kar mobiles limited - bseindia.com

Annual Report2011- 2012

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KAR MOBILES LIMITED

KAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITED

BOARD OF DIRECTORS

L Ganesh - Chairman

L Lakshman

K P Balasubramaniam

V Ramachandran

A Hydari

C N Srivatsan

AUDIT COMMITTEE

C N Srivatsan - Chairman

L Lakshman

K P Balasubramaniam

INVESTORS’ SERVICE COMMITTEE

L Ganesh

V Ramachandran

K P Balasubramaniam

AUDITORS

M/s Varma & Varma

BANKERS

State Bank of India

REGISTERED OFFICE

“Maithri”

132, Cathedral Road,

Chennai - 600 086

FACTORIES

Plot No.26, 1st Phase, Plot No.36-B & 37,

Peenya Industrial Area Hirehalli Industrial Area

Bangalore - 560 058 Tumkur - 572 101

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KAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDRegd. Office: “ Maithri” 132, Cathedral Road, Chennai - 600 086

visit us at http://rane.in

NOTICE TO SHAREHOLDERS

NOTICE is hereby given that the 75th Annual GeneralMeeting of the Shareholders of the Company will be heldat 10.30 a.m. on Tuesday, July 24, 2012, at ‘The MusicAcademy’ (Mini Hall), New No.168, TTK Road,Royapettah, Chennai 600 014, to transact the following:

Ordinary Business:

1. To receive, consider and adopt the Directors’ Report,the audited accounts of the Company for the yearended March 31, 2012 and the Auditors’ reportthereon.

To consider adoption of the following resolution, asan ordinary resolution :

"Resolved that the Audited Balance Sheet as atMarch 31, 2012, the Profit and Loss Account for theyear ended March 31, 2012 together with the Reportsof the Directors and the Auditors of the Companythereon, as presented to the meeting be and the sameare hereby approved and adopted.”

2. To declare dividend on equity shares.

To consider adoption of the following resolution, withor without modification, as an ordinary resolution:

“Resolved that the interim dividend of Rs. 5/- perequity share declared by the board of directors ofthe Company on January 23, 2012 on 22,40,000equity shares of Rs. 10/- each fully paid, absorbinga sum of Rs.1,30,16,920 (including dividenddistribution tax and cess thereon) paid to theshareholders on February 7, 2012 for the year endedMarch 31, 2012, be and is hereby approved.”

“Resolved further that final dividend of Rs. 3.50per equity share of Rs.10 each on 22,40,000 equityshares be and is hereby declared out of the profits ofthe Company for the year ended March 31, 2012,absorbing an amount of Rs. 91,11,844 (includingdividend distribution tax and cess thereon) and thatthe dividend be paid to those shareholders, whosenames appear in the Company’s Register ofMembers as on July 24, 2012 and in respect of sharesin electronic form to those beneficial owners of theshares as at the end of business hours onJuly 13, 2012 as per the details furnished by theDepositories for this purpose.”

3. To appoint a Director in the place ofMr. L Lakshman, who retires by rotation underArticle 116 and 118 of the Articles of Association ofthe Company and being eligible offers himself forre-election.

To consider adoption of the following resolution,with or without modification, as an ordinaryresolution:

“Resolved that Mr. L Lakshman, who retires byrotation and being eligible for re-appointment, beand is hereby re-appointed as a Director of theCompany.”

4. To appoint a Director in the place ofMr. V Ramachandran, who retires by rotation underArticle 116 and 118 of the Articles of Association ofthe Company and being eligible offers himself forre-election.


"Resolved that Mr. V Ramachandran, who retiresby rotation and being eligible for re-appointment,be and is hereby re-appointed as a Director of theCompany.”

5. To appoint auditors of the Company and to determinetheir remuneration. The retiring auditorsM/s. Varma & Varma, Chartered Accountants, areeligible for re-appointment. The declaration underSection 224(1B) of the Companies Act, 1956 hasbeen received.


"Resolved that M/s. Varma & Varma, CharteredAccountants (Registration No. 04532S with TheInstitute of Chartered Accountants of India), be andare hereby re-appointed as the auditors of theCompany to hold office from the conclusion of thisAnnual General Meeting until the conclusion of thenext Annual General Meeting of the Company onsuch remuneration as may be determined by theBoard of Directors of the Company, in addition toreimbursement of travelling and other out-of-pocketexpenses actually incurred by them in connectionwith the audit.”

(By Order of the Board)

For Kar Mobiles Limited

Place : Chennai L GaneshDate : May 21, 2012 Chairman

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NOTES

1. ANY MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING MAY APPOINT A PROXY TOATTEND AND VOTE INSTEAD OF HIMSELF. THE PROXY NEED NOT BE A MEMBER OF THECOMPANY. THE PROXIES SHOULD HOWEVER BE DEPOSITED AT THE REGISTERED OFFICE OFTHE COMPANY NOT LESS THAN 48 HOURS BEFORE THE COMMENCEMENT OF THE MEETING.

2. The Register of Members of the Company will remain closed from Saturday, July 14, 2012 to Tuesday,July 24, 2012 (both days inclusive).

3. Pursuant to the provisions of Section 205A of the Companies Act 1956, dividend for the financial year endedMarch 31, 2005 and thereafter which remain unclaimed for a period of seven years will be transferred to theInvestor Education and Protection Fund (IEPF) of the Central Government.

The Company has sent reminders to all those members whose dividend payments during the last seven yearsremain unpaid as per Company records. Members are requested to contact the Company’s Registrar and TransferAgents, for payment in respect of the unclaimed dividend on or after the financial year 2004-05.

4. Ministry of Corporate Affairs (MCA) vide circular no.17/2011 dated April 29, 2011 permitted sending allcommunications to members by electronic mail (e-mail), as a measure of "Green Initiative in CorporateGovernance". In line with the ministry’s direction your company intends to send all future communication tomembers by e-mail including notice of the annual general meeting and annual report, to the e-mail addressregistered with your respective Depository Participants (DPs). We encourage your participation and expect yoursupport in this green initiative. To receive communications from the Company in electronic form, please registeryour e-mail address with your DP/ Registrar and Share Transfer Agents (RTA) or write to us [email protected]. All members are entitled to receive the communication in physical form uponrequest for the same.

5. Members holding shares in physical form are requested to notify to the Company immediately of any change intheir residential and e-mail address to the Registrar and Transfer Agents:

M/s. Integrated Enterprises (India) LimitedII Floor, “Kences Towers”, No.1, Ramakrishna Street,North Usman Road, T.Nagar, Chennai 600 017.

Members holding shares in Dematerialized form may inform the change in their residential and e-mail addressto their Depository Participants.

6. Members who are holding shares in identical order of names in more than one account are requested to intimateto the Company, the ledger folio of such accounts together with the share certificate(s) to enable the Company toconsolidate all the holdings into one account. The share certificate(s) will be returned to the members afternecessary endorsements.

7. Members / Proxies should bring the attendance slip duly filled in for attending the meeting.

(By Order of the Board)

For Kar Mobiles Limited


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Information about directors seeking re-appointment in this annual general meeting in respect of item nos. 3 and 4 above(in accordance with Clause 49 (IV) of the Listing Agreement)

Item No. 3 Item No. 4

Name of the Director Mr. L Lakshman Mr. V Ramachandran

Father’s Name Mr. L L Narayan Mr. S Venkataraman

Date of Birth July 17, 1946 January 26, 1948

Educational B.E., Executive MBA from London B.E.,Qualification Business School

Experience

Date of Appointment July 30, 1999 May 29, 1992

Other Directorships 1. Rane (Madras) Limited2. Rane Engine Valve Limited3. Rane Holdings Limited4. Rane NSK Steering Systems Ltd.5. Rane TRW Steering Systems Ltd.6. Rane Brake Lining Limited7. JMA Rane Marketing Limited8. Force Motors Limited9. DCM Engineering Limited

10. Automotive Stampings andAssemblies Limited

11. Tata AutoComp Systems Limited12. SRF Limited

CommitteeMemberships

No. of Shares held Nil 25,232

(By Order of the Board)For Kar Mobiles Limited


Mr. Ramachandran has been the Executive ViceChairman of the Company till March 31, 2008. He hasover 40 years of experience in the business relating toautomotive components.

Mr. Lakshman has been spearheading the businessof different companies in Rane Group and has morethan 41 years of industrial experience.

1. The Vellore Electric Corporation Ltd.2. El Forge Ltd.3. VST Tillers Tractors Ltd.4. Sasyaka Engineering Solutions Pvt. Ltd.

Chairman - Audit

1. Rane TRW Steering Systems Ltd.2. Rane NSK Steering Systems Ltd.

Member – Audit

1. Rane (Madras) Limited2. Rane Engine Valve Limited3. Kar Mobiles Limited4. Automotive Stampings and

Assemblies Limited5. Tata AutoComp Systems Limited

Chairman – Investors’ Service1. Rane (Madras) Limited2. Rane Engine Valve Limited

Member – Investors’ Service

1. Rane Holdings Limited


1. Kar Mobiles Ltd.2. VST Tillers Tractors Ltd.

Member – Audit

1. El Forge Ltd.

2. VST Tillers Tractors Ltd.

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REPORT OF THE DIRECTORS

Your directors are pleased to present their Seventy FifthAnnual Report together with the accounts for the yearended March 31, 2012.

1. Financial Performance

The financial highlights for the year under revieware as follows:

(Rs.in Crores)

Particulars 2011-12 2010-11

Sales & Operating Revenue 120.43 95.94

Profit before Tax 7.68 4.78

Provision for Tax 2.46 1.64

Profit after Tax 5.22 3.14

Surplus brought forward 1.37 1.03

Profit Available for Appropriation 6.58 4.17

During the year, the Company’s sales and operatingrevenues grew by 25% in comparison to theprevious year. The Profit Before Tax improved by60% over the previous year due to cost reductionefforts and profit of Rs.0.85 crores earned on saleof surplus land at Tumkur plant. Earnings per sharewas higher at Rs.23.32 as against Rs.13.99 in theprevious year.

2. Appropriation

Profit available for appropriation is Rs. 6.58 crores.The Directors have declared and paid an interimdividend of 50% on the equity capital of theCompany for the year ended March 31, 2012 andhave recommend a further 35% as final dividend,making for a total dividend of 85% for the year.The amount on this account inclusive of tax ondistributed profits and surcharge thereon, worksout to Rs. 2.22 crores leaving the Company withretained profits of Rs. 4.37 crores. Out of this,Rs. 2.50 crores is being transferred to the GeneralReserve and Rs. 1.87 crores being retained assurplus in the Profit and Loss Account.

3. Management Discussion and Analysis

Your Company is engaged in the manufacturingand marketing of auto components fortransportation industry. A detailed analysis of theautomotive industry, your Company’s performanceetc. are discussed in the report on ‘ManagementDiscussion and Analysis’ which forms part of thisreport and annexed as Annexure A.

4. Fixed Deposits

The Company has not accepted any deposit fallingunder the provisions of Section 58A of theCompanies Act, 1956 and the rules framed thereunder.

5. Board of Directors

Mr. L Lakshman and Mr. V Ramachandran retireby rotation at this Annual General Meeting andbeing eligible offer themselves for re-election. Thenotice convening the ensuing Annual GeneralMeeting includes the proposal for theirre-appointment as directors.

6. Conservation of energy

During the year, various initiatives taken in boththe plants have resulted in reduced consumptionof energy. Employee involvement in conservingelectricity both in shop floors and offices byswitching off power whenever not in use alsocontributed to reduction in consumption of power.

7. Research & Development Activities

During the year, the Company has not carried outany research & development activity. However,upgrade of products / processes are carried out onregular basis. The statement giving information asrequired under Companies (Disclosure ofParticulars in the Report of the Board of Directors)Rules, 1988 is enclosed to this report as AnnexureB.

8. Foreign Exchange Earnings and Outgo

Strategic initiatives are undertaken to increaseexport business in terms of Customers, Product andGeographical location by identifying new businessopportunities.

Foreign exchange earned (FOB) during 2011-12was Rs. 51.62 crores and foreign exchange outgowas Rs. 23.64 crores.

9. Employees

There was no employee for whom the particularsas per Section 217(2A) of the Companies Act, 1956read with the Companies (Particulars ofEmployees) Rules, 1975 is applicable.

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10. Auditors

M/s Varma & Varma, Chartered Accountants, theauditors of the Company retire at the ensuingAnnual General Meeting and are eligible for re-appointment. The declaration under Section224(1B) of the Companies Act, 1956 has beenreceived from them. M/s Varma & Varma, hassubmitted the Peer Review Certificate issued tothem by The Institute of Chartered Accountants ofIndia (ICAI).

The notice of the ensuing Annual General Meetingcontains necessary resolution in this regard. Yourdirectors recommend the re-appointment ofM/s Varma & V arma, as Statutory Auditors.

11. Directors’ Responsibility Statement

Pursuant to Section 217(2AA) of the CompaniesAct, 1956, the directors hereby confirm that theyhave:

i. Followed the applicable accounting standardsin the preparation of the annual accounts;

ii. Selected such accounting policies and appliedthem consistently and made judgments andestimates that were reasonable and prudentso as to give a true and fair view of the stateof affairs of the Company at the end of thefinancial year and of the profits of theCompany for the year under review;

iii. Taken proper and sufficient care for themaintenance of adequate accounting recordsin accordance with the provisions of theCompanies Act, 1956, for safeguarding theassets of the Company and detecting fraudand other irregularities;

iv. Prepared the accounts for the financial yearon a ‘going concern’ basis.

12. Corporate Social Responsibility (CSR)

The vision on Corporate Social Responsibility(CSR) is, “To be a socially andenvironmentally responsible organizationcommitted to improve quality of life withinand outside”. CSR activities of Rane Groupare channelized through Rane Foundation, a

public charitable and educational trust, in thesocial and environmental spectrum. The focusof Rane’s social development initiatives hasbeen in the three specific areas of (a)Education (b) Healthcare and (c) communitydevelopment. The following socialdevelopment initiatives were undertaken byyour Company in this year.

The specific CSR initiatives taken by yourCompany are as follows:

vContribution of funds towardsestablishment of Polytechnic College atTrichy by Rane Foundation by way ofdonation and interest free loans.

vProvided uniform cloths to theGovernment Primary school children.

vProvided uniform cloths to the childrenat Orphanage.

vConducted Heath and blood donationscamps.

13. Corporate Governance Report

Your Company has complied with the CorporateGovernance requirements as stipulated underClause 49 of the listing agreement. Detailed reporton the compliance and a certificate by the StatutoryAuditors forms part of this report as Annexure ‘C’.

14. Compliance Certificate

As required under Section 383A of the CompaniesAct, 1956 (“the Act”) read with Companies(Appointment & Qualifications of Secretary) Rules,1988 the Company has obtained certificate from asecretary in whole-time practice confirming thatthe Company has complied with all the provisionsof the Act and a copy of the certificate is annexedto this Report as Annexure D.

For and on behalf of the Board

Place : Chennai L Ganesh L LakshmanDate : May 21, 2012 Chairman Director

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REVENUES

Annexure - A to Report of the Directors

Management Discussion and Analysis

Overview

The Company is engaged in the manufacture and marketing of engine valves, collets and guides for applications ininternal combustion engines.

a) Industry Structure, Developments and Performance

Domestic automobile market had a mixed year in 2011-12 with only select vehicles reaching the expectedindustry growth estimates. Overall the market grew by 14%. Though the Passenger Car and Medium & HeavyCommercial Vehicles (M&HCV) showed a sluggish growth during the year due to continuous increase in theinterest rates, the gap was made up by the growth in other categories like Small Commercial Vehicles andLight Commercial Vehicles.

b) Industry Growth

During the year under review the growth in automotive industry is as given below:-

Volume Growth in %

Vehicles 2011-12 2010-11

Passenger Cars 2 27

Utility Vehicles 17 17

Small Commercial Vehicles 27 36

Light Commercial Vehicles 28 22

Medium & Heavy Commercial Vehicles 11 38

Three Wheelers 10 29

Two Wheelers 16 27

Farm Tractors 12 22

Source : Society of Indian Automobile Manufacturers

Domestic

The stable growth in the domestic market necessitated the Company to optimize and scale up the operations.The Company was well prepared to meet the increase in demand and achieved an overall growth of 25%.

OEM and Aftermarket

The sales to OEM had a moderate growth, while the growth in the aftermarket was significant. The performanceof the Company in the OEM and aftermarket is given below:

(Rs. in Crores)

OEM Aftermarket

2011-12 2010-11 Growth in % 2011-12 2010-11 Growth in %

30.30 29.36 3 32.05 25.18 27

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The Company has met the continuing demand of the OEM tractor and industrial engine manufacturers. Thesales from the OEM marginally improved by 3% over the previous year due to lower offtake by Indian Medium& Heavy Commercial Vehicles and Farm Tractor manufacturers. The improved productivity helped regain thelost aftermarket sales, leading to a growth of 27% over the previous year.

Exports

The overall economic activity marginally improved in the United States and parts of European Union in theyear 2011. The total export turnover was Rs. 53.05 crores, which is 41% higher than the previous year. TheUnited States Dollar, the currency in which the Company exports were made, gained substantially againstthe rupee and the rupee remained weak for most part of the year. The impact of exchange rate volatility andweak rupee was minimised with robust Forex policy adopted by the Company.

Operational and Financial Performance

Financial Review:

In the fiscal year ended March 2012, the Company registered net sales of Rs. 115.41 crores, an increase of25% over the previous year with the Profit Before Tax of Rs. 7.68 crores, a growth of 61% from theprevious year. The sales from the new products generated 15% of the revenues, an increase of 30% from theprevious year. Despite higher input costs, the Company has continued to earn profit through optimization ofthe cost structure and improvisation of the operational efficiencies.

Operations and Manufacturing Review

The modernisation and expansion of Tumkur plant have commenced. This would pave the way for significantimprovements in quality and productivity in next 2-3 years. Total Quality Management (TQM) initiativeshave also started with intensive focus. With this, the Company would position as an attractive global autocomponents manufacturer for customers. The Company has recognized that the active employee participationis the key to implement TQM process. In the year under review, an average of 3 suggestions per employeewere received compared to an average of 2 suggestions in the previous year and 20 projects were undertakenduring the year compared to 12 projects in the previous year. The Company has received many awards andcertifications for its eminence in manufacturing and quality. Some of them include:

vWinning of silver medal in QCC competition conducted by Quality Circle Forum of India.

vBest vendor award received from Escorts Limited for suggestion – VA/VE.

vBest vendor award from Preeth Tractors.

Outlook

The Company is cautiously optimistic about the stable growth in the automotive industry, especially in thepassenger car and commercial vehicle markets. The demand for the large engine valve is expected tomoderately increase. The modernisation and expansion efforts in Tumkur plant would enable the Companyto scale up the operations to fulfil both OEM and aftermarket volumes.

The Company is focussing on key products and customers that could garner more market share, paving wayfor higher revenues. More focus is given to upgrade technology to manufacture large and extra-large valves.Through product diversification, the Company anticipates to provide range of products to the customersunder one roof.

The concerns of liquidity, high inflation, weak rupee, volatile oil price and high interest rate may negativelyaffect the growth sentiments of the auto industry. The Company is well placed to evaluate these conditionsand to address any specific issue affecting the growth.

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Opportunities & Threats

India has the largest engineering talent pool with acclaimed designing and process engineering skillsets. Inaddition to the human resources, India has abundant raw material resources and quality manufacturing facilitieson par with the world class quality testing centres elsewhere on the globe. These advantages have enabled Indiato position as a global resource hub for OEM and auto components manufacturers.

India’s distinct global cost and quality advantages have augmented the growth of your Company.

Your Company’s strength continues in areas of:-

vMarket Leadership

vBrand Equity

vHuman Resources

vTechnical capability in designing and manufacturing of large engine valves

vAbility to scale up operations

The Company would endeavor to further develop and improve its strengths.

The main threats to which auto component industry is exposed to are:-

vUnceasing cost reduction initiatives from OEMs from whom the major portion of the future growth islikely to come.

vSpiralling commodity prices affecting the input costs structure.

vDumping from China.

vApprehension about weak economic expansion in the developed countries.

Internal Control Systems and Risk Management

The Company has engaged an independent agency to carry out internal audit at all its locations across thecountry. The Audit Committee and the Board in consultation with the internal auditor, statutory auditor andoperating management approve annual internal Audit plan. The findings of the internal auditors in their quarterlyaudit are placed before the Audit Committee at each of its quarterly meeting for review. The response of theoperating management and counter measures proposed are discussed in the Audit Committee meetings. Thisprocess not only seeks to ensure the reliability of internal control systems and compliance with laws and regulationsbut also covers resource utilization and system efficacy.

During the year, the Company revisited the risks associated with each of the business processes and thesub-processes. The risks are broadly classified into strategic risks, operational risks, financial risks and statutorycompliance risks. These risks are rated based on factors such as past year experience, probability of occurrence,probability of non-detection and its impact on business. Every quarter the top management reviews the strategicrisks, the risks with high probability and high impact and presents its report to the Board of Directors togetherwith the risk mitigation plan on half-yearly basis. The strategic risks are taken into consideration in the annualplanning processes. Other risks are covered as part of internal audit process and presented to the Audit Committeeevery quarter. The risk ratings are revalidated with the top management as part of the internal audit processevery quarter. The overall re-assessment of risks at company level is carried out and presented to the Board oncein two years for their review.

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Human Resource Development and Industrial Relations

Human Resource (HR) in the Company partners with the business in formulation of strategies and in developingorganizational capability. The Company’s HR initiatives aim at balancing the near, mid and long term aspects ofcareer planning and management. HR at the Company upholds the dictum of attracting, inspiring and retainingthe right talent to drive business results.

As part of the Company’s four-level Professional Development Architecture (PDA), the first batch of RaneEmerging Managers Program (REMP) was launched during November 2011 for high potential individuals togroom them for future. Aspiring to become an employer of choice, the Company is implementing various initiativesfocusing on delivering its Employer Brand Promise of challenging assignments, encouraging learning andenhancing career opportunities.

The Corporate HR team refreshed the Performance Assessment & Development System (PADS) – aligning itwith the theme of Profitable Growth. Innovation is introduced as a vital competency. Moving ahead, nurturing aculture of innovation and entrepreneurial spirit will be high on people agenda.

As at the end of March 31, 2012, the total number of employees stood at 434.

Cautionary Statement

The information and opinion expressed in this report may contain certain forward-looking statements, which themanagement believe are true to the best of its knowledge at the time of its preparation. Actual results may differmaterially from those either expressed or implied in this report.

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FORM - B

Information as per Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particularsin the Report of the Board of Directors) Rules, 1988 and forming part of the Directors' Report for the yearended March 31, 2012.

RESEARCH AND DEVELOPMENT (R & D)

1. Specific areas in which R& D is carried by Company

NIL

2. Benefits derived as a Result of R & D and Future plan of action

Not applicable

3. Expenditure on R & D

NIL

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. Efforts in brief

Commissioned Production lines at Plant 2 with integration of Lean Production system

2. Benefits derived as a result of the above efforts

Quality Improvement and consistent output with reduction in Total employee cost

3. (a) Technology Imported(Technology imported during the last 5 yearsreckoned from the beginning of the financial year) : NIL

(b) Year of Import : Not Applicable

(c) Has technology been fully absorbed : Not Applicable

(d) Areas where technology not fully absorbed, reason andfuture plan of action : Not Applicable

For and on behalf of the Board

Place : Chennai L Ganesh L LakshmanDate : May 21, 2012 Chairman Director

Annexure - B to Report of the Directors

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Annexure - C to Report of the Directors

CORPORATE GOVERNANCE

1. Philosophy on Code of Governance:

Rane Group's time tested philosophy of Governance is based on principles of integrity, transparency and fairness.The Rane businesses seek enhancement to shareholder value within this framework. Employee behaviour is nourishedby this culture and is governed through a policy document "Ethical Standards of Behaviour" that regulates employeesand directors.

Our belief in good corporate citizenship drives internal processes towards statutory and regulatory compliances.

2. Board of Directors:

As of March 31, 2012, the Company has Six Directors with a Non-Executive chairman. Of the Six Non-Executivedirectors, three (50%) are Independent Directors. The composition of the Board is in conformity with Clause 49 ofthe Listing Agreement entered into with stock exchanges. None of the directors on the Board is member of morethan 10 committees or chairman of more than 5 committees across all the companies in which they are Directors.Necessary disclosures regarding committee positions in other public companies as on March 31, 2012 have beenmade by the Directors.

The Board met 5 times during the year on May 19, 2011, July 21, 2011, October 24, 2011, January 23, 2012 andMarch 22, 2012. The names and categories of the Directors on the Board, their attendance at Board meetings heldduring the year and the number of Directorships and Committee Chairmanships / Memberships held by them inother companies are given below:

No. of Whether No. of Directorship No. ofBoard attended in other companies # Committees @

Name of the Director Category Meetings Lastattended AGM Chairman Member Chairman Member

Mr. L Ganesh Non-Executive Chairman 5 Yes 6 4 2 7& Promoter

Mr. L Lakshman Non-Executive Director 5 Yes 1 11 4 6& Promoter

Mr. V Ramachandran Non-Executive Director 5 Yes - 3 1 3& Promoter

Mr. K P Balasubramaniam IndependentNon-ExecutiveDirector 5 Yes - 2 1 2

Mr. A Hydari IndependentNon-Executive Director 5 Yes - - - -

Mr. C N Srivatsan IndependentNon-Executive Director 5 Yes - 3 2 1

# - Excludes companies exempted under Section 278 of the Companies Act, 1956 and foreign companies

@ -Membership in Audit Committee and Investors’ Service / Grievance committee only is considered

Mr. L Lakshman and Mr. L Ganesh are related to each other.

The information as required under Annexure IA to Clause 49 of the listing agreement such as annual operatingplans and budgets, quarterly results for the Company, minutes of meetings of audit committee and other committeesof the board, quarterly details of foreign exchange exposures, risk management and mitigation measures etc. areplaced before the Board of Directors.

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3. Audit Committee :

Overall purpose / objective:

The purpose of the Audit Committee is to assist the Board of Directors (the "Board") in reviewing the financialinformation which will be provided to the shareholders and others, reviewing the systems of internal controlsestablished in the company, appointing, retaining and reviewing the performance of independent accountants/internal auditors and overseeing the Company's accounting and financial reporting processes and the audit of theCompany's financial statements.

The scope of reference to the committee includes:

1. Discuss the scope of audit and post-audit area of concern, if any, with Statutory Auditors and Internal Auditors.2. Recommending the appointment of statutory auditor and fixation of audit fee.3. Review of quarterly / annual financial statements with statutory auditors and management before submission

to the Board.4. Review of internal control systems with the Management, Statutory Auditors and Internal Auditors.5. Reviewing the adequacy of internal audit function.6. Review of financial and risk management policies of the Company.7. Reviewing defaults, if any, in payments to shareholders and creditors.8. Reviewing the statement of significant related party transactions submitted by the management.9. Reviewing the management letters/ letters of internal control weaknesses issued by the statutory auditors, if any.10. Reviewing the Internal audit reports relating to internal control weaknesses, if any.11. Management discussion and analysis of financial condition and results of operation.

Till last year, the Company was not required to constitute an audit committee both under the Companies Act, 1956and under Clause 49 of the listing agreement as the paid up capital of the Company was less than Rs. 3 crores andthe networth of the Company was below Rs.25 crores. However in the earlier years, the Company had voluntarilyconstituted the audit committee to review the matters specified under Clause 49 of the listing agreement. Thenetworth of the Company marginally exceeded Rs.25 crores as on March 31, 2011, the accounts of which wasadopted by the shareholders of the Company at the Annual General Meeting held on July 21, 2011. In order tocomply with the circular issued by SEBI vide its circular no. SEBI/CFD/DIL/CG/1/2004/12/10 dated October 29,2004, the Company re-constituted the audit committee with effect from January 23, 2012. The Composition ofAudit Committee as on March 31, 2012 is as follows:

Mr. C N Srivatsan - Chairman - Independent Non-Executive Director

Mr. L Lakshman - Member - Non-Executive Director

Mr. K P Balasubramaniam - Member - Independent Non-Executive Director

All the members of the audit committee are financially literate and possess accounting and related financialmanagement expertise.

The committee met on May 19, 2011, July 21, 2011, October 24, 2011 and January 23, 2012.

Name No of Meetings Attended

Mr. C N Srivatsan 4

Mr. L Ganesh 1 3

Mr. L Lakshman 4

Mr. K P Balasubramaniam 2 1

1 Ceased to be a member of the committee w.e.f. January 23, 2012

2 Appointed as a member of the committee w.e.f. January 23, 2012

The statutory auditors and internal auditors were present as invitees in all the meetings.

The President and the Head of Finance of the Company attended the meetings by invitation. Based on the requirement,other directors attended the meetings by invitation.

14


In compliance with Clause 41 of the listing agreement, the audit committee reviews the quarterly unauditedfinancial results of the Company (other than the last quarter). These results are subjected to limited review bythe statutory auditors of the Company. The statutory auditors are eligible to issue limited review report as theaudit firm has been subjected to peer review process of Institute of Chartered Accountants of India (ICAI) andhold a valid certificate issued by the Peer Review Board of ICAI.

The audit committee reviews all mandatory information under Clause 49 of the listing agreement.

4. Remuneration to Directors:

During the year 2011-12, the Company has paid sitting fees of Rs.20,000 for attending each meeting of theBoard / Audit Committee and a sitting fee of Rs.2,500 to the Non-executive Directors for attending meeting ofother committees of the Board, apart from reimbursement of actual travel and out-of-pocket expenses incurredby them for attending the meetings. No other remuneration is paid to the Non-executive Directors exceptcommission to Mr. L Ganesh, Chairman. The details of commission paid to Mr. L Ganesh, Chairman for the year2011-12 are given in Note 20.4 of the financial statements

The details of sitting fees paid to the directorsduring the year 2011-12 are as follows: Number of Shares held by the Directors are as follows :

Name of Director Sitting fees (in Rs.) Name of Director No. of Shares

Mr. L Ganesh 170,000 Mr. L Ganesh 50Mr. K P Balasubramaniam 125,000 Mr. K P Balasubramaniam 650Mr. A Hydari 100,000 Mr. V Ramachandran 25,232Mr. L Lakshman 185,000Mr. C N Srivatsan 180,000Mr. V Ramachandran 105,000

5. Code of Conduct :

The Board of Directors has laid down a code of conduct for all Board Members and Senior Management of theCompany. The same has also been posted on the website of the Company, viz. URL: http://www.rane.co.in/pdf/coc.pdf. The Board Members and Senior Management Personnel have affirmed their compliance with the codeof conduct for the year under review. Declaration from the Chief Executive Officer to this effect forms part ofthis report.

The Board of Directors has also laid down a code of conduct for prevention of insider trading. The designatedpersons have affirmed compliance with the code.

6. Investors’ Service Committee:The Composition of the Committee is as follows :

Mr. L Ganesh - Chairman

Mr. V Ramachandran - Member

Mr. K P Balasubramaniam – Member

The Committee met two times during the year on May 19, 2011 and July 21, 2011.

Name of the Director No. of Meetings Attended

Mr. L Ganesh 2

Mr. V Ramachandran 2

Mr. K P Balasubramaniam 2

During the year, the Company received two complaints from the investors and both of them were disposed off.The complaints pertain to non-receipt of Share Certificate and non-receipt of Dividend. No complaint wasreceived from Stock Exchanges/ SEBI / Ministry of Corporate Affairs. The Company also follows the SEBIComplaints Redress System (SCORES), a web based portal administered by SEBI for addressing investorcomplaints. During the year the Company did not receive any complaint in the SCORES platform.

None of the other Directors hold any share in theCompany.

15


7. General Body Meetings :Details of last three Annual General Meetings are as follows :

Date of AGM Special Resolutions Passed Time Venue

July 21, 2011 Payment of Commission to 10.30 a.m Narada Gana Sabha(74th AGM) Mr. L Ganesh, Chairman (Mini Hall), No. 314, T.T.K Road,

Chennai 600 018

July 22, 2010 No special resolution was passed 10.30 a.m The Music Academy (Mini Hall),(73rd AGM) New No. 168, T.T.K Road,

Royapettah, Chennai 600 014

July 23, 2009 No special resolution was passed 10.30 a.m The Music Academy (Mini Hall),(72nd AGM) New No. 168, T.T.K Road,

Royapettah, Chennai 600 014

No resolution was required to be passed by means of postal ballot by the members of the Company during theyear 2011-12.

8. Disclosures:

During the year, the Company had not entered into any transaction of material nature with any of the promoters,directors, management or relatives etc., which was in conflict with the interest of the Company. The details of therelated party transactions, as stated in Note 20.17 of the financial statements, have been reviewed by the AuditCommittee.

There was no instance of non-compliance by the Company on any matters relating to the capital markets, nor wasthere any penalty / strictures imposed by the stock exchanges or SEBI or any other statutory authority on suchmatters.

The Company has complied with all the mandatory requirements prescribed under revised Clause 49 of the ListingAgreement. The Company has obtained and placed before the board, certificate from the CEO and CFO on mattersstated in Clause 49 (V) of the listing agreement. The Company has complied with the following non-mandatoryrequirements:-

i. maintaining an office for the Chairman at the registered office of the Company

ii. adopting the best practices to ensure a regime of unqualified financial statements.

iii. individual communication of half-yearly results to shareholders.

No remuneration committee meeting was required to be held during the year. No formal Whistle Blower Policywas adopted by the Company. However, as part of the ‘Great Place To Work’ initiatives, the Company permitsaccess to its employees to approach the top management on any critical issues.

The present board consists of professional and well-experienced members, hence training and evaluation of theperformance of the non-executive directors are not practiced.

To comply with all laws governing the operations and conduct of affairs of the Company in accordance with thehighest ethical and legal standards, the Company has adopted a Statutory Compliance Kit (STACK). STACK is astructured process providing comprehensive reference framework to facilitate education to dealing personnel,execution, escalation and regular reviews to strengthen compliance management. The master list of statutoryrequirements are effectively complied through practice of Daily Routine Management (DRM) and Vital ActivityMonitory (VAM) charts. Reports relating to the compliance with various laws applicable to the Company areregularly reviewed and the vital issues are presented to the Audit Committee and the Board.

9. Means of Communication :

The quarterly / annual financial results are published in “Business Standard” (English) and “Dinamani” (Tamil).The financial results results and the share holding patteren were uploaded in the website of the Stock Exchangesand Company viz. http:\\rane.in. During the year, a presentation was made to analysts/institutional investors andwas published in the website of the Company. A Management Discussion and Analysis report is part of theannual report.

16

KAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITED10. General Shareholder Information :

(i) Information about director seeking re-appointment in this Annual General Meeting

Name of the Director Mr. L Lakshman Mr. V Ramachandran

Father’s Name Mr. L L Narayan Mr. S Venkataraman

Date of Birth July 17, 1946 January 26, 1948

Educational B.E., Executive MBA from London B.E.,Qualification Business School

Experience

Date of Appointment July 30, 1999 May 29, 1992

Other Directorships 1. Rane (Madras) Limited2. Rane Engine Valve Limited3. Rane Holdings Limited4. Rane NSK Steering Systems Ltd.5. Rane TRW Steering Systems Ltd.6. Rane Brake Lining Limited7. JMA Rane Marketing Limited8. Force Motors Limited9. DCM Engineering Limited10. Automotive Stampings and

Assemblies Limited11. Tata AutoComp Systems Limited12. SRF Limited

CommitteeMemberships

No. of Shares held Nil 25,232

Chairman - Audit

1. Rane TRW Steering Systems Ltd.2. Rane NSK Steering Systems Ltd.

Member – Audit

1. Rane (Madras) Limited2. Rane Engine Valve Limited3. Kar Mobiles Limited4. Automotive Stampings and

Assemblies Limited5. Tata AutoComp Systems Limited

Chairman – Investors’ Service

1. Rane (Madras) Limited2. Rane Engine Valve Limited

Member – Investors’ Service1. Rane Holdings Limited

1. The Vellore Electric Corporation Ltd.

2. El Forge Ltd.

3. VST Tillers Tractors Ltd.

4. Sasyaka Engineering Solutions Pvt. Ltd.


1. Kar Mobiles Ltd.2. VST Tillers Tractors Ltd.

Member – Audit

1. El Forge Ltd.2. VST Tillers Tractors Ltd.

Mr. Ramachandran has been the Executive ViceChairman of the Company till March 31, 2008.He has over 40 years of experience in thebusiness relating to automotive components.

Mr. Lakshman has been spearheading thebusiness of different companies in RaneGroup and has more than 41 years ofindustrial experience.

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(ii) Annual General Meeting : Tuesday, July 24, 2012 at 10.30 a.mThe Music Academy (Mini Hall),New No.168, TTK Road,Royapettah,Chennai 600 014

(iii) Financial year - 1st April to 31st MarchFinancial Calender :

Board Meeting for approval of Tentative Date

Annual Accounts for the year ended March 31, 2012 May 21, 2012

Un-audited results for the 1st quarter ending June 30, 2012 July 24, 2012

Un-audited results for the 2nd quarter ending September 30, 2012 October 19, 2012

Un-audited results for the 3rd quarter ending December 31, 2012 January 21, 2013

Annual Accounts for the year ending March 31, 2013 By last week of May 2013

(iv) Book Closure & Dividend

The book closure period is from July 14, 2012 (Saturday) to July 24, 2012 (Tuesday), both days inclusive.

Dividend

During the year, the Board of Directors declared an interim dividend of Rs.5/- per equity share and the samewas paid on February 7, 2012 to all eligible shareholders whose name appeared in the Register of Membersof the Company on February 3, 2012.

The Board of directors at its meeting held on May 21, 2012, has recommended a final dividend of Rs. 3.50per equity share. The dividend, if declared by the shareholders, will be paid on July 30, 2012 to all thosemembers whose name appear in the Register of Members as on July 24, 2012 and in respect of shares inelectronic form to those beneficial owners of the shares as at the end of business hours on July 13, 2012.

(v) Listing on Stock Exchanges :

Stock Exchange Stock Code

Bangalore Stock Exchange Ltd. KARMOBILESStock Exchange Towers,51, 1st Cross, JC Road, Bangalore – 560 027.

Madras Stock Exchange Ltd. KMBSecond Line Beach,Chennai – 600001.

Listing Fee: Annual Listing fees for the financial year 2012-13 has been paid to the above stock exchanges.

(vi) BSE IndoNext

Trading of Equity Shares on BSE IndoNext :

The equity shares of the Company are traded on BSE IndoNext platform of the Bombay Stock Exchange Ltd.with effect from January 31, 2006.

Scrip Code : 590053

Scrip ID : KARMOB

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(vii) Unpaid/Unclaimed Dividends:

Pursuant to the provisions of Section 205A of the Companies Act, 1956, dividend for the financial year endedMarch 31, 2005 and thereafter which remain unclaimed for a period of seven years will be transferred to theInvestor Education and Protection Fund (IEPF) of the Central Government.

During the year, the Company had transferred Rs. 2,31,375/- to IEPF, towards the unclaimed dividend for thefinancial year ended March 31, 2004.

The company has sent reminder letters to each of the shareholders’ whose dividend is remaining unclaimed asper the records available with the Company. Information in respect of such unclaimed dividend due for transferto the said fund is given below:

Year Date of Dividend Amount Last Date for Due date fordeclaration per share# outstanding claiming transfer

(Rs.) in Unclaimed unpaid to IEPFDividend dividend u/s 205A(5)Account

(as on 31.03.2012)(Rs.)

31.03.2005 15.07.2005 4.00 2,02,148.00 12.08.2012 10.09.201231.03.2006* 19.01.2006 2.50 1,37,457.50 16.02.2013 17.03.201331.03.2006 20.07.2006 1.50 80,251.50 31.08.2013 29.09.201331.03.2007 20.07.2007 3.00 1,80,549.00 17.08.2014 15.09.201431.03.2008* 21.03.2008 4.00 2,50,724.00 25.04.2015 24.05.201531.03.2009 23.07.2009 2.00 1,13,214.00 27.08.2016 25.09.201631.03.2010* 22.01.2010 3.00 2,13,870.00 26.02.2017 27.03.201731.03.2010 22.07.2010 1.50 95,253.00 24.08.2017 22.09.201731.03.2011* 20.01.2011 4.00 2,91,776.00 24.02.2018 25.03.201831.03.2011 21.07.2011 1.00 65,554.00 25.08.2018 22.09.201831.03.2012* 23.01.2012 5.00 3,00,330.00 25.02.2019 26.03.2019

# - Share of paid-up value of Rs.10/- per share

* - Interim dividend

(viii) Share Price Data :

There has been no active trading both in Bangalore Stock Exchange Limited and Madras Stock ExchangeLimited.

The share price data as quoted on the Bombay Stock Exchange of India Ltd. during the last financial year viz.April 1, 2011 - March 31, 2012 is given below :

Share price Sensex

Month High (Rs.) Low (Rs.) High Low

Apr - 2011 223.45 135.50 19701.73 19091.17May - 2011 219.15 180.15 18998.02 17847.24Jun - 2011 174.40 159.10 18845.87 17506.63Jul - 2011 161.70 140.00 19078.30 18197.20Aug - 2011 149.85 126.70 18314.33 15848.83Sept - 2011 134.40 118.20 17165.54 16051.10Oct - 2011 144.10 114.00 17804.80 15792.41Nov - 2011 152.55 130.00 17569.53 15695.43Dec - 2011 148.60 126.15 16877.06 15175.08Jan - 2012 169.95 121.00 17233.98 15517.92Feb - 2012 160.00 145.00 18428.61 17300.58Mar - 2012 158.80 145.10 17919.30 17052.78

Source: www.bseindia.com

19


Performance of share price of the Company Vs. BSE Sensex :

Note: Both Sensex and KML share prices are indexed to 100 as on April 1, 2011.

(ix) Registrar & Transfer Agents :

The contact details of Registrar & Transfer Agents are as follows:-

M/s. Integrated Enterprises (India) LimitedII Floor, “Kences Towers”,No.1, Ramakrishna Street,North Usman Road,T.Nagar, Chennai 600 017.Phone: 28140801 – 03Fax: 28142479, 28143378.e-mail: [email protected]

Name of the contact person: Mr. K Suresh Babu, Vice President

x) Share Transfer System

The power to approve transfer of shares has been delegated by the Board to the share transfer committee.Share transfer process is completed within 30 days from the date of receipt of transfer documents by theRegistrar and Transfer Agents (RTA). Requests for dematerialisation are generally confirmed on a weeklybasis by the RTA.

On a half-yearly basis the compliance with the share transfer formalities is audited by a Practising CompanySecretary (PCS) in terms of Clause 47(c) of the Listing Agreement with the stock exchanges and a certificateto this effect is filed with the stock exchanges. Also reconciliation of share capital audit in terms of Regulation55A of SEBI (Depositories and Participants) Regulations, 1996 is taken up on a quarterly basis and the reportof the PCS is filed with the stock exchanges certifying that the total listed capital of the Company is inagreement with the total number of shares in physical and dematerialized form and that there is no differencebetween the issued and the listed capital of the Company.

20


(xi) Distribution of Shareholdings as on March 31, 2012

No. of Shareholders Sharesshares held Number % to total Number % to total

Upto 500 1,721 84.03 2,26,950 10.13

501-1000 175 8.54 1,30,406 5.82

1001-2000 80 3.91 1,21,305 5.42

2001-5000 42 2.05 1,26,111 5.63

5001-10000 11 0.54 72,848 3.25

10001-20000 8 0.39 1,24,507 5.56

20001-50000 6 0.29 1,95,282 8.72

50001-100000 3 0.15 2,41,122 10.76

100001 & above 2 0.10 10,01,469 44.71

Total 2,048 100.00 22,40,000 100.00

(xii) Pattern of Shareholding as on March 31, 2012

Sl. Category No. of No. of % of ShareNo. Shareholders shares Holding

A Promoters 11 9,79,337 43.72B Govt. of Kerala 1 37,500 1.67C Banks 4 3,978 0.18D Private Bodies Corporate 49 2,29,093 10.23E NRI's 7 3,017 0.13F Indian Public and others 1,976 9,87,075 44.07

Total 2,048 22,40,000 100.00

(xiii) Dematerialisation of Shares :

The Company has entered into necessary agreements with NSDL & CDSL (depositories) for dematerializationof shares held by investors. As of March 31, 2012, about 88.67% of the shareholdings have been dematerialised.

Demat ISIN Number : INE 916E01011.Corporate Identity Number : L85110TN1936PLC071646

(xiv) Plant Locations : Given in the first page of the Annual Report.

(xv) Address for Communication :

Mr. H.K Vadiraj Mr. K Suresh BabuCompliance Officer Vice PresidentKar Mobiles Ltd., Integrated Enterprises (India) Ltd.,Rane Corporate Centre II Floor, ‘Kences Towers’‘Maithri’ 132, Cathedral Road, No.1, Ramakrishna Street, North Usman Road,Chennai - 600 086 T. Nagar, Chennai – 600 017Phone : 28112472, Fax : 28112449 Phone:28140801–03, Fax:28142479.

e-mail : [email protected] e-mail: [email protected]

OR

21


CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE

The MembersKar Mobiles Limited

We have examined the Compliance of conditions of Corporate governance by Kar Mobiles Limited,for the year ended on March 31, 2012 as stipulated in clause 49 of Listing Agreement with StockExchanges as contained in SEBI Guidelines, in respect of Equity Shares of the said Company.

The compliance of conditions of corporate governance is the responsibility of the management. Ourexamination was limited to procedures and implementation thereof, adopted by the Company forensuring the Compliance of the conditions of the Corporate Governance. It is neither an audit nor anexpression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, wecertify that the Company has complied with the conditions of Corporate Governance as stipulated inthe above mentioned Listing Agreement as at the year end, although the compliance of conditionsregarding constitution of the Audit Committee was with effect from January 23, 2012.

We further state that such compliance is neither as assurance as to the future viability of the Companynor the efficiency or effectiveness with which the management has conducted the affairs of theCompany.

For VARMA & VARMA Chartered Accountants

FRN.004532S

CHERIAN K BABYPlace : Chennai PartnerDate : May 21, 2012 M.No.16043

To,The MembersKar Mobiles Limited

Declaration by Chief Executive Officer onCode of Conduct under Clause 49 of the Listing Agreement

I, hereby declare that to the best of my knowledge and information, all the Board Members andSenior Management Personnel have affirmed compliance with the code of conduct for the yearended March 31, 2012.

Place : Chennai S KrishnamurthyDate : May 21, 2012 President

22


Annexure - D to the report of the Directors

R. Balasubramaniam “Newry Suprit”, 2A, No.27,B.A, B.L. F.C.S 2nd Floor, J Block, 2nd Street,Practising Company Secretary Anna Nagar East, Chennai - 600 102C.P. No.1340 Tel No. - 044 - 2626 9826

Compliance Report

To

The Members Company No. : 71646Kar Mobiles LimitedKar Mobiles LimitedKar Mobiles LimitedKar Mobiles LimitedKar Mobiles Limited CIN : L851l0TN1936PLC071646“Maithri”, 132, Cathedral Road, Nominal Capital : Rs.2.50 CroreChennai - 600 086 Paid-up Capital : Rs.2.24 Crore

I have examined the registers, records, books and papers of Kar Mobiles Limited (the Company) as required to bemaintained under the Companies Act, 1956, (the Act) and the rules made thereunder and also the provisions containedin the Memorandum and Articles of Association of the Company for the financial year ended on 31st March, 2012. Inmy opinion and to the best of my information and according to the examinations carried out by me and explanationsfurnished to me by the company and its officers, I certify that in respect of the aforesaid financial year:

1. The Company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as per theprovisions and the rules made thereunder and all entries therein have been duly recorded.

2. The Company has duly filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrarof Companies within the time prescribed under the Act and the rules made thereunder, except E-Forms mentionedin Sl. Nos. 1,2 & 9 of Annexure B to this certificate, which were filed with additional fee. The Company was notrequired to file any forms or returns to Regional Director, Central Government or Company Law Board duringthe financial year.

3. With respect to non-invitation of public subscription for its shares and non-invitation or acceptance of depositsother than its members’, directors or their relatives, being related to a Private Limited Company, this item is notapplicable to the Company.

4. The Board of Directors duly met five (5) times on May 19, 2011, July 21, 2011, October 24, 2011, January 23,2012 and March 22, 2012 in respect of which meetings proper notices were given and the proceedings wereproperly recorded and signed in the Minutes Book maintained for the purpose.

5. The Company closed its register of members from Saturday, July 16, 2011 to Thursday, July 21, 2011 (both daysinclusive) and necessary compliance of Section 154 of the Act has been made.

6. The annual general meeting for the financial year ended on March 31, 2011 was held on July 21, 2011 aftergiving due notice to the members of the Company and the resolutions passed thereat were duly recorded inMinutes Book maintained for the purpose.

7. No Extra-Ordinary general meeting was held during the financial year.

8. The Company has not advanced any loans to its directors and/or persons or firms or companies referred in thesection 295 of the Act.

9. The Company has not entered into any contracts falling within the purview of Section 297 of the Act.

10. The Company has made necessary entries in the register maintained under section 301 of the Act.

23

KAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITED11. As there were no instances falling within the purview of Section 314 of the Act, the company has not obtained

any approvals from the Board of Directors, members or Central Government.

12. The Company has constituted a committee and it has approved the issue of duplicate share certificate during thefinancial year.

13. The Company has:

(i) delivered all the certificates on lodgment thereof for transfer/ transmission in accordance with the provisionsof the Act. There was no allotment of securities during the financial year.

(ii) deposited the amount of dividend declared including interim dividend declared in a separate Bank Accountwithin five days from the date of declaration of such dividend, viz;

(a) For final dividend declared on July 21, 2011, the amount deposited on July 23, 2011.

(b) For interim dividend declared on January 23, 2012, the amount deposited on January 27, 2012.

(iii) paid/posted instruments for dividends to all members within a period of thirty days from the date of declarationand all unclaimed/unpaid dividends have been duly transferred to Unpaid Dividend Account of the Companywith Bank as follows

(a) Final dividend for the year ended March 31, 2011 paid on July, 2011 and amount transfered to unpaidDividend Account of the Company with Yes Bank Ltd. on August 26, 2011.

(b) Interim dividend for the year ended March 31, 2012 paid on February 7, 2012 and amount transferedto unpaid Dividend Account of the Company with Yes Bank Ltd on February 28, 2012.

(iv) transferred the amount in the unpaid dividend account pertaining to the year ended March 31, 2004, remainingunclaimed for seven years to Investor Education and Protection Fund.

(v) duly complied with the requirements of Section 217 of the Act.

14. There was no appointment of additional directors, alternate directors and directors to fill casual vacancy duringthe financial year.

15. The Company has not appointed any Managing Director/ Whole-time director or manager during the financialyear.

16. The Company has not appointed any sole-selling agents during the financial year.

17. The Company was not required to obtain any approval from Central Government, the Company Law Board,Regional Director and Registrar of Companies during the financial year, except the approvals for the E-Formsmentioned in Annexure ‘B’, filed with Registrar of Companies.

18. The directors have disclosed their interest in other firms / companies to the Board of Directors pursuant to theprovisions of the Act and the rules made thereunder.

19. The Company has not issued any shares / debentures / other securities during the financial year.

20. The Company has not bought back any shares during the financial year ended March 31, 2012.

21. There was no redemption of preference shares / debentures during the financial year.

22. There were no transactions necessitating the company to keep in abeyance the rights to dividend, rights sharesand bonus shares pending registration of transfer of shares.

24


23. The Company has not invited / accepted any Deposits including any unsecured loans falling within the purviewof Section 58A of the Act, during the financial year.

24. The amounts borrowed by the Company from banks/ financial institutions during the financial year endedMarch 31, 2012 are within the borrowing powers of the Company, in terms of section 293(1)(d) of the CompaniesAct, 1956.

25. The Company has not made loans, investments or given guarantees, provided securities to other bodies corporatepursuant to Section 372A of the Act and hence the requirement to maintain registers is not applicable.

26. The Company has not altered the provisions of the memorandum with respect to the registered office of theCompany during the year.

27. The Company has not altered the provisions of the memorandum with respect to the objects of the companyduring the year under scrutiny.

28. The Company has not altered the provisions of the memorandum with respect to name of the Company during theyear under scrutiny.

29. The Company has not altered the provisions of the memorandum with respect to share capital of the Companyduring the year under scrutiny.

30. The Company has not altered its articles of association during the financial year.

31. There was no prosecution initiated against or show cause notices received by the Company and no finesor penalties or any other punishment was imposed on the Company during the financial year, for offences underthe Act.

32. The Company has not received any money as security from its employees during the year under certification.

33. The Company has duly deposited both employee’s and employer’s contribution to Provident Fund with prescribedauthorities.

Signature:Name of the Company Secretary: R BalasubramaniamC.P. No.: 1340

Place: ChennaiDate: May 21, 2012

25


Annexure A

Registers as maintained by the Company

1. Register of charges under section 143 of the Act.

2. Register of Members under section 150 of the Act.

3. Register of Contracts under section 301 of the Act

4. Register of Directors under section 303 of the Act.

5. Register of Directors’ Shareholding under section 307 of the Act

6. Register of Share Transfers/ renewed and duplicate share certificates.

Annexure B

Forms and Returns as filed by the Company with the Registrar of Companies, Regional Director, CentralGovernment or other authorities during the financial year ended on 31st March, 2012: -

Sl Form No. Date of Section PurposeNo. Filling

1. E-Form 8 20-Jul-2011 125-135 Modification of Charge

2. E-Form 8 21-Jul-2011

3. E-Form 23 19-Aug-2011 192 Registration of Resolution

4. E-Form 66 19-Aug-2011 383(A) Filing of Compliance Certificate for theFinancial year ended March 31, 2011

5. E-Form IEPF 1 09-Sep-2011 Investor Transfered of unclaimed dividendseducation and to investor education and

protection Protection FundRules

6. E-Form 20 B 17-Sep-2011 159 Annual return for the year endedMarch 31, 2011

7. E-Form 23AC 11-Nov-2011 220 Balace Sheet as on March 31, 2011XBRL

8. E-Form 23 ACA 11-Nov-2011 220 Profit & Loss a/c for the year endedXBRL March 31, 2011

9. E-Form 8 24-Feb-2012 125-135 Modification of Charge

Signature:

Name of the Company Secretary: R Balasubramaniam

C.P. No.1340

Place: ChennaiDate: May 21,2012

26


AUDITORS’ REPORT

The Members,Kar Mobiles Limited

We have audited the attached Balance Sheet ofKar Mobiles LimitedKar Mobiles LimitedKar Mobiles LimitedKar Mobiles LimitedKar Mobiles Limited as at 31st March 2012, the Profitand Loss Account for the year ended on that date andthe Cash Flow Statement for the year ended on that dateannexed thereto. These financial statements are theresponsibility of the company’s management. Ourresponsibility is to express an opinion on thesefinancial statements based on our audit.

We conducted our audit in accordance with auditingstandards generally accepted in India. These Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material misstatement. An auditincludes, examining on a test basis, evidencesupporting the amounts and disclosures in the financialstatements. An audit also includes assessing theaccounting principles used and significant estimatesmade by management as well as evaluating the overallfinancial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.

I. As required by the Companies (Auditor’s Report)Order, 2003 issued by the Central Government ofIndia in terms of Section 227 (4A) of theCompanies Act, 1956, we enclose in theAnnexure, a statement on the matters specified inParagraphs 4 and 5 of the said Order;

II. Further to our comments in the Annexure referredto above, we report that:

i. We have obtained all the information andexplanations, which to the best of ourknowledge and belief were necessary for thepurposes of our audit;

ii. In our opinion, proper books of account asrequired by law have been kept by thecompany so far as appears from ourexamination of those books;

iii. The Balance Sheet, Profit and Loss Accountand Cash Flow Statement dealt with by thisreport are in agreement with the books ofaccount;

iv. In our opinion, the Balance Sheet, Profit andLoss Account and Cash Flow Statementdealt with by this report comply with theAccounting Standards referred to in sub-section (3C) of Section 211 of theCompanies Act, 1956;

v. On the basis of written representationsreceived from the directors and taken onrecord by the Board of Directors, we reportthat none of the directors of the company aredisqualified as on 31st March 2012, frombeing appointed as a director in terms ofclause (g) of sub-section (1) of Section 274of the Companies Act, 1956;

vi. In our opinion and to the best of ourinformation and according to theexplanations given to us, the said accountsread together with the significant accountingpolicies and notes on accounts attachedthereto, give the information required by theCompanies Act, 1956, in the manner sorequired and give a true and fair view inconformity with the accounting principlesgenerally accepted in India:

a. in the case of the Balance Sheet, of thestate of affairs of the company as at31st March 2012;

b. in the case of the Profit and LossAccount, of the profit for the yearended on that date; and

c. in the case of the Cash Flow statement,of the cash flow of the company for theyear ended on that date.

Place : Chennai

For VARMA & VARMAChartered Accountants

FRN.004532S

CHERIAN K BABYPartner

Date : May 21, 2012 M.No.16043

27


ANNEXURE REFERRED TO IN PARAGRAPH I OF OUR AUDIT REPORT OFEVEN DATE TO THE MEMBERS OF KAR MOBILES LIMITED ON THEACCOUNTS FOR THE YEAR ENDED MARCH 31, 2012

1. (a) The Company is maintaining proper records showing full particulars, including quantitativedetails and situation of fixed assets.

(b) We are informed that most of the fixed assets of the company are being physically verified bythe management based on the fixed assets verification programme laid down by the managementof the company which, in our opinion is reasonable having regard to the size of the companyand the nature of assets and discrepancies noticed on such verification, which are not materialhave been dealt within the accounts.

(c) The company has not disposed off substantial part of fixed assets during the year.

2. (a) We are informed that the inventory of raw materials, stores and spares in the custody of thecompany are physically verified by the management on a continuing basis as per a programmeof perpetual inventory and inventories of other items in custody have been physically verifiedat the year-end, the frequency of which, in our opinion is reasonable, having regard to the sizeof the Company and the nature of its business;

(b) In our opinion and according to the explanations given to us, the procedures of physicalverification of inventory followed by the management are fairly reasonable and adequate inrelation to the size of the Company and the nature of its business;

(c) The Company is maintaining proper records of inventory and as informed to us, discrepanciesof material nature noticed on physical verification, by the management, have been adequatelyadjusted in the books of account.

3. (a) The Company has not granted any loans, secured or unsecured to companies, firms or otherparties covered in the register maintained under Section 301 of the Companies Act, 1956.

(b) The Company has not taken any loans, secured or unsecured from companies, firms or otherparties covered in the register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there are fairly adequateinternal control procedures commensurate with the size of the Company and nature of its businessfor the purchase of inventory and fixed assets and for the sale of goods. We have not noted anycontinuing failure to correct major weaknesses in internal control system.

5. According to the information and explanations given to us, all transactions which require to beentered in a register maintained pursuant to Section 301 of the Companies Act, 1956 have been soentered. Where each such transactions is in excess of Rs.5 lakhs in respect of any party, they havebeen made at cost/ negotiated prices and they either compare favourably with market prices or thereare no comparable prices.

6. The Company has not accepted any deposits from the public during the year and there are no depositsoutstanding as at the beginning and end of the year. Hence, the compliance of provisions of Sections58A and 58AA of the Companies Act, 1956 is not applicable.

7. In our opinion, the company has an adequate internal audit system commensurate with the size ofthe Company and the nature of its business.

8. The Company is in the process of updating its cost records in respect of the products of the Companyand hence, we are unable to comment whether adequate records as contemplated under CostAccounting Record Rules, 2011 have been maintained.

28


9. (a) According to the information and explanations given to us and as per our verification of therecords of the Company, the Company has been fairly regular in depositing undisputed statutorydues including Provident fund, Employee’s State Insurance, Income Tax, Sales Tax, WealthTax, Custom Duty, Excise Duty, Cess, Investor Education and Protection Fund and other statutorydues with the appropriate authorities during the year to the extent applicable. There are noarrears of undisputed statutory dues of a material nature outstanding for a period of more thansix months from the date on which they became payable.

(b) According to the information and explanations given to us and as per our verification of therecords of the Company, there are no disputed amounts of tax/ duty that have not been depositedwith appropriate authorities as at 31st March 2012 except for the following.

Name of Nature of Amount Period to Forum wherethe statute dues which the dispute is

amount relates pending

Finance Act, 1994 Service tax 287,778 2004-05 Customs Excise andService Tax

Appellate Tribunal

Finance Act, 1994 Service tax 479,115 2008-09 Assistant Commissioner –Central Excise

Finance Act, 1994 Service tax 680,332 2009-10 Commissioner ofCentral Excise (Appeals)

Finance Act, 1994 Service tax 227,000 2009-10 Assistant Commissioner –Central Excise

Finance Act, 1994 Service tax 154,940 2009-10 Commissioner ofCentral Excise (Appeals)

Customs Act, 1962 Customs Duty 32,319 2010-11 Dy.Commissionerof Customs

10. There are no accumulated losses at the end of the financial year. The Company has also not incurredcash losses during the year and in the immediately preceding financial year.

11. According to the information and explanations given to us and as per our verification of the recordsof the company, the company has not defaulted in repayment of dues to the financial institutionsand banks.

12. The Company has not granted any loans or advances on the basis of security by way of pledge ofshares, debentures and other securities.

13. Since the Company is not a chit fund/nidhi/mutual benefit fund/society, the related reportingrequirements are not applicable.

14. Since the Company is not dealing or trading in shares, securities, debentures or other investments,the related reporting requirements are not applicable.

29


15. According to the information and explanations given to us and as per the verification of the recordsof the Company, there are no guarantees given by the company for loans taken by others from banksor financial institutions.

16. According to the information and explanations given to us and as per the verification of the recordsof the Company, the term loans obtained and to the extent utilized during the year were applied forthe purpose for which such loans were obtained and the remaining funds pending utilization wereplaced in bank accounts.

17. According to the information and explanations given to us and as per our verification of the recordsof the Company and on an overall basis, the Company has not utilized funds raised on short-termbasis for long term purposes.

18. The Company has not made any preferential allotment of shares to parties and companies coveredin the Register maintained under Section 301 of the Act.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money by public issues during the year.

21. According to the information and explanations given to us and as per our verification of the recordsof the Company, no fraud either on or by the Company has been noticed or reported during the year.

Place : Chennai


FRN.004532S

CHERIAN K BABY Partner

Date : May 21, 2012 M.No.16043

30


BALANCE SHEET AS AT 31ST MARCH

Note 2012 2011Particulars No.

I. EQUITY AND LIABILITIES

(1) Shareholders' Funds(a) Share Capital 1 2.24 2.24(b) Reserves and Surplus 2 26.54 23.57

(2) Non-Current Liabilities 3(a) Long term borrowings 15.45 8.59(b) Deferred Tax Liabilities (Net) 0.87 (0.17)(c) Long term provisions 4.95 6.38

(3) Current Liabilities 4(a) Short-term borrowings 14.17 8.25(b) Trade payables 20.90 13.00(c) Other current liabilities 4.69 4.70(d) Short-term provisions 2.23 1.24

TOTAL 92.04 67.80

II. ASSETS

(1) Non-current assets(a) Fixed assets 5

(i) Tangible assets 33.11 20.61(ii) Intangible assets 0.05 -(iii) Capital work-in-progress 0.55 4.42

(b) Non current investments 6 - 0.00(c) Long term loans and advances 7 1.75 1.59

(2) Current assets(a) Current investments 8 0.00 -(b) Inventories 9 16.46 11.23(c) Trade receivables 10 28.63 20.37(d) Cash and cash equivalents 11 4.29 4.47(e) Short-term loans and advances 12 2.64 1.86(f) Other current assets 13 4.56 3.25

TOTAL 92.04 67.80

Significant Accounting Policies and Other Notes to Accounts 20

For and on behalf of the Board As per our report of even date attached

L GaneshChairman For VARMA & VARMA

Chartered AccountantsFRN.004532S

L Lakshman S Krishnamurthy CHERIAN K BABYDirector President PartnerChennai : May 21, 2012 M.No.16043

Chennai : May 21, 2012

(Rs. in Crores)

31


STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH

Note 2012 2011Particulars No.

I. REVENUE FROM OPERATIONSRevenue from Operations 14 126.08 101.90Less: Excise duty 7.27 6.04Total Revenue from Operations 118.81 95.86

II. Other Income 15 0.77 0.08

III. TOTAL R EVENUE 119.58 95.94

IV. EXPENSESCost of materials consumed 52.51 40.12Purchase of Stock-in-Trade 0.39 0.34Changes in inventories of finished goods, work-in-progressand Stock-in-Trade 16 (0.42) (1.07)Employee benefit expense 17 25.40 24.84Finance Costs 18 1.90 0.82Depreciation and amortization expense 5 2.72 2.02Other expenses 19 30.25 24.09

TOTAL EXPENSES 112.75 91.16

V. Profit before exceptional and extraordinary itemsand tax (III - IV) 6.83 4.78

VI. Exceptional Items:- Gain on sale of surplus land 0.85 -

VII. Profit before extraordinary items and tax (V - VI) 7.68 4.78

VIII.Extraordinary Items - -

IX. Profit before tax (VII - VIII) 7.68 4.78

X. Tax expense:(1) Current tax 1.41 1.50(2) Deferred tax 1.05 0.14

XI. Profit (Loss) for the year (IX - X) 5.22 3.14

XII. Earnings per equity share:(1) Basic 23.32 13.99(2) Diluted 23.32 13.99

Significant Accounting Policies and Other Notes to Accounts 20


L GaneshChairman For VARMA & VARMA

Chartered AccountantsFRN.004532S

L Lakshman S Krishnamurthy CHERIAN K BABYDirector President PartnerPlace : Chennai M.No.16043Date : May 21, 2012 Place : Chennai

Date : May 21, 2012

(Rs. in Crores)

32


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH

Particulars 2012 2011

A CASH FLOWS FROM OPERATING ACTIVITIES

Net profit before taxation and extraordinary items 7.68 4.78

Adjustments for:

Depreciation and amortization expenses 2.72 2.02

Finance Costs 1.90 0.82

Loss on sale of fixed assets 0.09 0.08

Provision for Obsolete Assets 0.14 0.05

Income from investments (0.00) (0.00)

Interest received (0.04) (0.02)

Gain on sale of fixed assets (0.88) (0.04)

Exchange variation on PCFC Loans and Forward contracts 0.11 (0.39)

Hedging reserve account (0.03) 0.03

OPERATING PROFIT BEFORE THE CHANGES INWORKING CAPITAL 11.69 7.33

(Increase)/ Decrease in Inventories (5.24) (3.05)

(Increase)/ Decrease in Trade Receivables (8.26) (4.00)

(Increase)/ Decrease in Long term Loans and Advances (0.16) (0.01)

(Increase)/ Decrease in Short-term Loans and Advances (0.74) 0.18

(Increase)/ Decrease in Other Current Assets (1.31) (1.49)

Increase/ (Decrease) in Trade Payables 7.90 3.65

Increase/ (Decrease) in Other Current Liabilities (0.04) (0.04)

Increase/ (Decrease) in Long term Provisions (1.42) 0.68

Increase/ (Decrease) in Short term Provisions 0.20 0.10

CASH GENERATED FROM OPERATIONS 2.62 3.35

Income Tax (Net of refund) (1.31) (1.50)

NET CASH GENERATED FROM OPERATING ACTIVITIES - (A) 1.31 1.85

B CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (11.72) (7.60)

Income from investments 0.00 0.00

Interest received 0.04 (0.00)

Proceeds on sale of fixed assets 0.96 0.09

NET CASH USED IN INVESTING ACTIVITIES - (B) (10.72) (7.51)

(Rs. in Crores)

33


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH


C CASH FLOWS FROM FINANCING ACTIVITIES

(Repayment)/ Proceeds from long term borrowings 6.86 5.87(Repayment)/ Proceeds from short term borrowings 5.92 5.62Dividend and Dividend Tax Paid (1.56) (1.43)Finance Costs (1.87) (0.72)Exchange variation on PCFC Loans and Forward contracts (0.11) 0.39

NET CASH (USED)/ GENERATED FROM FINANCINGACTIVITIES - (C) 9.24 9.73

NET CASH FLOWS DURING THE YEAR (A+B+C) (0.17) 4.07

Opening balance of cash and cash equivalents 4.47 0.40Closing balance of cash and cash equivalents 4.29 4.47


L GaneshChairman

L Lakshman S Krishnamurthy CHERIAN K BABYDirector President PartnerPlace :ChennaiDate : May 21, 2012


FRN.004532S

M.No.16043 Place : Chennai

Date : May 21, 2012

(Rs. in Crores)

34


NOTES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH


1 SHAREHOLDER'S FUNDS

Share Capital

1.1 Equity Share Capital

1.1.1 Authorised Equity Share Capital:-23,50,000 Shares (23,50,000 Shares) of Rs.10/- each 2.35 2.35

1.1.2 Issued, Subscribed and Fully Paid Up:

22,40,000 Shares (22,40,000 Shares) of Rs.10/- each 2.24 2.24

1.1.3 Number of Shares held by Holding Company - -

1.1.4 Number of Equity Shares outstanding as at the beginning ofthe period 0.22 0.22

Number of Equity Shares outstanding as at the end ofthe period 0.22 0.22

Change in the number of Equity Shares Outstanding NIL NIL

1.1.5 Shares in the company held by each shareholder holdingmore than 5 per cent shares

Rane Holdings Limited-884369 equity shares(838660 equity shares) 0.08 0.08

Gagandeep Credit Capital Private Limited117100 equity shares( NIL) 0.01 -

1.2 13.50% Cumulative Redeemable Preference Share Capital

1.2.1 Authorised 13.50 % Cumulative Redeemable Preference ShareCapital 1,50,000 Shares (1,50,000 Shares) of Rs. 10/- each 0.15 0.15

1.3 Notes on Share Capital

1.3.1 The Company has not issued any securities convertible into equity/ preference shares.

1.3.2 During any of the last five years from year ended 31st March, 2007:

No shares were allotted as fully paid up pursuant to contract(s) without payment being receivedin cash.

No shares were allotted as fully paid up by way of bonus shares.

No shares were bought back.

3.1.3 Each holder of equity shares is entitled to one vote per share.

3.1.4 In the event of liquidation of the company, the holders of equity shares will be entitled to receiveremaining assets of the company, after distribution of all preferential amounts. The distribution willbe in proportion to number of equity shares held by the shareholders.

(Rs. in Crores)

35



2 RESERVES & SURPLUS

Balance BalanceDescription as at Additions Deductions as at

31.03.2011 31.03.2012

2.1 Reserves

Preference Share Redemption Reserve 0.10 - - 0.10

Investment Subsidy from Government ofKarnataka for Tumkur Unit 0.15 - - 0.15

Grant Received from Industrial Credit andInvestment Corporation Productivity Fund 0.04 - - 0.04

Hedge Reserve Account 0.03 - 0.03 -

General Reserve 21.88 2.50 - 24.38

22.20 24.67

2.2 Surplus

Opening Surplus i.e., Balance in Statementof Profit and Loss 1.03 1.37

Add:-

Profit for the period as per XI of Statementof Profit and Loss 3.14 5.22

Less:-

Interim Dividend @ (40%) 50% 0.90 1.12

Final Dividend @ (10%) 35% 0.22 0.79

Tax on dividend 0.18 0.31

Transfer to General Reserve 1.50 2.50

Closing Surplus i.e., Balance in Statementof Profit and Loss 1.37 1.87

TOTAL RESERVES AND SURPLUS 23.57 26.54

(Rs. in Crores)

36


(Rs. in Crores)NOTES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH

3 NON CURRENT LIABILITIES 2012 2011

3.1 Long Term Borrowings

3.1.1 Secured

Foreign Currency Term Loans fromStandard Chartered Bank 6.45 8.59

Foreign Currency Term Loans from HSBC Bank 9.00 -

15.45 8.59

3.1.2 Notes on Long Term Borrowings

Term loans from banks are secured by first charge on paripassu basis on all immoveable and moveable fixed assets,present and future, of the company's Peenya Unit and TumkurUnit and second charge on pari passu basis on all currentassets, present and future of the Company.

None of the above loans have been guaranteed by anyDirectors or others except for counter guarantee given bythe Company.

Term loan from banks are repayable in quarterly installmentsover the agreed repayment period.

There has been no continuing default as on Balance Sheetdate in repayment of loans and interest.

Also refer Note No.20. 6 (b)

3.2 Deferred Tax Liabilities/ (Assets) (Net)

Assets

In respect of timing difference of expenses (1.85) (2.45)

In respect of timing difference of doubtful debts (0.04) (0.02)

In respect of timing difference of deferredrevenue expenses (0.22) (0.15)

(2.11) (2.62)

LiabilityIn respect of timing differences on depreciation 2.98 2.45

2.98 2.45

Net Deferred Tax asset 0.87 (0.17)

3.3 Long Term ProvisionsProvision for employee benefits:

Provision for Gratuity 3.52 3.58

Provision for Leave Encashment 1.43 1.82

Provisions for Claims - 0.98

4.95 6.38

TOTAL NON CURRENT LIABILITIES 21.27 14.80

37



4 CURRENT LIABILITIES 2012 2011

4.1 Short Term Borrowings

4.1.1 Secured

Cash credit/ Packing credit from State Bank of India 14.17 8.25

Short-term borrowings from State Bank of India is securedby hypothecation of stock of raw materials, consumables,spares, semi finished goods and book debts wherever located.Further secured by second charge on land and buildings andplant and machineries of the company's Peenya and TumkurUnits.

None of the above loans have been guaranteed by anyDirectors or others except for counter guarantee given by theCompany.

4.2 Trade Payables 20.90 13.00

4.3 Other Current Liabilities

Current maturities of long term debt 2.15 2.84

Interest accrued but not due on borrowings 0.16 0.13

Employees benefits payable 1.69 1.08

Unclaimed dividends 0.19 0.18

Withholding Taxes payable 0.20 0.31

Due to Chairman 0.24 0.15

Provision for Forward contract 0.05 -

Deposit from Dealers 0.01 0.01

4.69 4.70

4.4 Short Term Provisions

Provision for employee benefits :

Provision for Gratuity 0.38 0.37

Provision for Leave Encashment 0.29 0.10

Provision for Taxation (Net of Advance IncomeTax and TDS) 0.65 0.51

Proposed Dividend on Equity Shares 0.78 0.22

Tax on Proposed Equity Dividend 0.13 0.04

2.23 1.24

TOTAL CURRENT LIABILITIES 41.99 27.19

38


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39



6 NON CURRENT INVESTMENTS 2012 2011

6.1 Other Investments

Investment in Indira Vikas Patra/NSC - 0.00

Less:- Provision for Dimunition in the value of investments - -

TOTAL NON CURRENT INVESTMENTS - 0.00

7 LONG TERM LOANS AND ADVANCES

7.1 Capital Advances

Unsecured, Considered good 0.61 1.21

7.2 Security Deposits

Unsecured, considered good

Electricity Deposits 0.35 0.35

Other Deposits 0.04 0.03

7.3 Loans and advances to related parties

Unsecured, considered good 0.75 -

TOTAL LONG TERM LOANS AND ADVANCES 1.75 1.59

8 CURRENT INVESTMENTS

8.1 Current Investments

Investment in Indira Vikas Patra/ NSC 0.00 -

Less:- Provision for Dimunition in the value of investments - -

NET CURRENT INVESTMENTS 0.00 -

9 INVENTORIES(As taken, valued and certified by the President)

9.1 Valued at Lower of Cost or Net Realisable value

Stores and Spares 1.43 1.19

Stores and Spares in transit 0.14 0.20

Raw Materials 7.65 3.94

Raw Material Stock in transit 1.96 1.14

Finished Goods 1.67 1.25

Finished Goods in transit 0.26 0.43

Work in Progress 3.30 3.05

Stock in Trade 0.00 0.00

Others 0.05 0.03

TOTAL INVENTORIES 16.46 11.23

(Rs. in Crores)

40



10 TRADE RECEIVABLES 2012 2011

10.1 Outstanding for a period more than six months

UnsecuredConsidered doubtful 0.09 0.05Less:- Provision for doubtful debts 0.09 0.05

- -

10.2 Other Trade ReceivablesUnsecured

Considered good 28.63 20.37Considered doubtful 0.02 0.01

28.65 20.38

Less:- Provision for doubtful debts 0.02 0.01

TOTAL TRADE RECEIVABLES 28.63 20.37

11 CASH AND BANK BALANCES

11.1 Cash and Cash equivalents *Cash on hand* 0.03 0.05

11.2 Balances with banks*In Current accounts 0.17 0.14In Fixed Deposit account 3.90 4.10Unpaid dividend accounts 0.19 0.18

TOTAL CASH AND BANK BALANCES 4.29 4.47

*Repatriation restrictions in respect of Cash and Bank Balances - NIL

12 SHORT TERM LOANS AND ADVANCES

12.1 OthersUnsecured Considered good

Advances for supply of goods and rendering of services 0.53 0.08Advances to be recoverable in cash or kind 0.09 0.09Advance Income Tax and TDS (Net of Provisions) 0.98 0.95Balance with excise department 0.77 0.57Prepaid expenses 0.27 0.17

TOTAL SHORT TERM LOANS AND ADVANCES 2.64 1.86

13 OTHER CURRENT ASSETSDerivative Assets - 0.24Deferred Premium on forward contract 0.05 -Claims receivable 0.05 0.06Export Incentive receivable 1.88 1.75Rebate on Excise duty on Export 2.56 1.18Interest accrued on investment and deposit 0.02 0.02

TOTAL OTHER CURRENT ASSETS 4.56 3.25

41


NOTES FORMING PART OF PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 31ST MARCH

14 REVENUE FROM OPERATIONS 2012 2011

Sale of Manufactured Products 121.91 97.60Sale of Traded Products 0.77 0.59

122.68 98.19

Other Operating Revenues:Sale of Scrap 1.56 1.51Sale of Materials 0.17 0.16Export Incentives 1.46 1.88Other Receipts 0.21 0.16

3.40 3.71

TOTAL REVENUE FROM OPERATIONS 126.08 101.90

15 OTHER INCOME

Income from Investments 0.00 0.00Interest received 0.04 0.02Insurance Claim received 0.09 -Interest on income tax refund - 0.02Gain on sale of assets 0.03 0.04Sundry Balances written back 0.61 -Other non-operating income - 0.00

TOTAL OTHER INCOME 0.77 0.08

16 CHANGES IN INVENTORIES OF FINISHED GOODS,WORK-IN-PROGRESS AND STOCK-IN-TRADE

Opening Stock:Finished Goods 1.68 1.52Work-in-progress 3.05 2.13Stock-in-trade 0.00 0.01Scrap 0.03 0.05

4.76 3.71

Add/(Less): Excise Duty on Stock 0.10 (0.02)

Less : Closing Stock:

Finished Goods 1.93 1.68Work-in-progress 3.30 3.05Stock-in-trade 0.00 0.00Scrap 0.05 0.03

5.28 4.76

TOTAL CHANGES IN INVENTORIES OF FINISHEDGOODS, WORK-IN-PROGRESS AND STOCK-IN-TRADE (0.42) (1.07)

(Rs. in Crores)

42


(Rs. in Crores)NOTES FORMING PART OF PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 31ST MARCH

17 EMPLOYEE BENEFITS 2012 2011

Salaries and Wages 19.01 19.00Contribution to Provident and other funds 2.09 2.53Staff welfare expenses 3.79 3.22VRS Expenses 0.51 0.09

TOTAL EMPLOYEE BENEFITS 25.40 24.84

18 FINANCE COSTSInterest expense 1.77 0.60Interest on Income Tax 0.00 -Other Interest 0.03 0.00Other borrowing costs 0.06 0.10Net gain/loss on foreign currency transactions and translation 0.04 0.12

TOTAL FINANCE COSTS 1.90 0.82

19 OTHER EXPENSESConsumption of Stores and Spare parts 6.51 5.61Freight Inwards 1.11 0.76Job charges 1.88 1.35Power and fuel 4.37 4.02Rent 0.04 0.00Repairs and Maintenance

Buildings 0.73 0.72Machinery 3.55 3.42Others 0.04 0.03

Watch and Ward Expenses 0.34 0.31Insurance 0.38 0.29Rates and taxes 0.44 0.28Postage, Telegram Expenses 0.22 0.22Printing and Stationery 0.30 0.24Travelling and Conveyance Expenses 1.54 1.11Information Systems expenses 0.70 0.49Packing and Forwarding Charges 3.78 2.65Advertisement and Sales Promotion 0.96 0.78Sales Commission and Discount 1.11 1.15Professional Charges 0.96 0.74Bank and Financial Charges 0.30 0.24Directors' Sitting Fees 0.09 0.05Auditors' Remuneration - See Note 19.1 below 0.08 0.07Net Exchange Loss - Other than considered under Finance Costs 0.31 (0.69)General Charges 0.23 0.25Loss on Sale / Discarding of Fixed Assets 0.09 0.08Provision for Obsolete Assets 0.14 0.05Provision for doubtful deposits - (0.00)Provision for Doubtful debts 0.05 (0.13)

TOTAL OTHER EXPENSES 30.25 24.09

43


(Rs. in Crores)NOTES FORMING PART OF PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 31ST MARCH

19.1 Auditors’ Remuneration 2012 2011

As Auditor 0.04 0.04

For Tax Audit 0.01 0.01

For Limited Review 0.01 0.01

For Taxation matters 0.01 0.01

For Certification Matters 0.01 0.00

For Reimbursement of Expenses - 0.00

Total 0.08 0.07

44


NOTE - 20SIGNIFICANT ACCOUNTING POLICIES & NOTES TO ACCOUNTS

20.1 SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention, in accordance with the provisionsof the Companies Act, 1956 and the Companies (Accounting Standards) Rules, 2006 (Indian GAAP) asadopted consistently by the Company. All income and expenditure having a material bearing on financialstatements are recognised on accrual basis.

These financial statements are prepared under the historical cost convention on accrual basis as mentionedabove except for certain financial instruments which are measured at fair values, in accordance with theAccounting Standard 30 issued by the Institute of Chartered Accountants of India. Accounting policieshave been consistently applied except where a newly issued accounting standard is initially adopted or arevision to an existing standard requires a change in the accounting policy hither to in use.

b) Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires that the managementmakes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure ofcontingent liabilities as at the date of financial statements and the reported amounts of revenue andexpense during the reported period. Although such estimates were made on a reasonable and prudentbasis taking into account all available information, actual results could differ from estimates and suchdifferences are recognised in the year in which the results are ascertained.

c) Fixed Assets

Tangible :

Fixed Assets are valued at cost, namely, cost of acquisition and other incidental expenses directly relatedto their installation/erection less accumulated depreciation and impairment, if any. Capitalwork-in-progress comprises of the cost of fixed assets that are not yet ready for their intended use at thereporting date.

Intangible :

Intangible assets are carried at cost less amortization and impairment if any, where it is probable thatfuture economic benefits will arise for an amount not less than the carrying value.

d) Inventories

Inventories are valued at lower of cost or estimated net realisable value. Material cost is ascertained onweighted average basis and conversion and other costs incurred for bringing the inventories to theirpresent location and condition allocated to the extent required.

e) Customs Duty and Excise Duty

(i) Excise Duty in respect of goods sold is reduced from sales.

(ii) Customs duty and Excise Duty applicable on goods under clearance have been computed andprovided for by adding the same to the value of relative inventories.

(iii) The net effect of Excise Duty on opening and closing stock of finished goods and other adjustmentsrelating to Excise Duty are disclosed separately in the Profit & Loss Account.

45


f) Capital Reserve

Investment subsidy received from the Government and Grant received from Industrial Credit and InvestmentCorporation of India - Productivity Fund are considered as a part of the Capital Reserve.

g) Foreign Exchange Transactions

Transactions in foreign currency are accounted at the exchange rates prevailing at the time of enteringinto the transaction or at the contracted rates.

Premium or discount on forward exchange contracts which are not intended for trading or speculationpurpose and is to establish the amount of reporting currency required at the settlement date of the transactionis recognised in the Profit and loss account over the period of contracts. The exchange differences on thecontract are recognised in the year in which the exchange rates change.

Exchange differences arising from settlement or restatement of foreign currency loans relating to fixedassets/capital work-in-progress to the extent regarded as an adjustment to interest cost are treated asborrowing cost net of corresponding difference arising from restatement of the forward contract whereapplicable.

Other exchange differences arising from settlement or restatement of long term monetary items intoreporting currency are adjusted in the carrying cost of related assets / Foreign Currency Monetary ItemTranslation Difference Account and those relating to short term monetary items are adjusted in profit andloss account.

h) Derivative Instruments and Hedge Accounting

The Company is exposed to foreign currency fluctuations on foreign currency assets, liabilities andforecasted cash flows denominated in foreign currency. It uses foreign currency derivative contracts tohedge its risks associated with foreign currency fluctuations and enters into derivative contracts, wherethe counterparty is a bank. The use of foreign currency derivative contracts is governed by the Company’spolicies approved by the board of directors. It does not use derivative financial instruments for speculativepurposes.

The Company has adopted Accounting Standard 30 (AS 30) “Financial Instruments: Recognition andMeasurement”, and accordingly, the changes in the fair values of derivative contracts designated as cashflow hedges are recognised directly in ‘Hedging Reserve Account’ which is part of shareholders’ fundsand reclassified into the profit and loss account upon the occurrence of the hedged transactions. Thechanges in fair value relating to the ineffective portion of the cash flow hedge derivative contracts, if any,are recognised in the profit and loss account as they arise.

i) Depreciation and Amortisation

Depreciation on tangible fixed assets is charged on Straight Line Method at the rates and in the mannerspecified in Schedule XIV of the Companies Act, 1956 except that depreciation on certain fixed assets isprovided on straight-line method over the useful lives of assets estimated by the management. Depreciationfor the assets purchased / sold during the period is proportionately charged. Individual low cost assets(acquired for Rs.10,000/- or less) are depreciated over a period of one year. During the year the managementhas estimated the useful lives of some of the fixed assets at less number of years than that are contemplatedin Schedule XIV of the Companies Act, 1956.

46


The revised expected lives are as follows:

Office Equipments - 3 Years

Computers - 4 Years

Furniture and Fixtures - 5 Years

Vehicles - 5 Years

Licenses (Major Software) - 3 Years

Depreciation methods, useful lives and residual values are reviewed at each reporting date.

Intangible assets are amortised over their respective individual estimated period for which future economicbenefits will arise or ten years whichever is lower. Software licenses are amortised over a period of threeyears.

j) Employee Benefits

Short-term Employee Benefits

a. The amounts paid/payable on account of short term employee benefits, comprising largely of salaries& wages, short term compensated absences and annual bonus is valued on an undiscounted basisand charged to the Profit and Loss account for the year.

b. Defined Contribution Plans

The company has defined contribution plans for its employees comprising of Provident Fund,Superannuation Fund and Employee’s State Insurance. The contributions paid/payable to theseplans during the year are charged to the Profit and Loss Account for the year. The Company has noother obligation in this regard.

c. Defined Benefit Plans

i. Gratuity

The company’s Gratuity scheme is administered through the Employee’s Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India. The net present value of theobligation for gratuity benefits as determined on actuarial valuation, conducted annually usingthe projected unit credit method, as adjusted for unrecognized past services cost, if any and asreduced by the fair value of plan assets, is recognised in the accounts. Actuarial gains andlosses are recognised in full in the Profit and Loss account for the period in which they occur.

ii. Compensated Absences (Earned Leave Encashment)

The Company has a scheme for compensated absences for employees, the liability other thanfor short term compensated absences is determined on the basis of actuarial valuation carriedout at the end of the year, using projected unit credit method. Actuarial gains and losses arerecognised in full in the Profit and Loss account for the period in which they occur.

k) Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets require asubstantial period of time are capitalized as part of the cost of the asset if they will result in futureeconomic benefit to the company. All other borrowing costs are charged to revenue.

47


l) Revenue Recognition

Sales : Sales are recognised on despatch of goods to customers except in respect of domestic originalequipment customers where it is recognised on delivery. Sales are net of sales tax, trade discount andreturns.

Export Incentives: Export incentives are recognised when there is certainty of realisation.

Interest: Interest income is recognised on time proportion basis taking into account the amount outstandingand the rate applicable.

m) Income Tax

Tax expense comprising current tax and deferred tax are recognised in the profit and loss account for theyear. Current tax is the amount of income tax determined to be payable in respect of taxable income ascomputed under tax laws.

Certain items of income and expenditure are not reported in tax returns and financial statements in thesame year. The net tax effect calculated at the current enacted tax rates of this timing difference as alsothat relating to carried forward unabsorbed depreciation and business loss as at the end of an accountingyear is reported as deferred income tax asset/liability. The effect on deferred tax assets and liabilities dueto change in such assets/liabilities as at the end of the previous accounting year and due to a change in taxrates are recognised in the income statement of the year.

n) Provisions and Contingencies

Provision for losses and contingencies arising as a result of a past event where the management considersit probable that a liability may be incurred are made on the basis of the best reliable estimates of theexpenditure required to settle the present obligation on the Balance Sheet date and are not discounted toits present value. Provisions are reviewed at each Balance Sheet date and adjusted to reflect the currentbest estimate.

Contingent liabilities to the extent the management is aware, are disclosed by way of notes to the accounts.

o) Cash Flow Statement

Cash Flow statement has been prepared in accordance with the indirect method prescribed in AccountingStandard – 3 of Companies (Accounting Standards) Rules, 2006.

20.2 Contingent Liabilities not provided for:

Pariculars 31.03.2012 31.03.2011Rs. Rs.

Disputed Customs/ Excise/ Service Tax Demands 0.16 0.13

No provision has been made in these accounts for these disputed tax demands as the management isconfident that the matter will be ultimately decided in favour of the Company.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for

Pariculars 31.03.2012 31.03.2011Rs. Rs.

Estimated amount of contracts remaining to be executed on capital 3.44 4.53account and not provided for

(Rs. in Crores)

48


20.4 a) Remuneration of the Chairman :

Particulars 31.03.2012 31.03.2011

Commission @ 3% of the Net Profit as computed underSection 309 (5) of the Companies Act,1956 as approvedby AGM / Board of Directors 0.24 0.15

b) Computation of Net Profit under Section 198, 309 and 349 of the Companies Act, 1956 for ManagerialRemunerationNet Profit for the year as per Profit and Loss Account 7.68 4.78

Add / (less) :Remuneration paid/ provided to Chairman 0.24 0.15

VRS Written off 0.51 0.09

Directors’ Sitting Fees 0.09 0.04

Depreciation provided in the books 2.72 2.02

Profit on sale of land (0.85) 0.00

Provision for doubtful debts 0.05 (0.14)

Provision for doubtful deposits 0.00 0.00

Depreciation ascertained as per Section 350 (at the ratesspecified in Schedule XIV) (2.39) (2.02)

Net Profit as per Section 198, 309 and 349 of theCompanies Act, 1956 8.05 4.92

Maximum remuneration permissible to Chairman @ 3%of the net profits 0.24 0.15

20.5 Some of the Trade Receivables, Loans and Advances and Trade Payables shown in the Balance Sheet aresubject to confirmation/ reconciliation.

20.6 a) The Company has adopted Accounting Standard-30 (AS30) “Financial Instruments: Recognition andMeasurement” and designated all outstanding forward contracts as cash flow hedges. The changes in fairvalue of forward contracts designated as cash flow hedges to the extent they are relate to forecasttransactions that have occurred by the year end amounting to Rs.0.05 loss (PY – Rs 0.21 gain) arerecognised in the profit and loss account and included in Net Exchange Loss in Note No. 19 - OtherExpenses. In respect of these contracts which relate to forecast transactions pending to be undertaken,the changes in fair value of the forward contracts are recognised directly in Hedging Reserve Account inNote No. 2 – Reserves and Surplus, if proven effective.

The Company has the following outstanding derivative contracts, which have been designated as cashflow hedges as on 31.03.2012

Particulars 31.03.2012

Notional amount of forward Fair valuecontracts Gain/ (Loss)

Forward contractsUSD 9.63 (0.05)EURO 2.02 -

(Rs. in Crores)

49


b) In the previous year, the Company had availed an FCN(R) borrowing of USD 0.18 Crores towards thecapital investment at Plant-1 and Plant-2 from Hongkong and Shanghai Banking CorporationLimited(HSBC Bank). It had also entered into a back to back cross currency rate swap agreement withthe HSBC Bank, India for the repayment of its commitments against the said loan. Consequently, theexposure of the Company against the loan commitments is fixed in Indian Rupees and there is nopossibility of any exposure to the Company in this regard and hence no foreign exchange fluctuation hasbeen recognized on this transaction and corresponding changes in the fair value of the contracts havealso not been recognised.

20.7 Foreign Currency Exposure – Hedged and Not Hedged

31.03.2012 31.03.2011

Particulars Foreign Equivalent Foreign EquivalentCurrency Rs. Currency Rs.(in crores) (in crores)

a) Forward contracts to hedge currentand future payables

USD 0.05 2.76 0.07 2.84

b) Forward contracts to hedge highlyprobable forecast receivables

USD 0.19 9.58 0.19 8.44

EURO 0.03 2.01 0.04 2.24

c) Foreign exchange exposures hedgedby Derivative instruments (net) :

USD – Receivable 0.19 9.78 0.15 6.78

EURO – Receivable 0.02 1.12 0.03 1.97

USD – Payables 0.05 2.76 0.07 2.84

d) Foreign exchange exposures nothedged by Derivative instruments(net):

USD – Receivable 0.09 4.64 - -

GBP – Receivable 0.01 0.53 0.01 0.55

YEN – Payable - - 0.06 0.04

20.8 Borrowing costs (net) of Rs.0.38 including Rs.0.07 brought forward and included in capitalwork-in-progress, specifically incurred for Tumkur plant expansion has been capitalized along with therespective assets for which loan amount was utilized.

20.9 Due to the change in estimated life of some of the fixed assets, additional depreciation charged in theaccounts is Rs. 0.32 and consequently net profit for the year and WDV of fixed assets are lower by the sameamount.

(Rs. in Crores)

50


20.10 Employee Benefits

a. Details of the employee benefits are given below:

i) Defined Contribution Plans

During the year the following amounts have been recognised in the Profit and Loss Account onaccount of defined contribution plans.

Particulars 31.03.2012 31.03.2011

Employers contribution to Provident Fund 1.39 1.35

Employers contribution to Superannuation Fund 0.21 0.20

Employers contribution to Employee’s State Insurance 0.15 0.16

TOTAL 1.75 1.71

ii) Defined Benefit Plans

a. Gratuity- Funded Obligation

b. Compensated Absences - Unfunded Obligation

31.03.2012 31.03.2011

i Actuarial Assumptions Gratuity Compensated Gratuity Compensatedabsences absences

Discount Rate (per annum) 8% 8% 8% 8%

Expected return on plan assets 8% - 8% -

Salary escalation rate* 7% 7% 7% 7%

Expected average remaining lives of LIC (94-96) LIC (94-96) LIC (94-96) LIC (94-96)working employees (years) ultimate ultimate ultimate ultimate

mortality table mortality table mortality table mortality table

*The assumption of future salary increases takes into account of inflation, seniority, promotions and otherrelevant factors such as supply and demand in the employment market.

31.03.2012 31.03.2011

ii Reconciliation of present value of obligation Funded Unfunded Funded UnfundedScheme Scheme Scheme Scheme

Present value of obligation at beginning of the year 8.84 1.92 8.07 1.58

Current Service Cost 0.45 0.60 0.61 0.67

Interest Cost 0.67 0.13 0.63 0.10

Actuarial (gain)/loss (0.40) (0.30) (0.02) 0.22

Benefits Paid (0.90) (0.63) (0.45) (0.65)

Present value of obligation at end of the year 8.66 1.72 8.84 1.92

(Rs. in Crores)

51


iii Reconciliation of fair value of plan assets 31.03.2012 31.03.2011Funded FundedScheme Scheme

Fair value of plan assets beginning of the year 4.88 4.54

Expected return on plan assets 0.37 0.36

Actuarial gain/(loss) 0.05 0.07

Contributions 0.37 0.37

Accretion to the fund on transfer of employee from group company - 0.01

Benefits paid (0.90) (0.47)

Assets distributed on settlement (if applicable) - -

Fair value of plan assets at end of the year 4.77 4.88

iv Net (Asset)/Liability recognised 31.03.2012 31.03.2011

in the Balance Sheet as at year end Funded Unfunded Funded UnfundedScheme Scheme Scheme Scheme

Present value of obligation at end of the year 8.66 1.72 8.84 1.92

Fair value of plan assets at end of the year 4.77 - 4.88 -

Net present value of unfunded obligationrecognised as (asset)/liability in the Balance Sheet 3.89 1.72 3.96 1.92

v (Income)/ Expense recognised in the 31.03.2012 31.03.2011

Profit and Loss Account Funded Unfunded Funded UnfundedScheme Scheme Scheme Scheme

Current Service Cost 0.45 0.60 0.61 0.67

Interest Cost 0.67 0.13 0.63 0.10

Expected return on plan assets (0.37) - (0.36) -

Actuarial (gain) /loss (0.45) (0.30) (0.09) 0.22

Accretion to the fund on transfer ofemployee from group company - - (0.01) -

Total (income)/ expense recognised inthe Profit and Loss Account for the year 0.30 0.43 0.77 0.99

Actual return on plan assets 0.42 0.43 -

The above disclosures are based on information certified by the independent actuary and also LICin the case of funded scheme and relied upon by the auditors.

(Rs. in Crores)

52

KAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITED.

20.11 Provision for current Income Tax liability is made on the basis of assessment / appellate ordersreceived / Company’s own estimates. Certain provisions made in earlier year have been continuedalthough the appeals have been disposed off in favour of the Company as the matter is disputed by thedepartment by filing an appeal before the Income Tax Appellate Tribunal (ITAT) where it is pending.The management does not expect any material additional liability to devolve on disposal of theseappeals. Also the reserves of the Company are adequate to meet any such liability.

20.12 In the opinion of the Management, Current Assets, Loans and Advances have the value at which theyare stated in the Balance Sheet if realised in the ordinary course of business.

20.13 As final settlement has been reached in respect of certain disputed labour claims, the excess provisionheld in respect of those claims based on certain disputed government orders has been reversed to theprofit and loss account of the current year.

Particulars 31.03.2012 31.03.2011

Opening balance 0.97 0.85

Additional Provision - 0.12

Amounts Utilised for settlement 0.36 -

Provision reversed 0.61 -

Closing Balance - 0.97

20.14 There are no amounts outstanding for more than 7 years to be deposited in the Investor Education andProtection Fund.

20.15 The Company has identified Micro and Small Enterprises as defined in the Micro, Small and MediumEnterprises Development Act, 2006. Particulars of these parties are as under:

Particulars 31.03.2012 31.03.2011

Principal amount outstanding (including overdue amount)at the beginning of the year 0.01 0.05

Interest amount outstanding at the beginning of the year - -

Interest (out of the above) paid during the year - -

Amount paid after the due date during the year 0.07 0.06

Interest paid on the amount paid after due date during the year - -

Overdue amount outstanding at the end of the year - -

Principal amount (except overdue amount) outstanding atthe end of the year - 0.01

Interest amount accrued and remaining unpaid at the endof the year - -

(Rs. in Crores)

53


20.16 Segment Reporting

Primary Segment (Business)The entire operation of the Company relates to only one segment viz. components for transportationIndustry.

Secondary Segment (Geographical)

Particulars 31.03.2012 31.03.2011

Revenue by Geographical Area:India 65.57 57.77Rest of the World 53.24 38.09

TOTAL 118.81 95.86

Segment Assets:India 15.93 10.44Rest of the World 12.69 9.93

TOTAL 28.62 20.37

All other assets and liabilities of the Company are located in India.

20.17 Related Party Disclosures

Sl. Name 31.03.2012 31.03.2011No.

A Company having significant influence:1 Rane Holdings Limited

(Has holding of shares in excess of 20% and have commondirectors)Transactions during the year with the above party:a. Services received (excluding service tax) 1.48 1.18b. Reimbursement of expenses incurred by the Company

on their behalf - 0.01c. Reimbursement of expenses incurred on behalf

of Company 0.16 -d. Balance outstanding at the year end [Dr / (Cr)] - -

2 Rane Engine Valve Limited(Has common key management personnel exercisingsignificant influence)Transactions During the year with the above party:a. Sale of materials (excluding duties and taxes) 0.16 0.08b. Sale of valves (excluding duties and taxes) - -c. Sale of fixed Assets - 0.04d. Purchase of fixed Assets 0.08 -e. Purchase of materials 0.14 0.27f. Repair expenditure - 0.15g. Job work expenditure 0.02 0.01h. Reimbursement of expenses incurred on behalf of Company - -i. Reimbursement of expenses incurred by the Company on

their behalf - -j. Balance outstanding at the year end [Dr./(Cr.)] 0.01 (0.02)

(Rs. in Crores)

54


Sl. Name 31.03.2012 31.03.2011No.

3 Rane Brake Lining Limited

(Has common key management personnel exercisingsignificant influence)

Transactions during the year with the above party :

a. Reimbursement of expenses incurred on behalf of Company 0.05 -

b. Balance outstanding at the year end [Dr./(Cr.)] - -

4 Rane Holding America Inc.



a. Service Fee 0.09 -

b. Balance outstanding at the year end [Dr./(Cr.)] (0.04) -

5 Rane Foundation



a. Donation paid 0.15 0.15

b. Interest free loan given by the Company 0.75 -

c. Balance outstanding at the year end [Dr./(Cr.)] 0.75 -

B Key Management Personnel :

L.Ganesh - Chairman

Sitting Fees 0.02 0.01

For details of remuneration paid refer note no. 20.4(a) & 20.4(b)

Remuneration 0.24 0.15

C Relatives of Key Management Personnel :

Director’s sitting fee 0.02 0.01

(Rs. in Crores)

55


20.18 Additional Information :

Particulars 31.03.2012 31.03.2011

Value Value

a) Raw Material consumed

i) Valve Steel Long Bars 47.23 36.29

ii) Valve Steel Cut bars 2.28 1.47

iii) Hard Facing Material 2.99 2.36

52.51 40.12

b) Value of Imports calculated on CIF basis

i) Raw Material 23.38 13.60

ii) Components and Spares 0.16 0.07

iii) Capital Goods 0.43 0.10

Particulars 31.03.2012 31.03.2011

Value Percentage Value Percentage

c) Value of raw materials, storesand spares consumed duringthe year

i) Raw Material

a) Imported 22.95 44% 14.34 36%

b) Indigenous 29.56 56% 25.78 64%

52.51 100% 40.12 100%

ii) Stores and spares(Including for repairs &maintenance)

a) Imported 0.12 1% 0.06 1%

b) Indigenous 9.94 99% 8.97 99%

10.06 100% 9.03 100%

(Rs. in Crores)

56


Particulars 31.03.2012 31.03.2011Value Value

d) Expenditure in foreign currency on account ofTravelling, Royalty, Know-how, Interest etc.

i) Travelling expenses 0.02 0.04

ii) Commission on sales 0.15 -

iii) Market survey expenses 0.09 -

iv) Fee for ECB loan processing - 0.01

e) Earnings In Foreign Exchange

Export of goods at FOB Value 51.62 37.29

20.19 The figures for the previous year have been regrouped wherever necessary to conform to current year’sclassification consequent to revision to Schedule VI to the Companies Act, 1956. Figures have alsobeen rounded off to crores of rupees in accordance therewith.

Signature to Notes 1 to 20

For and on behalf of the Board As per our report of even date attachedL Ganesh For VARMA & VARMAChairman Chartered Accountants

FRN. 004532S

L Lakshman S Krishnamurthy CHERIAN K BABYDirector President PartnerPlace : Chennai M.No.16043Date : May 21, 2012 Place : Chennai

Date : May 21, 2012

(Rs. in Crores)

57

KAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDKAR MOBILES LIMITEDBALANCE SHEET ABSTRACT AND COMPANY’S BUSINESS PROFILEAs per Schedule VI, Part - (IV) of the Companies Act, 1956

I. REGISTRATION DETAILS

Registration No. : 71646 71646State Code : 18 18Balance Sheet Date : 31.03.2012 31.03.2011

II. CAPITAL RAISED DURING THE YEAR Rs. Rs.

Public Issue : NIL NILRights Issue : NIL NILBonus Issue : NIL NILPrivate Placement : NIL NIL

III POSITION OF MOBILISATION AND Rs. Rs.DEPLOYMENT OF FUNDS

Total Liabilities : 92.04 67.80Total Assets : 92.04 67.80

SOURCE OF FUNDS

Paid-up Capital : 2.24 2.24Reserves and Surplus : 26.54 23.57Secured Loans : 31.77 19.68

APPLICATION OF FUNDS

Net Fixed Assets : 33.71 25.03Investments : 0.00 0.00Deferred Tax Asset (0.87) 0.17Net Current Assets : 14.59 13.99

IV. PERFORMANCE OF THE COMPANY

Turnover : 120.43 95.94Total Expenditure : 112.75 91.16Profit Before Tax : 7.68 4.78Profit After Tax : 5.22 3.14Earning Per Share (Rs.) [ Basic and Diluted ] : 23.32 13.99Dividend Rate (%) : 85 50

V. GENERAL NAMES OF PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY(AS PER MONETARY TERMS)

Item Code Product Description:84099111 Valves for I/C Engines

For and on behalf of the Board As per our report of even date attachedL Ganesh For VARMA & VARMAChairman Chartered Accountants

FRN. 004532S

L Lakshman S Krishnamurth CHERIAN K BABYDirector President PartnerPlace : Chennai M.No.16043Date : May 21, 2012 Place : Chennai

Date : May 21, 2012

(Rs. in Crores)

kar mobiles limited - bseindia.com

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