Tube Investments of India

1.  Commitments and Contingent Liabilities
 
                                               Rs. in Crores
 
                                              
 Particulars 
 
                                               31.03.2009    31.03.2008
 
 a) Estimated amount of contracts remaining to
 be executed on capital account and not 
 provided for (including capital commitment)     69.72          39.72
 
 b) Disputed Income — Tax demands from A.Y. 
 1993-94 to 2006-07 under appeal / remand 
 pending before various appellate/ assessing
  authorities against which Rs.28.05 Cr.  
 (Previous Year Rs.27.33 Cr.) has been
 deposited. The Management is of the opinion
 that the above demands are not sustainable.      28.05         32.23
 
 c) Disputed Excise/Service Tax demands 
 amounting to Rs. 2.30 Cr.(Previous Year 
 Rs.1.22 Cr.)and penalty of Rs. 1.22 Cr.
 (Previous Year Rs.1.22 Cr.) pertaining to 
 financial years 1998-99 to 2006-07 under
 appeal. The same has not been deposited.  
 The Management is of the opinion that the
 demand is arbitrary and the same is
 not sustainable.                                  3.52          2.44
 
 d) Cases decided in favour of the Company against which the department
 has gone on appeal
 
 1.  Income Tax                                     0.31        33.60
 
 2.  Excise                                         0.21         0.44
 
 e)   Bills Drawn on Customers and Discounted with 
                                             Banks  0.40         2.74
 
 f) Export obligation under EPCG / Advance License 
 Scheme not yet fulfilled. The Company is confident
  of meeting its obligations under
 the Schemes within the Stipulated Period.          75.28        87.05
 
 g) Guarantee favouring HSBC Bank (China Co Ltd.)
 Suzhou, China to secure borrowing by Tubular 
 Precision Products (Suzhou) Co. Ltd., a
 Subsidiary of the Company. The Company does not
 expect any liability on this account.              11.13          -
 
 h) Claims against the Company by a customer not
 acknowledged as debt. The Company has filed a 
 counter claim on an insurance company for the
 same and hence no liability to the Company is 
                                      expected.      0.89          -
 
 
 Note:
 
 Show cause notices received from various Government Agencies pending
 formal demand notices, have not been considered as contingent
 liabilities.
 
 Also Refer Note 7 below.
 
 2.  Accounting Standard 11 -The Effects of Changes in Foreign Exchange
 Rates
 
 Upto 31st March 2007, the Company had capitalised the exchange
 differences arising from foreign currency liabilities relating to fixed
 assets acquired from outside India. Effective 1 st April 2007,
 consequent to the applicability of Accounting Standard 11, notified by
 the Government of India, the Company accounted such exchange
 differences in the Profit and Loss Account. Had the Company followed
 the same policy, the Profit Before Tax for the previous year would have
 been higher by Rs. 1.32 Cr.
 
 3.  Share Capital
 
 a) Status on GDRs
 
 The aggregate number of Global Depository Receipts (GDRs) outstanding
 as at 31st March 2009 is 1,67,59,250 (Previous Year 1,67,59,250) each
 representing one Equity Share of Rs.2 face value. The GDRs are quoted
 on the Luxembourg Stock Exchange.
 
 b) Stock Options
 
 The Company has granted Stock Options to certain employees in line with
 the Employees Stock Option Scheme.  The total number of such Options
 outstanding as at 31st March 2009 is 33,34,332 (Previous year
 33,53,940) and each Option is exercisable into One Equity Share of Rs.
 2 face value.
 
 4.  Capital Work-in-Progress (including Capital Advances)
 
 The balance in the Capital Work-in-Progress (including Capital
 Advances) account as at 31st March 2009 includes:
 
 i. The cost of Plant & Machinery amounting to Rs. Nil (Previous Year
 Rs. 0.56 Cr) being manufactured on behalf of the Companys Subsidiary
 in China, namely, Tubular Precision Products (Suzhou) Company Ltd.
 During the year, Plant & Machinery worth Rs.Nil (Previous Year Rs.11.95
 Cr) was converted to Share Capital in the Subsidiary and treated as an
 Investment in the books of the Company.
 
 ii.  Interest on borrowings amounting to Rs. 0.60 Cr. (Previous Year
 Rs. Nil)
 
 5.  Amalgamation of erstwhile TIDC India Ltd with the Company
 
 In accordance with the Scheme of Arrangement, approved by the
 Honourable High Court of Madras vide its Order dated 30th November
 2004, all the assets, liabilities and business of TIDC India Ltd.,
 (TIDC), (formerly a subsidiary of the Company) were transferred to and
 vested in the Company, as a going concern, effective from 1 st April
 2004. Accordingly, 20,30,374 Equity Shares of Rs.10 each (Post-Split
 1,01,51,870 Equity Shares of Rs.2 each) held in the Company by TIDC was
 vested in a Trust, namely, Til Shareholding Trust, created for the
 purpose.
 
 During the previous year, the Trust had sold 57,50,000 Equity Shares of
 Rs.2 each and the Net Surplus on Sale of Shares was credited to the
 Securities Premium Account.
 
 During the year, pursuant to an application by the Company, the said
 Honourable High Court, vide its order dated 11th February 2009, has
 granted an extension of time upto 14th December 2010 for the sale /
 disposal of the balance shares held by the Trust.
 
 Since the beneficiary of the Trust is the Company itself, the dividend
 distributed to the Trust relating to the Companys shares held by the
 Trust is credited back to the Profit and Loss Account on receipt of the
 same from the Trust.
 
 6.  Other Expenses
 
 Other Expenses under Operating and Other Costs (Schedule 16) include
 
 i.  Contribution to Shri. A M M Murugappa Chettiar Research Centre
 Rs.0.15 Cr. (Previous Year Rs. 0.15 Cr.)
 
 ii.  Contribution to A M M Foundation Rs.0.30 Cr. (Previous Year Rs.
 0.30 Cr.)
 
 iii.  Contribution to Bharatiya Janata Party Rs. 0.15 Cr. (Previous
 Year Rs. NIL)
 
 iv.  Contribution to Mahindra World School Educational Trust Rs. 2.00
 Cr. (Previous Year Rs. NIL)
 
 v.  Other Donations Rs.0.05 Cr. (Previous Year Rs. 0.04 Cr.)
 
 vi.  Excise Duty Differential on Accretion to Stock - Credit Rs.1.09
 Cr. (Previous Year Debit Rs. 2.09 Cr.)
 
 b) Provident Fund
 
 The Companys Provident Fund is exempted under Section 17 of the
 Employees Provident Fund Act, 1952. Conditions for the grant of
 exemption stipulate that the employer shall make good the deficiency,
 if any, in the interest rate declared by the Trust over the statutory
 limit. Having regard to the assets of the Fund and the return on the
 investments, the Company does not expect any deficiency in the
 foreseeable future, in excess of the amount already provided for as per
 the Management estimates.
 
 7. Segment Information
 
 The Companys operations are organised into three major divisions -
 Cycles / Components / E-Scooters, Engineering and Metal Formed
 Products. Accordingly, these divisions comprise the primary basis of
 segmental information. Secondary segmental reporting is based on
 geographical location of customers.
 
 8. Disclosure in respect of Related Parties pursuant to Accounting
 Standard 18: a) List of Related Parties
 
 I.  Subsidiary Companies
 
 Cholamandalam MS General Insurance Company Limited
 
 Tubular Precision Products (Suzhou) Company Limited
 
 Tl Financial Holdings Limited (With effect from 6th October 2008)
 
 II.  Joint Venture Companies
 
 Borg Warner Morse TEC Murugappa Private Limited (Till 30th September
 2008) Cholamandalam, DBS Finance Limited Cholamandalam MS Risk Services
 Limited
 
 III.  Key Management Personnel (KMP)
 
 Mr. L Ramkumar - Managing Director (From 1 st February 2008)
 
 Note: Related party relationships are as identified by the Management
 and relied upon by the Auditors.
 
 9. Accounting for Derivatives
 
 Pursuant to the announcement of the Institute of Chartered Accountants
 of India (ICAI) in respect of Accounting for Derivatives, the Company
 had opted to follow the recognition and measurement principles relating
 to derivatives as specified in AS 30 Financial Instruments,
 Recognition and Measurement, issued by the ICAI, from the year ended
 31st March 2008.
 
 Consequently, as of 31st March 2009, the Company has recognised Mark to
 Market (MTM) Losses of Rs.35.05 Cr.  (Previous Year Rs. 3.03 Cr)
 relating to forward contracts and other derivatives entered into to
 hedge the foreign currency risk of highly probable forecast
 transactions that are designated as effective cash flow hedges, in the
 Hedge Reserve Account as part of the Shareholders Funds.