Moser Baer (India)

1 Contingent Liabilities
 
 In respect of:-
 
 1.1 Corporate guarantees given on behalf of the Subsidiary Companies:
 Rs.22,405,393,000 (Previous Year Rs. 13,642,815,000). Against these
 guarantees loan amounts of Rs.16,119,391,787 (Previous Year Rs.
 9,051,763,955) have been availed by the subsidiary companies. (Refer
 Note 12.3 a) below)
 
 1.2 Disputed demands (Gross) in respect of:- 2008-09    2007-08
                                               (Rs.)     (Rs.)
 
 Entry tax                               125,320,785  124,745,823
 Amount paid under protest Rs. 1,941,530 
 (Previous Year Rs.1,941,530)
 Service tax                             145,903,431  106,090,662
 Sales Tax
 Amount paid under protest Rs. 4,597,150 
 (Previous Year Rs. 4,597,150)            78,842,062   85,083,264
 paid through bank guarantee Rs. 26,596,226 
 (Previous Year Rs.26,596,226)]
 Custom duty and Excise duty
 [Amount paid under protest Rs. 500,000 
 (Previous Year Rs. 500,000)             224,659,676  320,465,525
 Income Tax                               97,231,147   92,195,160
 [Amount paid under protest Rs.
 34,500,000 (Previous Year Rs. 24,500,000)]
 Total                                   671,957,101  728,580,434
 
 1.3 Claims against the Company not acknowledged as debts: Rs.
 23,581,688 (Previous Year Rs. 20,059,830).
 
 The amount shown in 1.1 above represents guarantees given in the normal
 course of the Companys operations and are not expected to result in
 any loss to the Company on the basis of the beneficiary fulfilling its
 ordinary commercial obligations.
 
 The amounts shown in 1.2 and 1.3 above represent the best possible
 estimates arrived at on the basis of available information. The
 uncertainties and possible reimbursements are dependent on the outcome
 of the different legal processes which have been invoked by the Company
 or the claimants as the case may be and therefore cannot be predicted
 accurately. The Company engages reputed professional advisors to
 protect its interests and has been advised that it has strong legal
 positions against such disputes.
 
 2 In February 2003, Moser Baer India Limited (Moser Baer), and Imation
 Corporation Inc., USA (Imation), formed an associate company called
 Global Data Media FZ LLC (GDM). GDM is owned 51% by Imation, and 49% by
 Moser Baer. On October 27, 2006, Imation filed a suit in Minnesota, USA
 against Koninkiljke Philips Electronics NV (Philips) seeking a
 Declaratory Judgement on the validity of the Cross License Agreement
 (CLA) entered into with Minnesota Mining and Manufacturing Co. (3M) and
 its assignment to Imation and its subsidiaries (including GDM). Moser
 Baer supplies recordable media to GDM and Imation under the ambit of
 CLA.
 
 Philips filed a suit against Moser Baer in The Hague, Netherlands
 challenging the status and validity of the CLA under which supplies of
 recordable media have been made to Imation and its subsidiaries. With a
 view to reinforce its stand on the CLA (an issue which is currently
 pending in the US courts), Imation joined the proceedings in the
 Netherlands as a party, to contest the suit.
 
 In order to protect the rights arising out of various patent license
 agreements executed between Moser Baer and Phillips, Moser Baer filed a
 suit against Philips challenging the default notices issued by Philips
 thereby pre-empting any possibility of termination of the
 aforementioned license agreements. This matter is currently subjudice
 at the Delhi High Court.
 
 Based on legal advise received relating to the strength of Moser Baer
 case and the indemnity available, the company believes that no
 provision is necessary in the financial statements as at 31st March
 2009.
 
 3 In the previous year a search and seizure operation was carried out
 by the State of Kerala, DGP and the Nodal officer at the premises of
 distributors stocking home video CDROMs and DVDROMs in various cities
 of Kerala for alleged infringement of Section 52(A) of the Copyright
 Act. The Company has filed a writ petition against such police action
 and has received a favourable interim order. On the basis of advice
 obtained from external legal council, the Company does not expect any
 adverse results on issuance of the final order
 
 4 The Company has received claims relating to infringement of
 copyrights in relation to the home entertainment business activities
 carried on by it. In the opinion of the management, no material
 liability is likely to arise on account of such claims.
 
 5 Estimated value of contracts remaining to be executed on capital
 account and not provided for (net of advances): Rs. 457,684,344
 (Previous Year Rs. 1,086,322,605)
 
 5.1 Letters of Credit opened by banks on behalf of the Company: Rs.
 591,249,975 (Previous Year Rs. 469,066,986).
 
 Total lease payments recognized in the statement of Profit and Loss
 Account: Rs. 57,421,770 (Previous year Rs. 46,001,614).
 
 The company has entered into operating leases for its offices and
 employees residences that are renewable on a periodic basis and
 cancellable at companys option. The total rent recovered on sub lease
 during the year is Rs. 478,341 (Previous year Rs.360,090).
 
 (B) Assets given on operating lease
 
 The company has provided building on lease to units operating in its
 SEZ division up to 30.06.2008. Gross carrying amount of buildings
 provided on lease as on 30.06.2008 is Rs. 903,269,720 (Previous Year
 Rs.691,748,218) and accumulated depreciation as on 30.06.2008 is
 Rs.16,831,406 (Previous Year Rs.10,783,123).
 
 Total depreciation expense recognized in the statement of Profit and
 Loss Account: Rs. 6,048,283 for the period of April 1, 2008 to June 30,
 2008 (Previous year Rs.10,465,248).
 
 6 General Description of Lease terms :
 
 a.  The company has provided building on Financial lease to units
 operating in its SEZ division
 
 b.  Buildings are given on lease for a period of 20 years. Apart from
 the regular lease rental the Company has also taken an interest free
 refundable security deposit of Rs.765,000,000 from the lesee which is
 refundable at the end of the lease term.
 
 7 Taxation
 
 Provision for taxation has been made based on the relevant provisions
 of the Income Tax Act,1961.
 
 Deferred tax in respect of timing differences for undertakings enjoying
 tax holiday period under section 10A and section 10B of the Income Tax
 Act, 1961 have been recognised in the year in which they originate, to
 the extent that such differences reverse after the tax holiday period.
 
 8 Employees Stock Option Plan (ESOP) and Directors Stock Option Plan
 (DSOP)
 
 a) The company has granted options to its non-executive directors and
 employees of the Company and its subsidiaries, to be settled through
 issue of equity shares, at exercise prices that are equal to the market
 price of the share on the date of the grant. The Options granted vest
 over a period of maximum of four years from the date of grant.
 
 Two options granted before the record date under the above plans
 entitles the holder to three equity shares of the Company.
 
 The options outstanding at the end of year had exercise prices in the
 range of Rs. 125.00 to Rs. 491.90 (Previous Year Rs.  196.60 to Rs.
 491.90) and a weighted average remaining contractual life of 2.97 years
 (Previous Year 2.49 years).
 
 During the year 50,000 (Previous Year 552,885) options were exercised
 resulting in a premium of Rs. 10,915,000 (Previous Year Rs.
 116,172,343) which is the excess of exercise price of the options and
 nominal value of shares allotted.
 
 9. In terms of order no.46/46/2009-CL-III. dated 07.03.2009 issued by
 Department of Company Affairs under Section 211(4) of the Companies
 Act, 1956 disclosure has not been made for the quantitative details for
 the accounting year 2008-09, in respect of details pursuant to paras
 3(i)(a), 3(ii)(a) and 3(ii)(b) of part II of Schedule VI to the
 Companies Act, 1956 (as amended vide Notification No GSR 494 (E) dated
 30th October,1973).
 
 1.  In terms of order nos. 12/180/2008-CL.VII, dated 13.02.2008,
 12/160/2008-CL.VII dated 03.03.2008, 12/179/2008- CL.VII dated
 03.03.2008 issued by the Ministry of Corporate affairs under Section
 310, 198/309(3) and 673AA of the Companies Act, 1956, the Company has
 paid managerial remuneration as shown above.
 
 2.  Provision for leave encashment: (Rs. 182,598) (Previous year Rs.
 3,246,623) and Gratuity: Rs. 4,012 (Previous year Rs. 1,212) made
 during the year have not been included above.
 
 3.  Total remuneration for Deepak Puri and Ratul Puri shown above
 includes Rs. Nil (Previous year Rs.3,491,612) in respect of
 remuneration charged to subsidiary Companies.
 
 10 Related Party Transactions:
 
 In accordance with the requirements of Accounting Standard - 18
 Related Party Disclosures the names of the related party where
 control/ability to exercise significant influence exists, along with
 the aggregate amount of transactions and year end balances with them as
 identified and certified by the management are given below:
 
 11 Nature of relationship Name of the related party Share Holding
 
 Subsidiary European Optic Media Technology GmbH 100%
 
 Subsidiary Omega Optical Media Technologies100%
 
 Subsidiary Moser Baer SEZ Developer Limited 100%
 
 Subsidiary Solar Research Limited100%
 
 Subsidiary Moser Baer Energy Limited100%
 
 Subsidiary Moser Baer Entertainment Limited 100%
 
 Subsidiary Moser Baer Investment Limited100%
 
 Subsidiary Photovoltaic Holdings PLC 100%
 
 Subsidiary Moser Baer Solar PLC100%
 
 Subsidiary PV Technologies India Limited 100%
 
 Subsidiary Moser Baer Photovoltaic Limited 100%
 
 Subsidiary Perafly Limited100%
 
 Subsidiary Dalecrest Limited 100%
 
 Subsidiary Nicofly Limited100%
 
 Subsidiary Perasoft Limited 100%
 
 Subsidiary Crownglobe Limited100%
 
 Subsidiary Peraround Limited 100%
 
 Subsidiary Advoferm Limited 100%
 
 Subsidiary Cubic Technologies BV100%
 
 Subsidiary TIFTON Limited 100%
 
 Subsidiary Value Solar Energy Private Limited100%
 
 Subsidiary Pride Solar Systems Private Limited 100%
 
 Subsidiary Admire Energy Solutions Private Limited 100%
 
 Subsidiary Arise Solar Energy Private Limited 100%
 
 Subsidiary Competent Solar Energy Private Limited 100%
 
 Subsidiary Hamel Limited100%
 
 Subsidiary Zesa Limited 100%
 
 Subsidiary Tucker Limited 100%
 
 Subsidiary OM&T B.V 100%
 
 Associate Global Data Media FZ LLC 49%
 
 [Associate Moser Baer Infrastructure Limited 26%
 
 Associate Moser Baer Infrastructure and Developers Limited* 26%
 
 Joint Venture Solar Value Proizvodjna d.d.40%
 
 Trust Moser Baer Trust
 
 *Subsidiary till September 30, 2008.  Key Management Personnel
 
 Managing Director Mr. Deepak Puri
 
 Whole Time Directors Mrs. Nita Puri, Mr.Ratul Puri
 
 12 Foreign Currency Convertible Bonds
 
 (a) During the year, the Company has bought back and cancelled 260 Zero
 Coupon Tranche A Convertible Bonds and 250 Zero Coupon Tranche B
 Convertible Bonds (FCCBs) of the face value of USD 100,000 each, the
 purchase being made with the approval of the Reserve Bank of India, at
 a discount to the face value. This has resulted in a saving of Rs.
 14,212 lacs which has been reflected as part of Exceptional items.
 Consequent upon such buy back and cancellation, the Companys
 obligation to convert the said Bonds into shares, if so claimed by the
 Bond Holder and/or to redeem the same in foreign currency, has come to
 an end vis-à-vis the cancelled bonds.
 
 Premium payable on redemption of FCCB accrued up to March, 31, 2009
 calculated on prorata basis Rs. 598,465,075 (Previous Year Rs.
 304,784,267) has been fully provided for and charged to Securities
 Premium Account. In the event that the conversion option is exercised
 by the holders of FCCB in the future, the amount of premium charged to
 the Securities Premium Account will be written back to Security Premium
 Account.
 
 13 Pursuant to the notification issued by the Ministry of Corporate
 Affairs dated March 31, 2009, the Company changed its accounting policy
 relating to ‘Foreign currency transaction as mentioned in accounting
 policy 10 schedule 22 Part-A and exercised the option available under
 the newly inserted paragraph 46 to the Accounting Standard AS-11 The
 Effect of Changes in Foreign Exchange Rates. As a result of this
 change the Company has, during the year.
 
 i) in respect of exchange differences relating to long term liabilities
 in foreign currency amounting to Rs. 221,094,421 (net of depreciation
 and amortisation of Rs. 48,408,473 ) recognised in the Profit & Loss
 Account for the previous year ended March 31, 2008 have been adjusted
 against opening revenue reserves as provided in the rules.
 
 ii) capitalised exchange differences arising during the year amounting
 to Rs 661,534,060 and charged additional depreciation for the year
 amounting to Rs 15,432,202 in respect of the same.
 
 iii) in respect of other cases, debited exchange differences arising
 during the year amounting to Rs. 1,298,612,986, to Foreign Currency
 Monetary Item Translation Difference Account and amortised/ released
 exchange differences for the year amounting to Rs 488,305,074.
 
 Had the accounting treatment as per Accounting Standard - AS 11
 (Revised) been continued to be followed by the Company, the net loss
 after tax for the year would have been higher by Rs. 1,456,409,774.
 
 Warranty provisions relates to the estimated outflow in respect of
 warranty for products sold by the Company and other probable
 obligations provisions relates to the estimated outflow in respect of
 possible liabilities expected to arise in future.  Due to very nature
 of such costs, it is not possible to estimate the timing/uncertainties
 relating to their outflows as well as expense from such estimates
 
 14 The Company has been granted exemption from Trade Tax and Central
 Sales Tax under Section 4-A of U.P. Trade Tax Act for a period of 15
 years for their A – 164 Unit w.e.f. 31.03.2000, which was converted
 into Tax Deferment (Section 42) with the introduction of U.P. VAT Act,
 2008 w.e.f. 01.01.2008. Subsequently, the provisions were amended by
 U.P. VAT (Amendment) Act 2009 and as per amended provisions, the
 industrial unit availing benefit of exemption on the turnover of sales
 under the erstwhile Act or the Central Sales Tax Act become entitled
 for exemption again but by way of Refund of net tax paid subject to
 certain conditions . The company has met required conditions subsequent
 to the year end and is in the process of filing the claim for refund of
 tax deposited with the relevant authorities.
 
 15 Based on the information available with the company, the company has
 identified 8 vendors as Micro and small enterprises as defined in the
 Micro, Small and Medium Enterprises Development Act, 2006. The balance
 due to such vendors as at 31.03.2009 has been disclosed separately
 under Current Liabilities and Provisions (Refer Schedule 12).
 
 16 (a) During the year 2007-08 the Company issued fully paid bonus
 shares to the equity shareholders of the Company in the ratio of one
 bonus share for two existing fully paid shares by capitalising the sum
 standing to the credit of Companys general reserve. Consequently the
 Company has allotted 56,077,035 equity shares which also includes
 127,975 equity shares against options exercised after the record date
 i.e. 18th July 2007.
 
 (b) During the year 2008-09 the Company issued 25,000 fully paid bonus
 shares to a director of the Company on excercise of DSOP in the ratio
 of one bonus share for two existing stock options by capitalising the
 sum standing to the credit of Companys general reserve.
 
 17 Corresponding figures for the previous year have been
 regrouped/rearranged, wherever necessary to conform to current year
 classification.