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DIRECTORS’ REPORT Auto Private Limited, India, with a business objective of Sheet
Metal Processing, comprising of press work and welding
TO THE MEMBERS,
within Automotive Component sector. ASL has got its works
Your Directors have pleasure in presenting the Annual Report located at Farukhnagar, Gurgaon and the Commercial
together with audited accounts of the Company for the year ended production has already started with effect from January, 2008.
31st March, 2010. During the year ended 31st March, 2010, the Company has
Performance achieved total income of Rs. 5.19 crores and incurred loss of
2009-10 2008-09 Rs. 67.96 lacs.
Rs./Lacs Rs./Lacs Due to global economic meltdown as well as due to all projects
being in initial stages, the performance of all the subsidiaries
Sales and Other Income 85579 69742
have remained under stress, however, with various steps taken by
Profit before Interest & Depreciation 9316 1480
the Companies to overcome the difficulties, it is expected that the
- Interest 3361 3217
subsidiaries would do better in the times to come.
- Depreciation & Write Offs 2658 2796
Profit before Tax 3297 (4533) Subsidiary Companies Accounts
Less : Provision for Tax 25 0 In terms of approval granted by the Central Government under
Provision for Deferred Tax Liability/(Assets) 1107 (1497) Section 212(8) of the Companies Act, 1956, copy of the Balance
Provision for Fringe Benefit Tax 0 67 Sheets, Profit & Loss Accounts, reports of the Board of Directors
Profit after Tax 2165 (3103) and Auditors of the Subsidiary Companies have not been attached
Add : Profit Brought Forward (653) 2450 with the Balance Sheet of the Company. These documents will
Profit available for appropriations 1512 (653) be made available upon request by any member of the Company
interested in obtaining the same. However, as directed by the
Central Government, the financial data of the subsidiaries have
Appropriations been furnished under ‘Summarised Statement of Financials of
Proposed Dividend 596 0 Subsidiary Companies’ forming part of the Annual Report. Further,
pursuant to Accounting Standard AS-21 issued by the Institute
Tax on Dividend 99 0
of Chartered Accountants of India, Consolidated Financial
Transfer to General Reserve 200 0
Statements presented by the Company includes financial
Balance Carried Forward 617 (653)
information of its subsidiaries.
1512 (653)
Consolidation of Accounts
Dividend
In accordance with the Accounting Standard AS-21 on
Your Directors have recommended a Dividend of 30% on Equity Consolidated Financial Statements read with Accounting Standard
Share capital of the Company for the Financial Year 2009-2010. AS-27 on Financial Reporting for Interest in Joint Ventures, the
Subsidiary Companies Audited Consolidated Financial Statements are provided in the
The Company has the following Subsidiaries: Annual Report.

a) JTEKT SONA Automotive India Limited (JSAI) Corporate Governance

In JSAI, the Company is holding 49% of the Equity Capital The Company has been pro-active in following the principles and
but it has the right to nominate majority of the Directors on practices of good Corporate Governance. The Company has taken
the Board of JSAI. This Joint Venture Company has been adequate steps to ensure that the conditions of Corporate
established with JTEKT Corporation, Japan with a business Governance as stipulated in Clause 49 of the Listing Agreements
objective of manufacturing Column Type Electric Power with the Stock Exchanges are complied in its letter and spirit.
Steering (C-EPS) Systems. The Plant of JSAI is located in Bawal, A separate statement on Corporate Governance is produced as a
Haryana and the Commercial production has already started part of the Annual Report along with the Auditors’ Certificate on
with effect from 1st February, 2010. During the year ended its compliance.
31st March, 2010, the Company has achieved total income of
Listing
Rs. 4.75 crores and incurred loss of Rs. 27.77 lacs.
The Securities of your Company are listed at National Stock
b) Sona Fuji Kiko Automotive Limited (SFAL)
Exchange and Bombay Stock Exchange and the Company has
In SFAL, the Company is holding 51% of the Equity Capital. paid the Listing Fee due to them.
This Joint Venture Company has been established with FUJI
Fixed Deposits
KIKO Co. Ltd., Japan with a business objective of
manufacturing Columns to be used in the manufacturing of During the year the Company has not invited any deposits from
C-EPS by JSAI. The Plant of SFAL is located in Bawal, Haryana the public.
and the Commercial production has already started with Directors
effect from 1st November, 2009. During the year ended 31st
During the year under review Maruti Suzuki India Limited (MSIL)
March, 2010, the Company has achieved total income of
has withdrawn the nomination of Mr. Noriyuki Fujita and
Rs. 1.35 crores and incurred loss of Rs. 1.46 crores.
nominated Mr. Kazuhiko Ayabe in his place. The Board of Directors
c) Arjan Stampings Limited (ASL) of the Company, in their meeting held on 30th January, 2010,
In ASL, the Company is holding 51.5% of the Equity Capital. have appointed Mr. Ayabe to fill the casual vacancy caused due to 37
This Joint Venture Company has been established with Arjan withdrawal of nomination of Mr. Noriyuki Fujita by MSIL.
Mr. Kazuhiko Ayabe, Nominee of MSIL shall retire at the Auditors
forthcoming Annual General Meeting pursuant to the provisions M/s. S.P. Puri & Co., Chartered Accountants, holds office as
of Section 262 of the Companies Act, 1956. Requisite notice
Auditors until the conclusion of the forthcoming Annual General
under Section 257 of the Companies Act, 1956 has been received
Meeting and has indicated their willingness to be re-appointed
from a member for his re-appointment. The resolution is
as Auditors. The requisite certificate under Section 224(1B) of the
commended for the Members’ approval.
Companies Act, 1956, has been received from them. The notes to
Pursuant to Article 122 of the Articles of Association of the accounts referred to in the Auditors’ Report are self-explanatory.
Company Mr. P.K. Chadha, Mr. Ramesh Suri and Lt. Gen. (Retd.)
Shamsher Singh Mehta will retire by rotation at the forthcoming Conservation of Energy, Technology Absorption, Foreign
Annual General Meeting and being eligible, offer themselves for Exchange Earnings and Outgo.
reappointment. A statement containing the necessary information as required
Audit Committee under the Companies (Disclosure of particulars in the Report of
Pursuant to the provisions of Section 292A of the Companies Directors) Rules, 1988 and forming part of the Directors’ Report
Act, 1956 and Clause 49 of the Listing Agreements with Stock for the year ended March 31, 2010 is given as Annexure - ‘A’ to
Exchanges, the Audit Committee of Directors of the Company this report.
consists of the following members: Employees
i) Mr. Ravi Bhoothalingam; In accordance with the provisions of Section 217(2A) of the
ii) Mr. P.K. Chadha; Companies Act, 1956 read with the Companies (Particulars of
iii) Mr. Sunjay Kapur Employees) Rules, 1975, the particulars of employees are given in
iv) Lt. Gen. (Retd.) Shamsher Singh Mehta Annexure - ‘B’ forming part of this report.

The Audit Committee in its meeting held on 20th May, 2002, had Acknowledgements
appointed Mr. Ravi Bhoothalingam as the Chairman of the Audit Your Directors acknowledge with gratitude the co-operation and
Committee. support extended by SONA’s customers namely Maruti Suzuki
Directors’ Responsibility Statement India Limited, Hyundai Motors (India) Ltd., Toyota Kirloskar, Tata
As required under Section 217(2AA) of the Companies Act, 1956, Motors Ltd., Mahindra & Mahindra, Hindustan Motors Ltd., JTEKT
your Directors confirm having: Corporation, Japan, Mando Corporation, Korea and Fuji Autotech
Europe S.A.S, the Financial Institutions, Banks, various agencies
i) followed in the preparation of the Annual Accounts, the
applicable accounting standards with proper explanation of the Government, SONA’s collaborators – JTEKT Corporation,
relating to material departures; Japan, Mando Corporation, Korea and Fuji Autotech AB, Sweden.
ii) selected such accounting policies and applied them Your Directors also wish to place on record their sincere
consistently and made judgement and estimates that are appreciation of the services rendered by all employees of the
reasonable and prudent so as to give a true and fair view of Company and are thankful to the Shareholders for their continued
the state of affairs of your Company at the end of the patronage.
financial year and of the profit/loss of your Company for that
period.
iii) taken proper and sufficient care for the maintenance of For and on behalf of the Board
adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the
assets of your Company and for preventing and detecting
fraud and other irregularities; and Place : Gurgaon Dr. Surinder Kapur
iv) prepared the Annual Accounts on a going concern basis. Dated : 30th April, 2010 Chairman

38
ANNEXURE - ‘A’ TO THE DIRECTORS’ REPORT
Form - A : Particulars with respect to Conservation of Energy
Power and Fuel Consumption 2009-2010 2008-2009
Gurgaon* Dharuhera# Chennai Gurgaon* Dharuhera# Chennai

1. HSEB / TNEB Power (Units) 32,15,646 4,91,289 18,76,273 28,05,423 2,24,829 21,11,461
purchased (KWH)
Total Amount Rs. 1,50,44,363 23,02,114 98,51,251 1,25,17,468 10,18,755 1,14,48,862
Rate per unit Rs. 4.68 4.69 5.25 4.46 4.53 5.42

2. Captive Generation (Units) 63,77,932 16,74,050 11,95,718 59,87,130 9,82,329 27,70,769


DG Set (KWH)
Total Amount Rs. 5,61,38,411 1,79,57,207 1,18,06,739 4,48,74,882 79,48,365 1,88,49,229
Rate per unit Rs. 8.80 10.73 9.87 7.50 8.09 6.80

3. Diesel Consumption (Litres) 6,48,747 5,10,043 2,27,600 5,34,407 2,31,544 1,84,680


Total Amount Rs. 1,88,52,588 1,46,26,744 76,73,579 1,59,41,361 69,29,610 72,36,193
Rate per litre Rs. 29.06 28.68 33.72 29.83 29.93 39.18
Litre per unit 0.29 0.30 5.25 0.297 0.306 0.087

4. Furnace Oil Consumption (Litres) 11,34,456 — — 11,51,558 — —


Total Amount Rs. 2,78,16,861 — — 2,98,94,446 — —
Rate per litre Rs. 24.52 — — 25.96 — —
Litre per unit 0.25 — — 0.274 — —

* Total saving achieved at Gurgaon Plant during Financial Year 2009-10 – Rs. 28.55 lacs.
Above saving achieved by taking the following initiatives :
i) Shifted 100 KW non critical load from DG sets to HSEB / State supply, and resulted into saving of Rs. 16 lacs.
ii) Maintained power factor above 0.98 and saved Rs. 5.25 lacs.
iii) Reduced air pressure of Air Guns by regulators at 110 nos. of place and saved Rs. 4 lacs.
iv) Installed energy efficient pump on cooling tower and machines and saved Rs. 2 lacs.
v) Common Hydraulic Power Packs for two and more machines and beheaved saving of Rs. 1.3 lacs.
# Total saving achieved at Dharuhera Plant during Financial Year 2009-10 – Rs. 20.58 lacs.
Above saving achieved by taking the following initiatives :
i) FDV, CEPS A/C, Admn. A/C and Exhaust Blower stopped during lunch and dinner time and saved Rs. 1.75 lacs.
ii) Independent feeder started to reduce diesel consumption and DG rent and saved Rs. 14.34 lacs.
iii) April month FDV, Admn A/C, CEPS & PV A/C Units started at 50% load and saved one month DG rent and saved Rs. 1.05 lacs.
iv) Stop second DG during Dinner time and saved Rs. 2.82 lacs.
v) Installed temperature controller for Cooling Tower and saved Rs. 0.62 lacs.

Form - B : Particulars with respect to Technology Absorption


A. Technology Absorption
1. Efforts in brief towards Technology Adoption and Innovation. a) Developing Electronically controlled Hydraulic Power
Steering System (ECPS) including its ECU for a global
sports utility vehicle.
b) Developed high performance advanced tilt Steering
Column with low friction sliding shaft for the new
passenger car from a major global OEM.
c) Developed Steering Gear for CEPS System for the global
project of the largest OEM in country with full engineering
responsibility.
d) Developed high performance Intermediate Shafts for high
power CEPS System for the new projects of global OEMs
with full engineering responsibility.
e) Developed low cost and lightweight Steering System for
the largest OEM keeping the performance same as the
original requirement.
2. Benefits derived as a result of above efforts e.g. Product a) The Company is the first in country to offer electronically
Improvement, Cost Reduction, Product Development, Import controlled Power Steering System (ECPS). This adds an 39
Substitution etc. advanced product to Company’s portfolio.
b) With the development of advanced Steering Column for
global OEM for domestic market, there is good opportunity
to export the same part to OEM’s global operations.
c) With the development of Steering Gear for global CEPS
project, Company has achieved self-reliance in such critical
projects and at the same time could save significant
development cost and technical support fee.
d) With the development of high performance Intermediate
Shafts, Company will be able to cater to the large volume
requirements of OEMs at competitiive price. It will also give
opportunity to explore the export possibilities.
e) With the development of low cost Steering System,
Company has been able to offer improved solution to
customer and could protect its business share and
B. Research and Development profitability.
1. Specific areas in which R&D carried out by the Company. a) Research on development of low cost Electric Power Steering
(EPS) for specialized vehicles.
b) Research on development of control unit for electric bike.
c) Development of controller for Autonomous Steering for
Off highway vehicle.
2. Benefits derived as a result of the above R&D. a) The above R&D initiatives would enable the Company to
experience future growth through technological innovations
by developing new concepts and futuristic electro-
mechancial products with fuller knowledge, indigenous
designs and technology protected with patents.
b) The Company aims to develop advanced futuristic product
technologies for its interest in the long run with the
association of research institutes.
3. Expenditure on R&D a) Capital Expenditure of Rs. 7.07 lacs.
b) Revenue Expenditure of Rs. 154.76 lacs.

Form - C : Foreign Exchange Earning and Outgo

Foreign Exchange outflow on account of import of raw material, spares and tools during the year was Rs. 19758.16 lacs. During
the year the Company’s export sales amounted to Rs. 3174.80 lacs.

ANNEXURE – ‘B’ TO THE DIRECTORS’ REPORT


Statement of particulars of employees pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with the
Companies (Particulars of Employees) Rules, 1975 for the financial year ended 31st March, 2010
Sl. Name Age Designation/ Remuneration Qualification(s) Experience Date of Last Employment
No. (Years) Nature of Duties (Rs.) (Years) Employment (Designation)
1. Mr. Chanana 43 Chief Financial 27,99,284/- B.Com(Hons.), 19 25.03.2009 Deutsche Post Bank Home
Rajiv Officer C.A. Finance Ltd.
(Vice President-Treasury)
2. Mr. Chopra Sudhir 52 President (Legal) 35,36,674/- B.Com, FCS, LL.B. 32 15.05.1993 Samtel India Limited
& Company (Company Secretary)
Secretary
3. Mr. Deshmukh 56 Dy. Managing 53,79,561/- B.Tech (Metallurgy) 33 01.08.1986 Bharat Gears Ltd.
K.M. Director (Dy. Manager-Development)
4. Mr. Kapur Sunjay 36 Vice Chairman 53,49,694/- Graduate in Business 14 22.10.2008 Sona Management Services
& Managing Admn. from Buckingham Ltd. (Managing Director)
Director University (UK)
5. Dr. Kapur Surinder 66 Chairman 39,38,000/- Ph.D.(Mech.Engg) 36 01.10.1990 Bharat Gears Ltd.
Michigan State (Vice Chairman & Managing
University, (U.S.A.) Director)
6. Mr. Maity Atanu 47 Sr. Vice President- 30,83,288/- B.Tech., MBA 23 28.01.2002 Schlumberger (Divisional
Strategy Planning Technical Manager)
7. Mr. Parriker 63 Group Chief-Supply 33,75,527/- M.E. (Mech.) 36 01.02.1991 Bharat Gears Ltd.
P.V. Prabhu Chain Management (Gen. Manager-Comm.)
8. Mr. Rao A.D. 51 Vice President- 24,86,098/- M.Sc., B.E. (Mech.) 27 16.02.1987 Hindustan Aluminium
Operations Corp. Ltd. (Sr. Executive Eng.)
9. Mr. Rajan 47 Chief Executive 36,75,964/- B.Sc. MBA & Master 25 01.12.2008 Sona Autocomp Holding P.Ltd.
Govindrajan Sunder Officer of Info. Management (V.P.-Strategy & innovations)

NOTES :
1. Remuneration received includes Salary, Allowances, Commission, payment in respect of Rent / Furnished Accommodation,
40 Company’s contribution to Provident Fund and Superannuation Fund, Medical reimbursement and LTA.
2. Employment of Dr. Surinder Kapur, Mr. Sunjay Kapur and Mr. K.M. Deshmukh is contractual.
AUDITORS’ REPORT iii. The Balance Sheet, Profit & Loss Account and Cash
Flow Statement dealt with by this report are in
TO THE MEMBERS OF agreement with the books of account;
SONA KOYO STEERING SYSTEMS LIMITED iv. In our opinion, the Balance Sheet, Profit & Loss
Account and Cash Flow Statement dealt with by this
We have audited the attached Balance Sheet of SONA KOYO
report comply with the Accounting Standards
STEERING SYSTEMS LIMITED (‘the Company’) as at 31st March
referred to in sub-section (3C) of Section 211 of the
2010, the Profit & Loss Account and the Cash Flow Statement
Companies Act, 1956;
for the year ended on that date, annexed thereto. These
financial statements are the responsibility of the Company’s v. Based on confirmations received from other public
management. Our responsibility is to express an opinion on Companies in which directors of the Company are
these financial statements based on our audit. directors and/or written representations made by the
directors of the Company as on 31st March, 2010
We conducted our audit in accordance with Auditing Standards
and taken on record by the Board of Directors, we
generally accepted in India. Those standards require that we
report that none of the directors of the Company is
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material disqualified as on 31st March, 2010 from being
misstatement. An audit includes examining, on a test basis, appointed as a director in terms of clause (g) of sub-
evidence supporting the amounts and disclosures in the section (1) of Section 274 of the Companies Act,
financial statements. An audit also includes assessing the 1956;
accounting principles used and significant estimates made by vi. In our opinion and to the best of our information
management, as well as evaluating the overall financial and according to the explanations given to us, the
statement presentation. We believe that our audit provides a said accounts give the information required by the
reasonable basis for our opinion. Companies Act, 1956, in the manner so required
1. As required by the Companies (Auditor’s Report) Order, and give a true and fair view in conformity with the
2003, as amended by the Companies (Auditor’s Report) accounting principles generally accepted in India :-
(Amendment) Order, 2004 (together ‘the Order’) issued
a) in the case of the Balance Sheet, of the state of
by the Central Government of India in terms of sub-section
(4A) of section 227 of the Companies Act, 1956, we enclose affairs of the Company as at 31st March, 2010;
in the annexure a statement on the matters specified in b) in the case of the Profit & Loss Account, of the
Paragraphs 4 & 5 of the said Order. PROFIT for the year ended on that date; and
2. Further to our comments in the Annexure referred to in c) in the case of Cash Flow Statement, of the cash
paragraph 1 above, we report that:
flows for the year ended on that date.
i. We have obtained all the information and
explanations, which to the best of our knowledge For S.P. Puri & Co.,
and belief were necessary for the purpose of our Chartered Accountants
audit;
ii. In our opinion, proper books of account as required (Rajiv Puri - Partner)
by law have been kept by the Company so far as Place : Gurgaon Membership No. 84318
appears from our examination of those books; Dated : 30th April, 2010 FRN. 001152 N

41
The Annexure referred to in paragraph 1 of the Auditors’ vi. The Company has not accepted any deposits from the
Report of even date to the members of Sona Koyo Steering public covered under section 58A, 58AA or any other
Systems Limited for the year ended 31st March, 2010. relevant provisions of the Companies Act, 1956.

On the basis of such checks as we considered appropriate, we vii. The Company has an adequate internal audit system,
which in our opinion, is commensurate with the size of
further report that :
the Company and the nature of its business.
i. (a) The Company has maintained proper records viii. We have broadly reviewed the books of account maintained
showing full particulars, including quantitative details by the Company in respect of manufacture of Company’s
and situation of fixed assets. automotive products pursuant to the order made by the
(b) All the fixed assets of the Company have not been Central Government for the maintenance of cost records
under section 209(l)(d) of the Companies Act, 1956 and
physically verified by the management during the year
are of the opinion that, prima facie, the prescribed accounts
but there is a regular phased programme of physical
and records have been made and maintained. We have
verification which, in our opinion, is reasonable not, however, made a detailed examination of the records
having regard to the size of the Company and nature with a view to determine whether they are accurate or
of its fixed assets. No material discrepancies were complete.
noticed on such verification.
ix. (a) According to the information and explanations given
(c) In our opinion, and according to the information and to us and on the basis of our examination of the
explanations given to us, fixed assets disposals during books of account, the Company has been generally
the year were not substantial and therefore do not regular in depositing undisputed statutory dues
affect the going concern assumption. including Provident Fund, Investor Education and
ii. (a) Physical verification of inventory, except stocks lying Protection Fund, Employees’ State Insurance, Income
with vendors and goods-in-transit has been Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty,
conducted by the management during the year. In Excise Duty, Cess and other material statutory dues
respect of inventory lying with vendors, these have applicable to it. According to the information and
been confirmed by them. In our opinion, the frequency explanations given to us, no undisputed amounts
of such verification is reasonable. payable in respect of Provident Fund, Investor
Education and Protection Fund, Employees’ State
(b) In our opinion and according to the information and Insurance, Income Tax, Sales Tax, Wealth Tax, Service
explanations given to us, the procedures of physical Tax, Customs Duty, Excise Duty and Cess were
verification of inventories followed by the outstanding, as at 31st March, 2010 for a period of
management were found reasonable and adequate more than six months from the date they became
in relation to the size of the Company and the nature payable.
of its business.
(b) According to the information and explanations given
(c) On the basis of examination of records of the to us, and on the basis of our examination of the
inventory, we are of the opinion that the Company is books of account, there are no dues of Sales Tax,
maintaining proper records of inventory. The Income Tax, Customs Duty, Wealth Tax, Service Tax,
discrepancies noticed on verification between the Excise Duty and Cess which have not been deposited
physical stocks and book records, which in our opinion on account of any dispute.
were not material, have been properly dealt with in
the books of account. x. The Company does not have accumulated losses at the
end of the financial year and has not incurred cash losses
iii. According to the information and explanations given to in the current financial year but had incurred cash losses
us and on the basis of our examination of the books of in the immediately preceding financial year.
account, the Company has neither granted or taken any
loans, secured or unsecured, to or from companies, firms xi. Based on our audit procedures and on the information
or other parties listed in the register maintained under and explanations given to us, the Company has not
Section 301 of the Companies Act, 1956. Accordingly, defaulted in repayment of dues to its bankers. There are
the paragraphs 4 iii(b), 4 iii(c), 4 iii(d), 4 iii(f) and 4 iii(g) of no dues to a financial institution or debenture holders.
the Order are not applicable to the Company. xii. According to the information and explanations given to
iv. In our opinion, having regard to the information and us, the Company has not granted loans and advances on
explanations given to us that some of the inventory items the basis of security by way of pledge of shares, debentures
purchased are of specialised nature and for which and other securities.
alternative quotations are not available, there are adequate
xiii. The Company is not a chit fund or a nidhi/ mutual benefit
internal control procedures commensurate with the size
fund/society. Therefore, the provision of this clause of the
of the Company and the nature of its business for the
Companies (Auditor’s Report) Order, 2003 is not
purchase of inventory, fixed assets and for sale of goods
applicable to the Company.
and services. During the course of our audit, no major
weaknesses have been noticed in the internal controls. xiv. According to information and explanations given to us,
v. Based on the audit procedures applied by us and according the Company is not dealing or trading in Shares, Securities,
to the information and explanations given to us, the Debentures and other investments.
Company has not entered into any transactions during xv. According to the information and explanations given to
the year that needs to be entered into the Register us, the Company has not given any guarantee for any loan
42 maintained under section 301 of the Companies Act, 1956. taken by others from a bank or financial institution.
xvi. Based on our audit procedures and on the information xxi. Based on the audit procedures performed and the
and explanations given by the management, the term information and explanations given by the management,
loans have been applied for the purpose for which they we report that no fraud on or by the Company has been
were raised. noticed or reported during the year.
xvii. Based on the information and explanations given to us
and on an overall examination of the Balance Sheet of the
Company as at 31st March, 2010, we are of the opinion
that no funds raised on short term basis have been used
for long term investment by the Company. For S.P. Puri & Co.,
xviii. The Company has not made any preferential allotment of Chartered Accountants
shares during the year.
xix. The Company has no outstanding debentures during the
year. (Rajiv Puri - Partner)
xx. The Company has not raised any money by public issue Place : Gurgaon Membership No. 84318
during the year. Dated : 30th April, 2010 FRN. 001152 N

43
BALANCE SHEET
AS AT 31ST MARCH, 2010
As at As at
Particulars Schedule 31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs

I. SOURCES OF FUNDS

1. Shareholders’ Fund
a) Share Capital 1 1987.42 1987.42
b) Reserves & Surplus 2 16149.72 14680.45
Sub-Total 18137.14 16667.87
2. Loan Funds
a) Secured Loans 3 21912.12 18149.19
b) Unsecured Loans 4 0.00 5750.00
Sub-Total 21912.12 23899.19

3. Deferred Tax Liability (Net) 19(16) 2279.25 1172.11

Total 42328.51 41739.17


II. APPLICATION OF FUNDS

1. Fixed Assets 5
a) Gross Block 45773.70 44238.67
Less : Depreciation 15794.32 13525.14
Net Block 29979.38 30713.53
b) Capital Work In Progress 1962.45 31941.83 1999.30 32712.83

2. Investments 6 7133.57 5874.76


Sub-Total 39075.40 38587.59

3. Current Assets, Loans and Advances


a) Inventories 7 3902.07 2793.34
b) Sundry Debtors 8 9131.23 8070.23
c) Cash & Bank Balances 9 78.61 232.63
d) Other Current Assets 10 53.75 36.14
e) Loans & Advances 11 4782.02 6168.22
Sub-Total 17947.68 17300.56

Less : Current Liabilities and Provisions 12


a) Current Liabilities 13661.92 13985.02
b) Provisions 1032.65 163.96
Sub-Total 14694.57 14148.98
Net Current Assets 3253.11 3151.58

Total 42328.51 41739.17


Significant Accounting Policies & Notes to the Accounts 19
Related Party Disclosures 20
The Schedules referred to above form an integral part of the financial statements

As per our report of even date attached


For S.P. Puri & Co.,
Chartered Accountants

(Rajiv Puri - Partner) For and on behalf of the Board


Membership No. 84318
FRN 001152 N
Place : Gurgaon Sudhir Chopra - Company Secretary Sunjay Kapur-Vice Chairman & Managing Director
44 Dated : 30th April, 2010 Rajiv Chanana - Chief Financial Officer Ravi Bhoothalingam - Director
PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED 31ST MARCH, 2010
Year ended Year ended
Particulars Schedule 31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs
INCOME
Gross Sales 96387.77 81004.71
Less : Excise Duty and Other Taxes 11357.87 11688.26
Net Sales 85029.90 69316.45

Other Income 13 549.55 426.01


Total 85579.45 69742.46

EXPENDITURE
Raw Materials and Components Consumed 64056.74 56239.79
(Increase) / Decrease in Stock of
Finished Goods and Work-in-Process 14 (207.08) (29.29)
Excise Duty on Increase / (Decrease) in finished goods 15.74 0.58
Manufacturing Expenses 15 3702.21 3315.51
Employees’ Remuneration and Benefits 16 5556.13 5384.15
Administrative, Selling & Other Expenses 17 2985.02 3259.54
Research & Development Expenses 19(6) 154.76 92.64
Finance Charges 18 3361.24 3216.79
79624.76 71479.71

Cash Profit 5954.69 (1737.25)


Miscellaneous Expenditure Written off 0.00 302.15
Depreciation & Amortisation 2658.03 2493.46
Profit before Tax 3296.66 (4532.86)
Provision for Tax - Current Year 591.89 0.00
Provision for Fringe Benefit Tax - Current Year 0.00 67.00
Minimum Alternate Tax (MAT) Credit entitlement (566.90) 0.00
Increase/(Decrease) in Deferred Tax Liability 1107.14 (1496.75)
Profit after Tax 2164.53 (3103.11)
Balance Brought forward from Previous Year (652.53) 2450.58
Profit available for appropriation 1512.00 (652.53)
Proposed Dividend 596.23 0.00
Tax on Dividend 99.03 0.00
Transfer to General Reserve 200.00 0.00
Balance carried to Balance Sheet 616.74 (652.53)

EARNING PER SHARE (Face value Re. 1/- each)


Basic & Diluted Earning Per Share (In Rs.) 19(17) 1.09 (1.56)
Significant Accounting Policies and Notes to the Accounts 19
Related Party Disclosures 20
The Schedules referred to above form an integral part of the Financial Statements

As per our report of even date attached


For S.P. Puri & Co.,
Chartered Accountants

(Rajiv Puri - Partner) For and on behalf of the Board


Membership No. 84318
FRN 001152 N
Place : Gurgaon Sudhir Chopra - Company Secretary Sunjay Kapur-Vice Chairman & Managing Director
Dated : 30th April, 2010 Rajiv Chanana - Chief Financial Officer Ravi Bhoothalingam - Director 45
SCHEDULES FORMING PART OF ACCOUNTS
31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs

SCHEDULE — 1
SHARE CAPITAL
AUTHORISED
25,00,00,000 Equity Shares of Re. 1/- each 2500.00 2500.00
(Previous Year 25,00,00,000 Equity Shares of Re. 1/- each)
2500.00 2500.00
ISSUED, SUBSCRIBED AND PAID UP
19,87,41,832 Equity Shares of Re. 1/- each, fully paid up 1987.42 1987.42
(Previous Year 19,87,41,832 Equity Shares of Re. 1/- each, fully paid up)

Out of above :
Equity Shares include 8,79,34,000 (Previous Year 8,79,34,000)
Shares of Re. 1/- each alloted as fully paid Bonus Shares
by capitalization of Capital Redemption Reserve.
1987.42 1987.42

SCHEDULE — 2
RESERVES & SURPLUS
Capital Reserve 0.44 0.44
(On account of reissue of forfeited Equity Shares)
Capital Redemption Reserve 120.66 120.66
Securities Premium Account 8921.17 8921.17

General Reserve
- As per Last Balance Sheet 6290.71
- Add transfer from Profit & Loss Account 200.00 6490.71 6290.71

Profit & Loss Account


- Balance as per Profit & Loss Account 616.74 (652.53)

16149.72 14680.45

SCHEDULE — 3
SECURED LOANS
Term Loans from Banks 20504.35 13899.82
Term Loans from Others 972.17 237.10
Short Term Loans from Banks 435.60 3801.38
Sales Tax Loan 0.00 210.89
21912.12 18149.19

46
NOTES :
1. Term Loans from Banks include :
a) External Commercial Borrowings of USD Nil (Previous Year USD 2.5 Million) secured by first pari passu charge on all the movable and
immovable properties both present and future.
b) Rupee Term Loan of Rs. 18254 Lacs (Previous Year Rs. 12623 Lacs) secured by first pari passu charge over the entire movable and immovable
fixed assets of the Company, both present and future, except the assets exclusively charged to Standard Chartered Bank for Rs. 500 Lacs
(Previous Year Nil). Loans to the extent of Rs. 2100 Lacs (Previous Year Rs. 2100 Lacs) are further secured by way of second charge on current
assets, on pari passu basis.
c) Corporate Loan of Rs. 2250 Lacs from State Bank of India is secured by way of first pari passu charge on Current Assets and second
pari passu charge on movable and immovable fixed assets of the Company. The loan is further secured by way of exclusive
mortgage on land situated at Plot No. 19, Dharuhera Industrial Area, Phase II, District Rewari (Haryana).
2. Term Loans from Others include :
a) Term Loan of Rs. Nil (Previous Year Rs. 237.01 Lacs) secured by way of exclusive first charge on specific equipments financed.
b) Term Loan of Rs. 972 Lacs (Previous Year Nil) secured by way of second charge on entire assets of the Company situated at Sanand,
Gujarat to be purchased or constructed out of said Term Loan.
3. The Short Term Loans from Banks are secured by hypothecation of inventories, book debts and other receivables both present & future.
4. Sales Tax Loan is secured by pari passu first charge over all immovable properties including embedded fixed assets of the Company excluding the
assets exclusively charged to other lenders.
Loans from Bank and other loans aggregating to Rs. 2250 Lacs (Previous Year Rs. 2369.45 Lacs) are repayable within one year.
31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs

SCHEDULE — 4
UNSECURED LOANS
Short Term Loan and Advances from Banks 0.00 5750.00
0.00 5750.00
SCHEDULE — 5
FIXED ASSETS (Rs./Lacs)
Sl. Assets Gross Block (At Cost) Depreciation Net Block
No. As At Additions Sales/ As at Upto For the Written As at As at As at
01.04.09 Disposal 31.03.10 31.03.09 Year Back 31.03.10 31.03.10 31.03.09

Tangible Assets
1. Free Hold Land 1949.04 0.00 0.00 1949.04 0.00 0.00 0.00 0.00 1949.04 1949.04
2. Lease Hold Land 0.00 221.50 0.00 221.50* 0.00 0.21 0.00 0.21 221.29 0.00
3. Building 5476.76 102.20 0.12 5578.84 719.03 182.57 0.01 901.59 4677.25 4757.73
4. Lease Hold Improvements 174.63 19.51 174.63 19.51 163.89 2.48 166.03 0.34 19.17 10.74
5. Plant & Machinery 30080.16 1197.26 85.34 31192.08 10174.60 1902.03 74.55 12002.08 19190.00 19905.56
6. Jigs & Fixture 359.68 1.46 0.00 361.14 103.77 23.47 0.00 127.24 233.90 255.91
7. Electric Installation 1606.01 56.84 0.59 1662.26 366.68 108.23 0.09 474.82 1187.44 1239.33
8. Furniture & Fixture 780.64 11.15 79.59 712.20 375.89 38.31 78.57 335.63 376.57 404.75
9. Office Equipment (Incl. Computers) 2039.62 43.39 29.36 2053.65 1211.52 147.54 27.11 1331.95 721.70 828.10
10.Vehicles 255.00 77.46 85.62 246.84 113.34 26.02 42.49 96.87 149.97 141.66
11.R&D-Plant & Machinery 432.49 7.07 0.00 439.56 55.74 23.79 0.00 79.53 360.03 376.75
12.R&D-Office Equipment 88.34 0.00 0.00 88.34 54.43 15.11 0.00 69.54 18.80 33.91
Intangible Assets
1. R&D-Computer Software 55.73 0.00 0.00 55.73 20.69 7.62 0.00 28.31 27.42 35.04
2. Computer Software 30.39 0.00 0.00 30.39 7.53 4.93 0.00 12.46 17.93 22.86
3. New Product Development Cost 910.18 252.44 0.00 1162.62 158.03 175.72 0.00 333.75 828.87 752.15
Total 44238.67 1990.28 455.25 45773.70 13525.14 2658.03 388.85 15794.32 29979.38 30713.53
Total (Previous Year) 37457.19 6859.95 78.47 44238.67 11042.05 2493.46 10.37 13525.14 30713.53
Capital Work In Progress - Tangible Assets 1144.76 1037.50
Capital Work In Progress - Intangible Assets 817.69 961.80
1962.45 1999.30
47
*Leasehold Land includes Rs. 221.50 Lacs (Previous Year Nil) in respect of which lease deed is pending for execution.
31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs
SCHEDULE — 6
INVESTMENTS
LONG TERM (Valued At Cost)
UNQUOTED, FULLY PAID UP :

In Trade Investments :
i) 1,33,334 Equity Shares (Previous Year 1,33,334) of Rs. 10/- each, 20.00 20.00
in Roop Automotive Ltd.
ii) 49,29,636 Equity Shares (Previous Year 49,29,636) of Euro 1 each, 2932.10 2932.10
in Fuji Autotech Europe S.A.S. (Incorporated in France)
iii) 24,000 Equity Shares (Previous Year 24,000) of USD 1 each, 10.79 10.79
in Sona Autocomp Inc., (Incorporated in USA)
iv) 12,000 Equity Shares (Previous Year 12,000) of Euro 1 each, 6.87 6.87
in Sona Autocomp Europe SARL., (Incorporated in France)
v) 27,60,000 Equity Shares (Previous Year 27,60,000) of Rs. 10/- each, 276.00 276.00
in AAM Sona Axle Pvt. Ltd.
vi) 30,00,000 Equity Shares (Previous Year 30,00,000) of Rs. 10/- each, 300.00 300.00
in Sona Mobility Services Ltd.
In Subsidiary Companies :
vii) 50,99,993 Equity Shares (Previous Year 50,99,993) of Rs 10/- each, 510.00 510.00
in Sona Fuji Kiko Automotive Ltd.
viii) 2,77,78,094 Equity Shares (Previous Year 1,51,89,994) of Rs. 10/- each, 2777.81 1519.00
in JTEKT SONA Automotive India Ltd. (1,25,88,100 Equity Shares acquired
during the year)
ix) 37,142 Equity Shares (Previous Year 37,142) of Rs. 100/- each, 300.00 300.00
in Arjan Stampings Ltd.
7133.57 5874.76

SCHEDULE — 7
INVENTORIES
(At cost or net realisable value, whichever is lower)
Stores and Spare Parts 403.86 260.12
Raw Materials and Components* 2392.80 1671.21
Work-in-process 455.10 380.63
Finished Goods** 255.70 123.09
Tools 394.61 387.83
3902.07 2822.88
Less : Provision for slow moving inventory 0.00 29.54
3902.07 2793.34
* Includes material in transit Rs. 26.61 Lacs (Previous Year Nil)
** Includes material in transit Rs. 46.59 Lacs (Previous Year Nil)

SCHEDULE — 8
SUNDRY DEBTORS
(Unsecured, considered good)
Debts outstanding for a period exceeding six months 104.32 177.54
Other Debts 9026.91 7892.69
9131.23 8070.23

SCHEDULE — 9
CASH AND BANK BALANCES
Cash and Cheques in hand 10.23 3.88
Balances with Scheduled Banks in Current Accounts 68.38 228.75

48 78.61 232.63
31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs

SCHEDULE — 10
OTHER CURRENT ASSETS
(Unsecured, considered good)
Claims Receivable 53.75 36.14
53.75 36.14
SCHEDULE — 11
LOANS AND ADVANCES
(Unsecured, considered good unless otherwise stated)
Advances recoverable in cash or in kind or
for value to be received
- Considered good 1404.77 2636.42
- Considered doubtful 19.61 0.00
1424.38 2636.42
Less : Provision for Doubtful Advances 19.61 0.00
1404.77 2636.42
Security Deposits 328.86 380.08
Balance with Excise and Port Trust Authorities 2319.85 2472.87
Advance payment against Income Tax (Net of Provisions) 728.54 678.85
4782.02 6168.22

SCHEDULE — 12
CURRENT LIABILITIES AND PROVISIONS
A. CURRENT LIABILITIES
Sundry Creditors
- Due to Micro, Small & Medium Enterprises 32.69 61.17
(Refer to Note 9 of Schedule 19)
- Due to Others 12640.47 12859.85
- Due to Subsidiaries 181.80 89.10
- Unclaimed Dividends* 34.20 37.69
- Unclaimed Redeemed Debentures 0.00 3.57
Other Liabilities 761.23 905.29
Interest Accrued but not due on Loans 11.53 28.35
13661.92 13985.02
*There is no amount due and outstanding to be credited to
Investor Education & Protection Fund
B. PROVISIONS
Proposed Dividend 596.23 0.00
Corporate Dividend Tax 99.03 0.00
Gratuity 0.00 5.17
Leave Encashment 242.39 65.79
Warranty 95.00 93.00
1032.65 163.96

SCHEDULE — 13
OTHER INCOME
Lease Rental Income 11.48 0.44
Income from Sale of Scrap 252.76 273.09
Dividend from Long Term Trade Investments 7.00 2.00
Interest Income 67.39 48.34
[TDS Deducted Rs. 2.82 Lacs (Previous Year Rs. 7.93 Lacs)]
Miscellaneous Income 109.42 102.02
Exchange Gain on Foreign Currency Loans 101.50 0.00
Profit on disposal of Fixed Assets 0.00 0.12
549.55 426.01 49
31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs

SCHEDULE — 14
(INCREASE)/DECREASE IN STOCK OF FINISHED
GOODS AND WORK IN PROCESS
INVENTORY as at 31.03.2009
Finished Goods 123.09
Work-in-process 380.63 503.72 474.43

INVENTORY as at 31.03.2010
Finished Goods 255.70
Work-in-process 455.10 710.80 503.72

(207.08) (29.29)

SCHEDULE — 15
MANUFACTURING EXPENSES
Stores and spare parts consumed 936.47 945.06
Loose tools consumed 541.28 473.66
Power and fuel 1172.15 994.31
Freight & Octroi charges 369.88 390.65
Machine repairs and maintenance 313.55 256.71
Royalty 368.88 255.12
3702.21 3315.51

SCHEDULE — 16
EMPLOYEES’ REMUNERATION AND BENEFITS
Salaries, wages and allowances 4410.57 4019.57
Contribution to Provident and other Funds 480.48 560.91
Employees’ welfare expenses 665.08 803.67
5556.13 5384.15

50
31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs

SCHEDULE — 17
ADMINISTRATIVE, SELLING AND OTHER EXPENSES
Rent 89.77 123.55
Rates and taxes 11.10 6.78
Insurance 35.81 69.27
Building repairs and maintenance 37.65 39.20
Other repairs and maintenance 190.88 153.48
Travelling, Conveyance and Vehicle Expenses 389.76 436.78
Communication & Stationery Expenses 140.89 156.75
Legal & Professional Charges 482.83 483.09
Security Charges 87.19 81.19
Business Promotion 41.79 33.47
Forwarding Expenses 995.51 1059.46
Directors’ Sitting Fees 4.95 8.04
Exchange Loss on Foreign Currency Loans 0.00 507.78
Provision for Slow Moving Inventory 0.00 29.54
Provision for Doubtful Advances 19.61 0.00
Loss on Disposal of Fixed Assets 23.85 0.00
Miscellaneous Expenses 418.27 57.92
Auditors’ Remuneration
Audit Fee 7.25 6.00
Fee for other services (i) Taxation Matters 2.00 2.00
(ii) Limited Review Fee 3.00 2.25
(iii) Certifications 2.91 2.99
2985.02 3259.54

SCHEDULE — 18
FINANCE CHARGES
Interest on fixed loans 2441.00 2400.79
Other interest 51.72 232.46
Bank and other finance charges 471.02 359.13
Cash discount 397.50 224.41
3361.24 3216.79

SCHEDULE – 19
NOTES TO THE ACCOUNTS
1. SIGNIFICANT ACCOUNTING POLICIES
I. Accounting Convention :
The financial statements have been prepared in accordance with applicable accounting standards in India notified
under Section 211(3C) of the Companies Act, 1956. Financial statements have also been prepared in accordance
with relevant presentation requirements of the Companies Act, 1956 of India.
II. Basis of Accounting :
The financial statements are prepared under the historical cost convention on an accrual basis.
III. Use of Estimates
The preparation of financial statements is in conformity with generally accepted accounting principles (GAAP)
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the year. Actual results could differ from those estimates. Any revision to accounting
estimates is recognised prospectively in current and future periods.

51
IV. Fixed Assets and Depreciation :
Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation. Cost comprises of the
purchase price, incidental expenses,erection/commissioning expenses and financial charges upto the date the
fixed asset is ready for its intended use.
The Company provides depreciation on fixed assets on the straight-line method at the rates specified in Schedule
XIV to the Companies Act, 1956 on a pro-rata basis from the month in which the asset is put to use, except as
stated below.
- Leasehold improvements are depreciated at the rate of 20% per annum or over the period of lease if less than
five years.
- Assets situated at employees’ residence are depreciated at the rate of 33.33% per annum.
- Vehicles are depreciated at the rate of 12% per annum from April, 2003.
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss
is charged to the Profit & Loss Account in the year in which an asset is identified as impaired. The impairment loss
recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
V. Intangible Assets and Amortization thereof :
Intangible assets comprise new product development expenses and computer software and are stated at cost less
accumulated amortization and impairment losses, if any.
Product development costs incurred including technical fees paid to collaborator for the development of new
products for which letters of intent have been received from customers are accumulated and recognised as
intangible assets (included under fixed assets) and are amortised over a period of six years. Un-amortized products
development fee in respect of models discontinued during the year is fully charged off in Profit & Loss Account.
Software, which is not an integral part of the related computer hardware is classified as an intangible asset and is
being amortised over a period of 72 months, being the estimated useful life.
Amortization expenses is charged on a pro-rata basis for assets purchased during the year. The appropriateness of
the amortization period and the amortization method is reviewed at each financial year end.
VI. Leases :
Operating Lease :
Lease arrangements, where the risks and rewards incidental to ownership of an asset substantially vest with the
lessor, are recognised as operating lease.
Operating lease payments are recognised as an expense in the Profit & Loss Account on a straight line basis over
the lease term.
VII. Investments :
Long term investments are valued at their acquisition cost. Provision for diminution, other than temporary, is made
wherever necessary.
VIII. Inventory Valuation :
a) Stores and spare parts are valued at lower of weighted average cost and net realisable value.
b) All tools (including loose tools) are written off over their useful life and un-issued tools are valued at lower of
weighted average cost and market value.
c) Raw materials, Components and Work-in-Process are valued at lower of weighted average cost and net realisable
value.
d) Finished Goods are valued at lower of weighted average cost and net realisable value.
Finished Goods and Work in Process include costs of conversion and other costs incurred in bringing the inventories
to their present location and condition.
IX. Foreign Currency Transactions :
Foreign currency transactions are recorded on the basis of average of the exchange rates in force during the
relevant week of each month. Gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit & Loss
Account. In case of transaction covered by forward contracts, the difference between the contract rate and
exchange rate prevailing on the date of transaction is charged to Profit & Loss Account, proportionately over the
contract period. All assets and liabilities denominated in foreign currency are restated at relevant year end rates.
X. Excise :
52
Excise duty on finished goods manufactured is accounted on the basis of production of goods.
XI . Research & Development :
a) Capital Expenditure for Research & Development is capitalised in the year of installation.
b) Revenue expenses incurred for Research & Development for existing products are charged to Profit & Loss
Account of the year.
XII. Income :
1) Revenue recognition - Revenue from domestic and export sales are recognised on transfer of all significant risks
and rewards or ownership to the buyer, which generally coincides with dispatch of goods from factory / port
respectively.
2) Price escalation claims from customers and discounts from suppliers are accounted in the year under audit, only
if they are settled with the customers and suppliers respectively up to the date of finalisation of accounts.
3) Dividend on investment is accounted in the year in which it is declared.
4) All export benefits are recognised as income when there is substantial certainty as to their realisability e.g.
a) DEPB license recognized as income on the relevant application being filed.
b) Duty draw back is accounted in the year of export.
XIII. Expenses :
a) Discounts to customers and price escalation to suppliers to the extent not settled at the Balance Sheet date are
accounted on the basis of reasonable estimates made after considering negotiations with vendors/customers.
b) Jigs and fixtures costing less than Rs. 5,000/- each are written off in the year of purchase.
c) Goods received are accounted as purchases on satisfactory completion of inspection.
XIV. Borrowing Cost :
Borrowing costs on loans relatable to qualifying assets are capitalized to the extent incurred prior to these assets
being put to use. Other borrowing costs are written off in the year to which they pertain.
XV. Employees’ Benefits :
Provident Fund
Contributions to defined contribution schemes such as Provident Fund, etc. are charged to the Profit & Loss Account
as incurred. In respect of certain employees, Provident Fund contirbutions are made to a Trust administered by the
Company. The interest rate payable to the members of the Trust shall not be lower than the statutory rate of interest
declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952
and shortfall, if any, shall be made good by the Company. The remaining contributions are made to a government
administered Provident Fund towards which the Company has no further obligations beyond its monthly contributions.
Gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The
Company has an Employee Gratuity Fund managed by LIC. The Company accounts for the liability of Gratuity
Benefits payable in future based on an independent actuarial valuation.
Leave Encashment
The Company provides for the encashment of leave with pay subject to certain rules for certain grade of employees.
The eligible employees are entitled to accumulate leave subject to certain limits, for future encashment/availment.
The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of
an independent actuarial valuation.
Termination Benefits
Termination benefits are recognised as an expense as and when incurred or only when the obligation can be reliably
estimated.
XVI. Taxation:
Taxes on income for the current year are determined on the basis of provisions of Income Tax Act, 1961.
Deferred Tax is recognised on timing differences between the accounting income and the taxable income for the year
and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.
Deferred Tax assets are recognised and carried forward to the extent that there is a virtual certainty that sufficient
future taxable income will be available against which such deferred tax asset can be realised.

53
XVII. Contingencies:
Loss contingencies arising from claims, litigations, assessments, fines, penalties, etc., are recorded when it is
probable that a liability will be incurred, and the amount can be reasonably estimated.
Warranty cost is provided on the basis of cost of warranty claims received from the customers and a reasonable
estimate for future claims is made based on empirical data.
XVIII. Earning Per Share :
Annualised basic earning per equity share is arrived at based on net profit/(loss) after taxation to the basic/
weighted average number of equity shares.
Current Year Previous Year
Rs./Lacs Rs./Lacs
2. Capital Commitment :
Estimated amount of contracts (Net of Advances) remaining 1548.49 1875.78
to be executed on capital account not provided for
3. Contingent Liabilities :
I. Claims against the Company not acknowledged
as debt on account of
a) Excise Duty 847.36 683.72
b) Service Tax 299.22 76.21
c) Income Tax - Matters in Appeal 83.96 102.16
d) Warranties 22.11 0.00
II. Customer Bills Discounted - 1925.00
III. Letter of Credit opened by banks for purchase of inventory/capital goods 1324.51 184.92
4. a) Raw Material and Components consumed are net of Rs. 2522.39 Lacs (Previous Year Rs. 2093.10 Lacs) being the
value of dispatches made to vendors for job work.
b) Raw Material and Components consumed includes purchase of traded goods of Rs. 521.40 Lacs (Previous Year Rs.
215.20 Lacs).
5. Miscellaneous Income in Schedule 13 includes Rs. 29.54 Lacs (Previous Year NIL) being provision for slow moving inventory
written back.
6. The Company has an R & D Centre (Approved by the Department of Scientific and Industrial Research, Ministry of Science &
Technology, Govt. of India) on which revenue expenditure incurred in addition to capital expenditure of Rs. 7.07 Lacs
(Previous Year Rs. 23.06 Lacs) is as under:
a) Travelling Expenses 7.54 6.13
b) Salary & Allowances 143.73 79.12
c) Components, Tools & Spares 2.11 5.31
d) Professional Charges 0.47 -
e) Others 0.91 2.08
TOTAL 154.76 92.64
7. Fixed Assets / Capital work in progress during the year includes :
a) Technical know-how Fees 169.79 218.46
b) Professional Charges 8.53 19.52
c) Development Expenses 70.24 29.21
d) Components, Tools & Spares 204.24 795.46
e) Travelling Expenses 17.64 140.57
f) Interest & Bank Charges 0.00 127.78
g) Training 0.00 6.18
h) Others 33.95 30.02
i) Salary 4.18 325.73
TOTAL 508.57 1692.93

8. The amount of Excise Duty and other Taxes recovered on sales is reduced from income and comprise Sales Tax of
Rs. 3491.07 Lacs (Previous Year Rs. 2671.43 Lacs) and Excise Duty of Rs. 7866.80 Lacs (Previous Year Rs. 9016.83 Lacs).
54
9. Information in terms of Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 :
Details of dues to Micro, Small and Medium Enterprises as per 31st March, 2010 31st March, 2009
MSMED Act, 2006 (Rs./Lacs) (Rs./Lacs)
The principal amount and the interest due thereon remaining Principal - 32.69 Principal - 61.17
unpaid to any supplier as at the end of each accounting year. Interest - 0.00 Interest- 0.00
The amount of interest paid by the buyer in terms of Section 16, of 0.00 0.00
the Micro, Small and Medium Enterprises Development Act, 2006
along with the amounts of the payment made to the supplier beyond
the appointed day during each accounting year.
The amount of interest due and payable for the period of delay in 0.00 0.00
making payment (which have been paid but beyond the appointed
day during the year) but without adding the interest specified under
Micro, Small and Medium Enterprises Development Act, 2006.
The amount of interest accrued and remaining unpaid at the end 0.00 0.00
of each accounting year, and the amount of further interest remaining
due and payable even in the succeeding years, until such date when
the interest dues as above are actually paid to the small enterprises
for the purpose of disallowance as a deductible expenditure under
Section 23 of the Micro Small and Medium Enterprises Development
Act, 2006.
Current Year Previous Year
(Rs./ Lacs) (Rs./ Lacs)
10. Defined Benefit Plans
i) The Company has recognised, in the Profit & Loss Account for the year ended
March 31, 2010 an amount of Rs. 321.58 Lacs (Previous Year Rs. 324.51 Lacs)
expenses under defined contribution plans.
Contribution to Defined Contribution Plans include :
a) Provident Fund 227.56 235.96
b) Superannuation Fund 83.44 75.74
c) Employee State Insurance Corporation 10.58 12.81
321.58 324.51
The expense is disclosed in the line item - Contribution to Provident and Other Funds in Schedule 16
ii) The Company operates post retirement defined benefit plan for retirement gratuity, which is funded.
iii) Detail of the post retirement funded gratuity plan and leaves, which is unfunded, are as follows :

Gratuity (Funded) Leaves (Unfunded)


Current Year Previous Year Current Year Previous Year
(Rs./ Lacs) (Rs./ Lacs) (Rs./ Lacs) (Rs./ Lacs)
1. Reconciliation of opening and closing balances of obligations:
a) Obligation as at April 1, 2009 687.86 426.50 65.79 166.34
b) Current Service Cost 55.39 57.70 142.80 20.59
c) Interest Cost 51.59 34.13 4.60 12.27
d) Actuarial (Gain) / Loss (64.05) 193.82 77.23 88.21
e) Benefits paid (30.23) (24.29) (48.03) (221.62)
f) Obligation as at March 31, 2010 700.56 687.86 242.39 65.79
2. Change in Plan Assets (Reconciliation of opening and closing balances):
a) Fair Value of Plan Assets as at April 1, 2009 682.69 405.19 0.00 0.00
b) Prior Period Adjustment - 29.16 0.00 0.00
c) Expected return on Plan Asset 63.49 39.09 0.00 0.00
d) Contributions 137.83 225.10 0.00 0.00
e) Benefits paid (30.23) (24.29) 0.00 0.00
f) Actuarial Gain / (Loss) on Plan Assets 6.24 8.44 0.00 0.00
g) Fair Value of Plan Assets as at March 31, 2010 860.02 682.69 0.00 0.00
3. Reconciliation of fair value of assets and obligations:
a) Present value of obligation as at March 31, 2010 700.56 687.86 242.39 65.79
b) Fair Value of Plan Assets as at March 31, 2010 (860.02) (682.69) 0.00 0.00
c) Asset / liability recognised in the Balance Sheet -* 5.17 242.39 65.79
* The excess of Assets over Liabilities in respect of Gratuity has not been recognised as the same is lying in an Income 55
Tax approved irrevocable Trust Fund.
Gratuity (Funded) Leaves (Unfunded)
Current Year Previous Year Current Year Previous Year
(Rs./ Lacs) (Rs./ Lacs) (Rs./ Lacs) (Rs./ Lacs)
4. Expense recognised during the year:
a) Current Service Cost 55.39 57.70 142.80 20.59
b) Interest Cost 51.59 34.13 4.60 12.27
c) Expected return on Plan Assets (63.49) (39.09) 0.00 0.00
d) Actuarial (Gain) / Loss (70.29) 185.38 77.23 88.21
e) Expenses recognised during the year (26.80) 238.12 224.63 121.07
5. Assumptions:
a) Discount Rate (per annum) 8.00% 7.50% 8.00% 7.00%
b) Expected rate of return on Plan Assets (per annum) 9.40% 9.30% N.A. N.A.
c) Rate of increase in compensation level (per annum) 5.00% 5.00% 5.00% 3.00%
The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotions
and other relevant factors.
The discount rate is based on the prevailing market yield of Govt. Bonds as at the date of valuation.
Expected return on asset - The expected return on assets over the accounting period, based on an assumed rate of return.
iv) Investment details of plan assets :
The Gratuity Trust has taken up a group policy with Life Insurance Corporation of India.
11. Additional information pursuant to Part II of Schedule VI to the Companies Act, 1956:
A) Particulars of Capacity (as certified by the management & accepted by the Auditors)

Item Licensed & Installed


Capacity (Nos.)
Current Previous
Year Year
Steering Product Group 6089000 5401900
Driveline Product Group 1316700 1255000

B) Production, Sale & Closing Stock of Finished Goods


i) Opening Stock & Production (Rs./Lacs)
Item Opening Stock Production

Current Year Previous Year Current Year Previous Year


Nos. Value Nos. Value Nos. Nos.
Steering Gear Assembly 17198 42.86 12819 26.10 2329064 1702806
Axle Assembly including Components 1005 3.34 38 0.71 915443 733350
Rack & Pinion Assy. 3697 35.34 354 11.79 751132 816117
Column & UJ Assy. 3644 26.16 1832 22.58 1177189 1145940
Others including sale of bought out — — — — — —
components as spares — 1.99
Total 107.70 61.18
Note :Production includes 142 pcs. (Previous Year 110 pcs.) of Sub Assemblies Steering & Nil pcs. (Previous Year 6 pcs.) of Axle
Assy. Components for sample.
ii) Sales & Closing Stock (Rs./Lacs)
Item Sales Closing Stock

Current Year Previous Year Current Year Previous Year


Nos. Value Nos. Value Nos. Value Nos. Value

Steering Gear Assembly incl. Components 2232728 56991.96 1698427 44148.68 113534 136.85 17198 42.86
Axle Assembly including Components 913448 12379.02 732383 10335.22 3000 6.54 1005 3.34
Rack & Pinion Assy. 753732 13866.50 812774 13297.47 1097 18.54 3697 35.34
Column & UJ Assy. 1124830 8645.32 1144128 8324.89 56003 89.52 3644 26.16
Others incl. sale of bought out Components — 4504.98 — 4898.45 — — — —
as Spares*
Total 96387.77 81004.71 251.45 107.70
Notes : 1. Above values include price escalation claims/reduction.
*2. In view of the number of Components and Spares being large and having different units of measurement, it is
not possible to give quantitative information.
56
C) Raw Material and Components consumed
(Rs./Lacs)
Item Current Year Previous Year

Qty./M.Ton Value Qty./M.Ton Value

Raw Material : Steel Bars (In M.T.) 807.58 510.65 604.89 338.65
Components — 63546.09 — 55901.14
Total 807.58 64056.74 604.89 56239.790

Note: In view of innumerable sizes/number of the components it is not possible to give quantitative details.
D) Value of consumption of imported and indigenous raw materials, components, tools, stores & spares and percentage of each
to total consumption:

Item Current Year Previous Year


Rs./Lacs % Rs./Lacs %

Raw Material & Components


Imported 21157.94 33.03% 20370.05 36.22%
Indigenous 42898.80 66.97% 35869.74 63.78%
64056.74 100.00% 56239.79 100.00%
Stores & Spares
Imported 6.18 0.66% 71.92 7.61%
Indigenous 930.29 99.34% 873.14 92.39%
936.47 100.00% 945.06 100.00%
Tools (Includes Loose Tools)
Imported 3.57 0.66% 86.35 18.23%
Indigenous 537.71 99.34% 387.31 81.77%
541.28 100.00% 473.66 100.00%

Current Year Previous Year


Rs./Lacs Rs./Lacs
E) CIF Value of Direct Imports
Capital Goods 229.27 443.84
Raw Material, Components, Spares & Tools 19528.89 21446.30

19758.16 21890.14
F) Trading Account (Current Year)
Description of Goods Opening Stock Purchase Sales Closing Stock
Sets Rs. in lacs Sets Rs. in lacs Sets Rs. in lacs Sets Rs. in lacs
Reservoir 6592 15.39 94618 160.1 98758 257.94 2452 4.25
Trading Account (Previous Year)
Description of Goods Opening Stock Purchase Sales Closing Stock
Sets Rs. in lacs Sets Rs. in lacs Sets Rs. in lacs Sets Rs. in lacs
Reservoir (Sets) 1020 2.12 67379 110.44 61807 168.04 6592 15.39

G) Expenditure in Foreign Currency (on Cash Basis)


Books and Periodicals 0.04 0.63
Royalty (Net of Taxes) 255.70 96.83
Technical Services (Net of Taxes) 242.84 86.57
Foreign Travels 39.33 43.79
Legal and Professional Charges (Net of Taxes) 45.56 61.50
Registration Fee 0.00 0.15
Training Fees 0.00 1.03
Warehouse Charges 9.41 11.36
Interest (Net of Taxes) 123.05 0.00
Others (Net of Taxes) 16.33 0.00

732.26 301.86
57
Current Year Previous Year
Rs./Lacs Rs./Lacs
H) Remittance in Foreign Currency (on Cash Basis)
Dividend 0.00 162.76
No. of Non Resident Shareholders N.A. 428
No. of Shares held by Non Resident Shareholders N.A. 23251092
Year to which the dividend relates N.A. 2007-08
I) Earnings in Foreign Exchange (on accrual basis)
a) FOB value of Export of Goods 3188.19 6281.89
b) Dividend (Net of Taxes) 0.00 0.00

The net difference of Rs. 514.71 Lacs gain (Previous Year Rs. 609.40 Lacs loss) on account of foreign currency fluctuation on
revenue account has been charged to relevant revenue account.

12. Forward Contracts outstanding and un-hedged Foreign Currencies exposures are as given below:
The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates.
These foreign exchange contracts are not used for trading or speculation purposes.
The Company has a risk of foreign currency exposure on the following derivative Instruments that are outstanding at the
year end:
Current Year Previous Year
Nature of Contracts Number of Contracts Foreign Currency Amount Number of Contracts Foreign Currency Amount
(In Lacs) (In Lacs)

Forward Contracts (JPY) 48 10403.81 57 10234.33

Rupees Equivalent Value - 5059.37 - 5341.30

Forward Contracts (USD) 5 6.78 25 19.96

Rupees Equivalent Value - 306.32 - 1019.96

Un-hedged Foreign Currency Exposure


Current Year (Amount in Lacs) Previous Year (Amount in Lacs)

CHF EURO USD YEN CHF EURO USD YEN

Creditors - 0.20 22.11 356.68 0.16 1.34 13.14 16.17

Rupees Equivalent Value - 12.20 998.93 173.45 7.15 90.95 671.45 8.44

Debtors & Loans & Advances - 5.88 16.70 20.74 - 6.07 49.94 96.51

Rupees Equivalent Value - 353.51 747.33 9.93 - 406.33 2529.96 49.64

Current Year Previous Year


Rs./Lacs Rs./Lacs
13. Directors’ Remuneration
I) Chairman, Vice Chairman & Managing Director and Dy. Managing Director
a) Salary 118.49 46.00
b) Commission 0.00 0.00
c) Perquisites 12.35 0.00
d) Contribution to Provident & Superannuation Funds 15.83 6.12

146.67 52.12
II) Non Whole Time Directors
a) Commission 14.00 0.00
Grand Total 160.67 52.12

Note : The above remuneration excludes provision for gratuity and leave encashment costs, since these are based on actuarial valuations
done on an overall company basis.
58
Current Year Previous Year
Rs./Lacs Rs./Lacs
III) Calculation of Commission payable to Directors including
Chairman, Vice Chairman & Managing Director and Dy. Managing Director
Profit before Tax 3296.66 (4532.86)
Add:Depreciation as per Profit & Loss Account 2658.03 2493.46
Profit on sale of assets as per Sec. 350 of The Companies Act 0.00 0.12
Loss on sale of assets as per Profit & Loss Account (23.85) 2634.18 0.00 2493.58
Less: Depreciation as per Sec.350 of Companies Act 2658.03 2493.46
Profit on sale of assets as per Profit & Loss Account 0.00 0.12
Loss on sale of assets as per Sec. 350 of The Companies Act (23.85) 0.00
Net profit on sale of investments 0.00 2634.18 0.00 2493.58
Adjusted Profit before tax 3296.66 (4532.86)
Less:Excess of expenditure over income brought
forward from previous financial year (1987.28) 0.00
Add: Directors’ Remuneration 160.67 52.12
Net Profit u/s 198 for the year 1470.05 (4480.74)
11% of the above (Previous Year 6%) 161.71 (268.84)
Commission restricted to maximum payable as per resolution
a) Chairman / Vice Chairman & Managing Director / Dy. Managing Director 0.00 0.00
b) Non Whole Time Directors 14.00 0.00

14. Interest in Joint Ventures

a) The Company holds 24,000 Equity Shares of US $1 each in Sona Autocomp Inc., incorporated in USA. This being 24% of the paid up
share capital of Sona Autocomp Inc.

The Company's interest in this joint venture is reported as Long Term Investments (Schedule 6) and is stated at Cost.

The Financial Statements, unaudited and certified by the management of Sona Autocomp Inc., U.S.A. are drawn upto 31st March,
2010.

The Company's share of each of assets, liabilities, income and expenses etc. related to its interest in this joint venture is as follows:

A) Assets
1. Fixed Assets (Net block) 0.19 0.34
Capital work in progress 0.00 0.00
Investments 0.00 0.00
2. Current Assets, Loans and Advances
Inventories 0.00 0.00
Sundry debtors 0.00 0.00
Cash and Bank Balance 0.48 1.07
Other Current Assets 0.00 8.80

B) Liabilities
1. Loan Funds 0.00 0.00
2. Current Liabilities and Provisions 4.40 1.02
3. Capital & Reserves (3.73) 8.02

C) Income
1. Sales and Services (Net) 14.04 42.74
2. Other Income 0.00 0.00

D) Expenditure
1. Salaries 18.64 19.05
2. Insurance 0.00 0.24
3. Fixed Expenses 3.09 8.63
4. Taxes 2.07 2.89
5. Others 5.39 5.66

E) Profit After Tax (15.15) 6.27


59
b) The Company holds 12,000 Equity Shares of Euro 1 each in Sona Autocomp Europe SARL, incorporated in France. This being 24%
of the paid up share capital of Sona Autocomp Europe SARL.
The Company's interest in this joint venture is reported as Long Term Investments (Schedule-6) and is stated at Cost.
The Financial Statements, unaudited and certified by the management of Sona Autocomp Europe SARL are drawn from
1st January, 2009 to 31st December, 2009.
The Company's share of each of assets, liabilities, income and expenses etc. related to its interest in this joint venture is as
follows :
Current Year Previous Year
Rs./Lacs Rs./Lacs

A) Assets
1. Fixed Assets (Net Block) 0.00 0.00
Investments 0.00 0.00

2. Current Assets, Loans and Advances


Inventories 6.56 19.22
Sundry Debtors 26.08 18.31
Cash and Bank Balance 12.19 13.39
Other Current Assets 26.01 19.54

B) Liabilities
1. Loan Funds 0.36 1.76
2. Current Liabilities and Provisions 55.70 89.21
3. Shareholder Fund 14.78 12.86

C) Income
1. Sales and Services (Net) 179.78 179.12
2. Other Income 3.59 15.28

D) Expenditure
1. Cost of Sales 162.72 179.27
2. Salaries and Wages 5.45 5.72
3. Selling and Admn. Expenses 11.98 5.25
4. Provision for Taxation 0.98 1.52

E) Profit After Tax 2.24 2.64

c) The Company holds 27,60,000 Equity Shares of Rs. 10/- each in AAM Sona Axle Pvt. Ltd. incorporated in India. This being 30% of
the paid up capital of AAM Sona Axle Pvt. Ltd.
The Company’s interest in this joint venture is reported as Long Term Investments (Schedule 6) and is stated at Cost.
The Financial Statements, unaudited and certified by the management of AAM Sona Axle Pvt. Ltd. are drawn for the year
1st April, 2009 to 31st March, 2010.
The Company’s share of each of assets, liabilities, income and expenses etc. related to its interest in this joint venture is as follows:
A) Assets
1. Fixed assets (Net block) Including CWIP 749.20 751.67
Investment 0.00 0.00
2. Current Assets, Loans and Advances
Inventories 67.22 0.00
Sundry Debtors 127.95 3.22
Cash and Bank Balance 46.30 39.91
Other Current Assets 15.32 6.06

B) Liabilities
1. Loan Funds 825.97 448.58
2. Current Liabilities and Provisions 135.74 19.98
3. Shareholder Fund 44.28 334.80

C) Income
1. Sales and Services (Net) 315.03 0.00
2. Other Income 1.02 0.00
60
Current Year Previous Year
Rs./Lacs Rs./Lacs

D) Expenditure
1. Cost of Sales 352.70 0.00
2. Salaries and Wages 45.98 0.00
3. Selling and Admn. Expenses 27.54 0.00
4. Provision for Taxation 0.00 0.00
5. Others 121.55 0.00

E) Profit After Tax (231.72) 0.00

15. The Company is primarily engaged in the business of auto components of four wheelers, which are governed by the same set of risk
and returns and hence there is only one primary segment. The Company operates mainly to the needs of domestic market and export
turnover is less than ten percent of the total turnover and hence there are no reportable secondary geographical segments.
16. Deferred Tax Liability (Net) of Rs. 2279.25 Lacs (Previous Year Rs.1172.11 Lacs) as shown in the Balance Sheet consist of:
A) Deferred tax liability representing tax arising out of
timing difference on account of
(i) Depreciation 3079.07 3039.26
(ii) Effect of Custom Duty & Excise Duty allowed for tax 29.43 23.79
purposes in the current year but will be debited to
Profit & Loss Account in the following year
3108.50 3063.05
B) Deferred tax asset representing future tax benefit on
(i) Leave Encashment Provision 114.89 22.36
(ii) Effect of expenditure debited to Profit & Loss Account 38.73 0.00
in the current year but allowed for tax purposes in the following year
(iii) Carry forward of unabsorbed Depreciation and Business Losses 675.63 1868.58
829.25 1890.94
Net Deferred Tax Liability (A-B) 2279.25 1172.11

The Deferred Tax Asset on Unabsorbed Depreciation and Business Loss has been recognised based on the profits as per the Letter
of Intent in hand from customers.
17. Earning Per Share (EPS)
- Net Profit after Tax 2164.53 (3103.11)
- Profit/(Loss) attributable to the Equity Shareholders (A) 2164.53 (3103.11)
- Basic/Weighted Average number of Equity Shares (
outstanding during the year (Nos.) (B)No 198,741,832 198,337,884
- Nominal Value of Equity Shares (In Rs.) 1.00 1.00
- Basic and Diluted Earnings Per Share (In Rs.) (A/B) 1.09 (1.56)

18. Operating Lease


The Company has taken various residential, vehicle and office premises under operating lease or lease and licence
agreements. These are cancellable, have a term of 11 months and five years. The agreements for premises cannot be
terminated by either party before the expiry of one year. Agreements for leasing of vehicles can generally be terminated
early by payment of nominal fees. The lease arrangements are generally renewable on the expiry of lease period subject
to mutual agreement. Lease payments are recognised in the Profit & Loss Account in the year incurred.
The Company has taken cars for its employees under operating lease agreement. An amount of Rs. 44.02 Lacs (Previous
Year Rs. 32.44 Lacs) is recognised as lease expenses in the Proft & Loss Account for the year ended March 31, 2010. The
future lease payment under leases are:
(i) upto 1 year Rs. 26.04 Lacs (Previous Year Rs. 43.74 Lacs)
(ii) between 1 to 5 years Rs. 16.77 Lacs (Previous Year Rs. 58.19 Lacs)
19. Provision for warranty account details as required by AS-29 (Rs./Lacs)
Description Current Year Previous Year
Opening Balance 93.00 59.00
Add : Addition During the Year 2.00 34.00
Closing Balance 95.00 93.00
The warranty expenses of Rs. 120.01 Lacs (Previous Year Rs. 161.68 Lacs) are charged off to Profit & Loss Account included under
the head Forwarding Expenses (Schedule 17).
20. Expenditure on account of premium on forward exchange contracts to be recognised in the Profit & Loss Account of
subsequent accounting period aggregates to Rs. 68.52 Lacs (Previous Year Rs. 97.06 Lacs).
61
21. Previous year figures have been regrouped/recast wherever necessary.
SCHEDULE — 20
RELATED PARTY DISCLOSURES
TRANSACTIONS WITH RELATED PARTIES
(Rs./Lacs)
Significant Substantial Joint Others Subsidiaries Key Relative Total
control Interest Venture (Significant Management of key
Influence) Personnel Management
Personnel
(1) (2) (3) (4) (5) (6) (7) (8)
PURCHASE OF GOODS 12218.80 0.00 7924.42 692.54 20835.77
Purchase of Goods (Previous Year) (13233.24) (0.43) (6431.57) (452.92) (20118.15)
SALE OF GOODS 8.18 586.67 53487.49 315.79 54398.13
Sale of Goods (Previous Year) (0.18) (963.30) (43551.05) (74.81) (44589.34)
RENDERING OF SERVICES 12.60 0.00 193.06 7.38 213.04
Rendering of Services (Previous Year) (35.98) (84.21) (177.84) (136.71) (434.74)
RECEIVING OF SERVICES 399.18 31.71 524.79 2.04 957.72
Receiving of Services (Previous Year) (287.71) (43.35) (147.86) 0.00 (478.92)
REIMBURSEMENT OF EXPENSES RECOVERED 0.13 0.00 42.84 0.00 42.97
Reimbursement of Expenses recovered (Previous Year) 0.00 0.00 0.00 0.00 0.00
REIMBURSEMENT OF EXPENSES 0.00 8.31 0.00 0.46 8.77
Reimbursement of Expenses (Previous Year) 0.00 (7.47) 0.00 0.00 (7.47)
LEASING OF PREMISES 26.27 11.11 12.13 49.51
Leasing of Premises (Previous Year) 0.00 0.00 (12.14) 0.00 (12.14)
INVESTMENT IN SHARE CAPITAL 1258.81 1258.81
Investment in Share Capital (Previous Year) (300.00) (539.00) (839.00)
REFUND OF APPLICATION MONEY 0.00
Refund of Application Money (Previous Year) (102.00) (102.00)
ADVANCE RECEIVED 0.00 0.00 0.00 18.12 18.12
Advance Received (Previous Year) (80.00) (80.00)
REMUNERATION* 39.38 213.17 252.55
Remuneration (Previous Year) (27.24) (95.00) (122.24)
DIRECTORS’ SITTING FEE 0.00
Directors’ Sitting Fee (Previous Year) (0.62) (0.62) (1.24)
DIVIDEND PAID 0.00
Dividend Paid (Previous Year) (139.81) (48.30) (0.20) (188.31)
OUTSTANDING BALANCE AS ON 31.03.2010 (DEBIT) 0.00 308.17 1469.27 2.48 1779.92
Outstanding balance as on 31.03.2009 (Debit) (378.89) (2313.35) (2692.24)
OUTSTANDING BALANCE AS ON 31.03.2010 (CREDIT) 5126.56 547.09 169.15 5842.79
Outstanding balance as on 31.03.2009 (Credit) (5210.78) (623.12) (73.92) (5907.82)

1. Figures in bracket are in respect of the previous year.


2. * Remuneration included Superannuation and Provident Fund.
Name of Related Parties & Description of Relationship is as below
1. The Individual/Entity Exercise Control over the Company 1. Dr. Surinder Kapur
2. The entity having substantial interest in the Company 1. JTEKT Corporation
3. Joint Ventures 1. Sona Autocomp Inc. 2. Sona Autocomp Europe SARL
3. AAM Sona Axle Pvt. Ltd.
4. Others (Significant Influence) 1. Sona Somic Lemforder Components Ltd. 2. Sona Okegawa Precision Forgings Ltd.
3. Mahindra Sona Ltd. 4. Maruti Suzuki India Ltd.
5. Sona e-Design and Technologies Ltd. 6. Fuji Autotech AB, Sweden
7. Pune Heat Treat Pvt. Ltd. 8. DRSK Management Services Pvt. Ltd.
9. Sona Mobility Services Ltd. 10. Sona Autocomp Holding Pvt. Ltd.
11. Kapur Properties & Investment 12. Fuji Autotech Europe SAS
5. Subsidiaries 1. Sona Fuji Kiko Automotive Ltd. 2. Arjan Stampings Ltd.
3. JTEKT SONA Automotive India Ltd.
6. Key Management Personnel 1. Dr. Surinder Kapur - (Transactions disclosed under category (1) above)
2. Mr. Sunder Rajan 3. Mr. P.V. Prabhu Parriker
4. Mr. Kiran M. Deshmukh 5. Mr. Sudhir Chopra
6. Mr. Sunjay Kapur
7. Relative of Key Individual Exercise Control 1. Mr. Sunjay Kapur (Transactions Disclosed under category (6) Above w.ef. 22nd Oct, 08)

Signature to Schedule 1 to 20
As per our report of even date attached
For S.P. Puri & Co.,
Chartered Accountants

(Rajiv Puri - Partner) For and on behalf of the Board


Membership No. 84318
FRN 001152 N
Place : Gurgaon Sudhir Chopra - Company Secretary Sunjay Kapur-Vice Chairman & Managing Director
Dated : 30th April, 2010 Rajiv Chanana - Chief Financial Officer Ravi Bhoothalingam - Director

62
CASH FLOW STATEMENT
Year Ended Year ended
31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs
A. CASH FLOW FROM OPERATING ACTIVITIES :
Net Profit before tax and extraordinary items 3296.66 (4532.86)
Adjustment for :
Depreciation 2658.03 2493.46
Miscellaneous Expenditure Written Off 0.00 302.15
(Profit)/Loss on sale of Fixed Assets 23.85 (0.12)
Dividend from Long Term Investment-Trade (7.00) (2.00)
Provision for Bad and Doubtful Debts Written Back 0.00 (18.62)
Provision for Doubtful Advances 19.61 0.00
Provision for Slow Moving Inventory Written Back (29.54) 0.00
Provision for Slow Moving Inventory 0.00 29.54
(Gain)/Loss on Revaluation of Foreign Currency Loans (101.50) 507.78
Income Tax Refund Including Interest (50.39) (56.32)
Interest Paid 2492.72 2633.25
Interest Received (17.00) 4988.78 (48.34) 5840.78
Operating Profit before Working Capital Changes 8285.44 1307.92
(Increase)/Decrease in Sundry Debtors (1061.00) (992.56)
(Increase)/Decrease in Inventories (1079.21) (287.73)
(Increase)/Decrease in Loans & Advances/Other Current Assets 1398.68 (459.08)
Increase/(Decrease) in Current Liabilities & Provisions (132.86) (874.39) 2992.25 1252.88
Cash generated from operations 7411.05 2560.80
Income Tax Paid (74.68) (198.95)
Income Tax Refund Including Interest 50.39 56.32
Net Cash from operating activities 7386.76 2418.17

B. CASH FLOW FROM INVESTING ACTIVITIES:


Purchase of Fixed Assets (including CWIP) (1953.42) (5931.69)
Proceeds from sale of Fixed Assets 42.56 68.20
Proceeds from sale of Investment 0.00 0.00
Proceeds for purchase of Investment (1258.81) (739.50)
Dividend Received 7.00 2.00
Interest Received 17.00 48.34
Net cash (used)/raised from investing activities (3145.67) (6552.65)

C . CASH FLOW FROM FINANCING ACTIVITIES:


Issue of Equity Shares 0.00 43.63
Share Premium 0.00 1420.03
Proceeds From Fresh Borrowings 9498.17 5718.39
Repayment of Borrowings (8017.96) (3842.85)
Interest Paid (2509.54) (2655.06)
Dividend Paid 0.00 (695.60)
Tax on Dividend Paid 0.00 (118.22)
Net Cash used in financing activities (1029.33) (129.68)
Net increase in cash & cash equivalents (A+B+C) 3211.76 (4264.16)

Cash & Cash Equivalents as at 31.03.2009


Cash & Bank Balances 232.63 1486.61
Cash Credit Accounts (3801.38) (3568.75) (791.20) 695.41
Cash & Cash Equivalents as at 31.03.2010
Cash & Bank Balances 78.61 232.63
Cash Credit Accounts (435.60) (356.99) (3801.38) (3568.75)

NOTES TO THE CASH FLOW STATEMENT :


1. Figures in brackets indicate cash outflow and without brackets indicate cash inflow.
2. Cash & cash equivalents include cash flows from cash credit borrowings from banks.

As per our report of even date attached


For S.P. Puri & Co.,
Chartered Accountants

(Rajiv Puri - Partner) For and on behalf of the Board


Membership No. 84318
FRN 001152 N
Place : Gurgaon Sudhir Chopra - Company Secretary Sunjay Kapur-Vice Chairman & Managing Director 63
Dated : 30th April, 2010 Rajiv Chanana - Chief Financial Officer Ravi Bhoothalingam - Director
The Company had applied to the Government of India, Ministry of Company Affairs for approval under Section 212(8) of the Companies Act, 1956 for
not attaching the Accounts of all its subsidiaries under Section 212(1) of the Companies Act, 1956. The Government of India, Ministry of Company
Affairs, vide its letter dated 5th April, 2010 had granted the said approval and directed the Company to disclose the specific financial information in
aggregate for each of the subsidiaries. The same is as per annexure given below.

SUMMARISED STATEMENT OF FINANCIALS OF SUBSIDIARY COMPANIES PURSUANT TO APPROVAL


UNDER SECTION 212(8) OF THE COMPANIES ACT, 1956.
(Rs./Lacs)
Sl. Name of Subsidiary Capital Reserves Total Total Detail of Turnover Profit before Provision for Profit after Proposed
No. Assets Liabilities Investments Taxation Taxation Taxation Dividend
1. Arjan Stampings Ltd. 72.14 99.05 746.60 746.60 - 518.42 (93.89) 25.93 (67.96) -
(w.e.f 18/10/07)
2. JTEKT SONA 5669.00 (31.55) 13931.75 13931.75 - 277.27 (108.68) 80.91 (27.77) -
Automotive India Ltd.
(w.e.f 10/10/07)
3. Sona Fuji Kiko 1000.00 (148.95) 2998.90 2998.90 - 128.79 (209.65) 63.26 (146.39) -
Automotive Ltd.
(w.e.f 22/11/07)
Note : The above information has been drawn to co-relate with the Consolidated Financial Statements.

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT,1956, RELATING TO


SUBSIDIARY COMPANIES
Sl. Particulars Arjan Stampings JTEKT SONA Sona Fuji Kiko
No. Ltd. Automotive Automotive
India Ltd. Ltd.
1. The Financial Year of the subsidiary company ended on: 31.03.2010 31.03.2010 31.03.2010
2. Number of shares in the subsidiary company held by 37142 27778094 5099993
Sona Koyo Steering Systems Limited at the above date.
Extent of holding (%) 51.48% 49% 51%
3. The net aggregate of profit/(loss) of the subsidiary
company so far as these concern the members of
Sona Koyo Steering Systems Limited.
i) dealt with in the Accounts of Sona Koyo Steering
Systems Limited amounted to:
a) for subsidiary’s Financial Year ended Nil Nil Nil
on 31st March, 2010
b) for previous Financial Years of the subsidiary Nil Nil Nil
since it become subsidiary of Sona Koyo Steering
Systems Limited.
ii) not dealt with in the Accounts of Sona Koyo Steering
Systems Limited amounted to:
a) for subsidiary’s Financial Year ended (67.96) (27.77) (146.39)
on 31st March, 2010 (Rs./Lacs)
b) for previous Financial Years of the subsidiary (66.07) (3.78) (2.56)
since it become subsidiary of Sona Koyo
Steering Systems Limited (Rs./Lacs)

For and on behalf of the Board

Place : Gurgaon Sudhir Chopra - Company Secretary Sunjay Kapur - Vice Chairman & Managing Director
64 Dated : 30th April, 2010 Rajiv Chanana - Chief Financial Officer Ravi Bhoothalingam - Director
SONA KOYO STEERING SYSTEMS LIMITED
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I. Registration Details
Registration No. L29113DL1984PLC018415 State Code 55
Balance Sheet Date 31 03 2010
Date Month Year
II. Capital Raised during the year (Amount in Rs. Thousand)
Public issue Rights issue
— —
Bonus issue Private issue
— —

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousand)


Total Liabilities Total Assets

4232851 4232851
Sources of Funds
Paid up Capital Reserves & Surplus
198742 1614972
Deferred Tax Liability
227925
Secured Loan Unsecured Loan

2191212 —

Applications of Funds
Net Fixed Assets Investments
3194183 713357
Net Current Assets Misc. Expenditure
325311 —
Accumulated Losses

IV. Performance of Company (Amount in Rs. Thousand)
Total Income Total Expenditure
8557945 8228279
Profit / (Loss) Before Tax Profit /(Loss) After Tax
329666 216453
Earning Per Share in Rs. Dividend Rate %
1.09 30%
V. Generic Names of Three Principal Products of Company (as per monetary terms)
Item Code No. 1-A074A00000
Product Description EPS Alto RHD
Item Code No. 1-A065A00000
Product Description EPS Wagon R
Item Code No. 1-A024900000
Product Description AXLE 8-SEATER
For S.P. Puri & Co.,
Chartered Accountants
(Rajiv Puri - Partner) For and on behalf of the Board
Membership No. 84318
FRN 001152 N
Place : Gurgaon Sudhir Chopra - Company Secretary Sunjay Kapur-Vice Chairman & Managing Director 65
Dated : 30th April, 2010 Rajiv Chanana - Chief Financial Officer Ravi Bhoothalingam - Director
FINANCIAL STATISTICS
(IN US DOLLARS)
REVENUE ACCOUNT CAPITAL ACCOUNT
Year Sales Profit Taxes Dividend Capital Reserves Borrowings Gross Earning Dividend Net Worth
Ended Before Block Per Per Per
Taxes Share Share Share

(US$’000) (US$’000) (US$)


31.03.2006 91976 5634 1980 1127 1976 16933 23726 39927 0.08 0.02 0.43
31.03.2007 161542 9538 3180 1821 4236 26370 22002 53100 0.07 0.02 0.32
31.03.2008 207861 9910 3580 2045 4872 40718 46497 94114 0.07 0.02 0.47
31.03.2009 158522 (8871) (2798) 0 3889 28729 46769 86573 (0.03) 0.00 0.21
31.03.2010 213342 7297 2506 1539 4399 35745 48500 101314 0.02 0.01 0.20
Note : Rupee figures have been converted into US Dollars at the exchange rates prevailing at the end of each year.

FUND FLOW - LAST FIVE YEARS


(US$’000)
2009-2010 2008-2009 2007-2008 2006-2007 2005-2006

SOURCES OF FUNDS

1. A. Increase in capital - 95 232 2219 -


B. Premium on Share Capital - 3088 7551 6566 -

2. Funds generated from operations


A. Profit/(Loss) after Tax 4791 (6073) 6330 6358 3654
B. Depreciation 5883 4880 4215 2851 2414
C. Deferred Tax 2451 (2929) 1442 366 282
3. Investment (Net) - - 60 - -

4. Borrowings 21023 11191 41457 2982 7314


5. Decrease in Working Capital - 3384 - 2210 -
34148 13636 61288 23553 13664

APPLICATION OF FUNDS

1. Capital Expenditure 4177 11552 33177 14493 8955


2. Capital Redemption Reserve for Bonus Issue - - - 2017 -

3. Dividends 1539 - 2045 1821 1127

4. Investments 2786 1448 5458 23 24


5. Increase in Working Capital 225 - 1550 - 484

6. Repayment of Loan 25421 636 19058 5199 3074


34148 13636 61288 23553 13664

Note : Rupee figures have been converted into US Dollars at the exchange rates prevailing at the end of each year.

66
statements as at 31st December, 2009 / 31st March, 2010
A UDITORS’ R EPORT ON C ONSOLIDATED provided by the management of these Companies for the
FINANCIAL STATEMENTS purpose of our examination of consolidated financial
statements.
TO THE BOARD OF DIRECTORS 2. We report that the consolidated financial statements have
SONA KOYO STEERING SYSTEMS LIMITED been prepared by the Company’s management in
accordance with the requirements of Accounting Standard
21 ‘Consolidated Financial Statements’ and Accounting
We have audited the attached Consolidated Balance Sheet of Standard 27 ‘Financial Reporting of interest in Joint
SONA KOYO STEERING SYSTEMS LIMITED (‘the Company’) and Ventures’, as notified by the Companies (Accounting
its Subsidiaries and Joint Ventures (‘the group’) as at 31st March, Standard) Rules, 2006 and on the basis of separate audited
2010, the consolidated Profit & Loss Account and the financial statements of Sona Koyo Steering Systems
consolidated Cash Flow Statement for the year ended on that Limited and its subsidiaries and joint ventures included
date, annexed thereto. These consolidated financial statements in the consolidated financial statements.
are the responsibility of the Company’s Management and have
3. On the basis of information and explanation given to us
been prepared by the management on the basis of separate
and on consideration of separate audit reports on
financial statements and other financial information regarding
individual audited financial statements of Sona Koyo
components. Our responsibility is to express an opinion on these
Steering Systems Limited and its subsidiaries and
consolidated financial statements based on our audit.
unaudited financial statements and other relevant
We conducted our audit in accordance with auditing standards financial information of the joint ventures, in our opinion
generally accepted in India. Those standards require that we and to the best of our information and according to the
plan and perform the audit to obtain reasonable assurance explanations given to us, the said consolidated financial
about whether the financial statements are free of material statements give a true and fair view in conformity with
misstatement. An audit includes examining, on a test basis, the accounting principles generally accepted in India :-
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting a. in the case of the consolidated Balance Sheet, of the
principles used and significant estimates made by management, consolidated state of affairs of the Group as at 31st
as well as evaluating the overall financial statement presentation. March, 2010;
We believe that our audit provides a reasonable basis for our b. in the case of the consolidated Profit & Loss Account,
opinion. of the consolidated results of operation of group for
1. We did not audit the financial statements of the Joint the year ended on that date; and
Ventures for the year ended 31 st March, 2010, whose
c. in the case of consolidated Cash Flow Statement, of
financial statements reflect total assets of Rs. 1077.49
the consolidated cash flows of the group for the year
lakhs (previous year Rs. 917.41 lakhs) as at 31st March,
2010 or 31st December, 2009 as the case may be, total ended on that date.
revenue of Rs. 513.46 lakhs (previous year Rs. 227.31 lakhs)
and net cash flows from operating activities of Rs. (292.19) For S.P. Puri & Co.,
lakhs (previous year Rs. (-) 12.47 lakhs) for the year ended Chartered Accountants
on that date. Attention is invited to Note No. 4 of
consolidated Notes to Accounts (Schedule 19) regarding
the Companies whose audited financial statements are (Rajiv Puri - Partner)
not available and the impact of which is not likely to be Place : Gurgaon Membership No. 84318
material. We have relied upon the unaudited financial Dated : 30th April, 2010 FRN. 001152 N

67
CONSOLIDATED BALANCE SHEET
AS AT 31ST MARCH, 2010
As at As at
Particulars Schedule 31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs

I. SOURCES OF FUNDS

1. Shareholders’ Fund
a) Share Capital 1 1987.42 1987.42
b) Share Application Money - 58.80
c) Reserves & Surplus 2 15619.21 14625.14
Minority Interest 3375.17 3500.46
Sub-Total 20981.80 20171.82
2. Loan Funds
a) Secured Loans 3 24378.99 19627.62
b) Unsecured Loans 4 8115.84 7781.76
Sub-Total 32494.83 27409.38
3. Deferred Tax Liability (Net) 19(10) 2064.22 1127.18
Total 55540.85 48708.38
II. APPLICATION OF FUNDS
1. Fixed Assets 5
a) Gross Block 60852.76 45978.50
Less : Depreciation 16089.42 13550.53
Net Block 44763.34 32427.97
b) Capital Work In Progress 1986.78 46750.12 10167.12 42595.09
c) Expenditure Incurred During Construction Period 5A - 571.37
(Pending Allocation)

2. Investments 6 3252.10 3252.10


3. Goodwill on Consolidation 112.50 133.13
Sub-Total 50114.72 46551.69
4. Current Assets, Loans and Advances
a) Inventories 7 5084.25 2987.98
b) Sundry Debtors 8 9323.36 7947.35
c) Cash & Bank Balances 9 587.72 376.19
d) Other Current Assets 10 53.75 36.14
e) Loans & Advances 11 6179.50 8571.88
Sub-Total 21228.58 19919.54
Less : Current Liabilities and Provisions 12
a) Current Liabilities 14718.79 17581.07
b) Provisions 1083.66 181.78
Sub-Total 15802.45 17762.85
Net Current Assets 5426.13 2156.69
Total 55540.85 48708.38
Significant Accounting Policies & Notes to the Accounts 19
Related Party Disclosures 20
The Schedules referred to above form an integral part of the Consolidated Balance Sheet.
This is the Consolidated Balance Sheet referred to in our report of even date.

For S.P. Puri & Co.,


Chartered Accountants

(Rajiv Puri - Partner) For and on behalf of the Board


Membership No. 84318
FRN 001152 N
Place : Gurgaon Sudhir Chopra - Company Secretary Sunjay Kapur-Vice Chairman & Managing Director
68 Dated : 30th April, 2010 Rajiv Chanana - Chief Financial Officer Ravi Bhoothalingam - Director
CONSOLIDATED PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED 31ST MARCH, 2010
Year ended Year ended
Particulars Schedule 31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs
INCOME
Gross Sales 96647.23 80925.81
[Including share of Joint Ventures Rs. 494.81 Lacs (Previous Year Rs. 179.12 Lacs)]
Less : Excise Duty and Other Taxes 11367.37 11726.30
Net Sales 85279.86 69199.51
Other Income 13 754.16 494.02
86034.02 69693.53

EXPENDITURE
Raw Materials and Components Consumed 64168.02 56080.92
[Including share of Joint Ventures Rs. 418.51 Lacs (Previous Year Rs. 198.48 Lacs)]
(Increase) / Decrease in Stock of
Finished Goods and Work-in-Process 14 (352.81) (118.65)
Excise Duty on Increase / (Decrease) in finished goods 25.71 3.95
Manufacturing Expenses 15 3868.77 3367.77
Employees’ Remuneration and Benefits 16 5904.87 5509.43
Administrative, Selling & Other Expenses 17 3246.39 3315.11
Research & Development Expenses 154.76 92.64
Finance Charges 18 3632.76 3240.85
80648.47 71492.02

Cash Profit 5385.55 (1798.49)


Miscellaneous Expenditure Written off - 303.26
Depreciation & Amortisation 2845.30 2507.63
Consolidated Profit/(Loss) before Tax 2540.25 (4609.38)
Provision for Tax - Current Year 592.87 6.97
[Including share of Joint Ventures Rs. 0.98 Lacs (Previous Year Rs. 5.45 Lacs)]
Minimum Alternate Tax (MAT) Credit Entitlement (566.90) -
Provision for Tax - Fringe Benefit Tax - Current Year - 70.54
[Including share of Joint Ventures Nil (Previous Year Rs. 2.82 Lacs)]
Increase/(Decrease) in Deferred Tax Liability 937.03 (1526.62)
Consolidated Profit / (Loss) after Tax 1577.25 (3160.27)
Add : Share of Loss Transferred to Minority 118.03 (13.63)
Consolidated Profits After Tax & Minority Interest 1695.28 (3173.90)
Balance brought forward from Previous Year (758.68) 2415.22
(Less) / Add : Prior Period Adjustments 40.33 -
Amount Available for Appropriation 976.93 (758.68)
Proposed Dividend 596.23 -
Tax on proposed Dividend 99.03 -
Transfer to General Reserve 200.00 -
Balance carried to Balance Sheet 81.67 (758.68)
EARNING PER SHARE
Basic and Diluted Earning Per Share (In Rs.) 19(11) 0.85 (1.59)
Significant Accounting Policies and Notes to the Accounts 19
Note on Related Party Disclosures 20
The Schedules referred to above form an integral part of the consolidated Profit & Loss Account
This is the Consolidated Profit & Loss Account referred to in our report of even date.

For S.P. Puri & Co.,


Chartered Accountants

(Rajiv Puri - Partner) For and on behalf of the Board


Membership No. 84318
FRN 001152 N
Place : Gurgaon Sudhir Chopra - Company Secretary Sunjay Kapur-Vice Chairman & Managing Director
Dated : 30th April, 2010 Rajiv Chanana - Chief Financial Officer Ravi Bhoothalingam - Director 69
CONSOLIDATED SCHEDULES FORMING PART OF ACCOUNTS
31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs
SCHEDULE — 1
SHARE CAPITAL
AUTHORISED
25,00,00,000 Equity Shares of Re. 1/- each 2500.00 2500.00
(Previous Year 25,00,00,000 Equity Shares of Re. 1/- each)
2500.00 2500.00
ISSUED, SUBSCRIBED AND PAID UP
19,87,41,832 Equity Shares of Re. 1/- each, fully paid up. 1987.42 1987.42
(Previous Year 19,87,41,832 Equity Shares of Re. 1/- each, fully paid up)
Out of above :
Equity Shares Include 8,79,34,000 (Previous Year 8,79,34,000) Shares of Re. 1/-
each alloted as fully paid Bonus Shares by Capitalisation of Capital
Redemption Reserve. 1987.42 1987.42

SCHEDULE — 2
RESERVES & SURPLUS
Capital Reserve 0.44 0.44
(On account of reissue of forfeited Equity Shares)
Capital Redemption Reserve 120.66 120.66
Securities Premium Account
- As per Last Balance Sheet 8921.17 7397.51
- Add : Securities Premium on account of - 1523.66
Preferential Issue of Shares
8921.17 8921.17
- Add : Addition on Consolidation - 8921.17 54.15 8975.32

General Reserve
- As per Last Balance Sheet 6287.18 6287.18
- Add : Transferred from Consolidated Profit & Loss Account 200.00 -
- Add : Transferred from Minority Interest 3.53 6490.71 - 6287.18
Profit & Loss Account
- Balance as per Profit & Loss Account [Including Share of 81.67 (758.68)
Joint Ventures Rs. 242.90 Lacs (Previous Year Rs. 8.92 Lacs)]
15614.65 14624.92
Foreign Currency Translation Reserve
- Share of Joint Ventures 4.56 0.22
15619.21 14625.14

SCHEDULE — 3
SECURED LOANS
Term Loans from Banks 22894.59 15310.32
Term Loans from Others 974.49 241.12
Short Term Loans from Banks 509.91 3865.29
Sales Tax Loan - 210.89
24378.99 19627.62
NOTES :
1. Term Loans from Banks include :
a) External Commercial Borrowings of USD Nil (Previous Year USD 2.5 Million) secured by first pari pasu charge on all the movable and
immovable properties both present and future.
b) Rupee Term Loan of Rs. 20087 Lacs (Previous Year Rs. 13389 Lacs) secured by first pari passu charge over the entire movable and
immovable fixed assets of the Company, both present and future, except the assets exclusively charged to Standard Chartered
70 Bank for Rs. 500 Lacs (Previous Year Nil). Loans to the extent of Rs. 3933 Lacs (Previous Year Rs. 2100 Lacs) are further secured by
way of second charge on current assets, on pari passu basis.
c) Corporate Loan of Rs. 2250 Lacs from State Bank of India is secured by way of first pari passu charge on Current Assets and second
pari passu charge on movable and immovable fixed assets of the Company. The Loan is further secured by way of exclusive
mortgage on Land situated at Plot No. 19, Dharuhera Industrial Area, Phase II, District Rewari (Haryana).
2. Term Loans from Others include :
a) Rs 2.32 Lacs secured by hypothecation of specific asset financed.
b) Term Loan of Rs. 972 Lacs (Previous Year Nil) secured by way of second charge on entire assets of the Company situated at
Sanand, Gujarat to be purchased or constructed out of said term loan.
c) Term Loan from financial institution (SIDBI) is secured by an exclusive first charge on specific Plant and Machinery and equitable
mortage of the land.
3. The Short Term Loans from Banks and Financial Institution are secured by hypothecation of inventories, book debts and other receivables
both present & future.
4. Sales Tax Loan is secured by pari passu first charge over all immovable properties including embedded fixed assets of the Company
excluding the assets exclusively charged to other lenders.
Loans from Bank and other loans aggregating to Rs. 2692 Lacs (Previous Year Rs. 2369.45 Lacs) are repayable within one year.
31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs

SCHEDULE — 4
UNSECURED LOANS
Short Term Loans and Advances :
- From Banks 1500.00 7740.00
- From Others 6073.98 40.00
Other Loans and Advances from Bank 80.00 -
7653.98 7780.00
Share in Joint Ventures 461.86 1.76
8115.84 7781.76

SCHEDULE — 5
FIXED ASSETS (Rs./Lacs)
Sl. Particulars Gross Block (At Cost) Depreciation Net Block
No. As at Additions Sales/ As at Upto For the Written As at As at As at
01.04.09 Disposal 31.03.10 01.04.09 Year Back 31.03.10 31.03.10 31.03.09

Tangible Assets
1. Land 3180.82 - - 3180.82 - - - - 3180.82 3180.82
2. Lease Hold Land** - 221.50 - 221.50 - 0.21 - 0.21 221.29 -
3. Building 5636.01 4140.94 0.12 9776.83 724.36 268.98 0.01 993.33 8783.50 4911.65
4. Lease Hold Improvements 174.63 19.51 174.63 19.51 163.88 2.48 166.03 0.33 19.18 10.75
5. Plant & Machinery 30220.25 8684.67 85.34 38819.58 10184.26 1995.10 74.55 12104.81 26714.77 20035.96
6. Jigs & Fixture 374.93 110.16 - 485.09 104.19 26.41 - 130.60 354.49 270.74
7. Electric Installation 1626.64 675.87 0.59 2301.92 368.07 120.15 0.09 488.13 1813.79 1258.58
8. Furniture & Fixture 825.37 54.22 79.59 800.00 379.66 52.91 78.57 354.00 446.00 445.71
9. Office Equipment 2136.26 272.56 29.36 2379.46 1212.45 172.06 27.11 1357.40 1022.06 923.80
10. Vehicles 261.92 81.31 85.62 257.61 113.89 26.85 42.49 98.25 159.36 148.03
11. R&D-Plant & Machinery 432.49 7.07 - 439.56 55.75 23.79 - 79.54 360.02 376.75
12. R&D-Computers 88.34 - - 88.34 55.43 15.11 - 70.54 17.80 32.92
Intangible Assets
1. R&D-Computer Softwares 55.73 - - 55.73 20.69 7.62 - 28.31 27.42 35.04
2. Software Others 52.29 21.65 - 73.94 7.53 10.30 - 17.83 56.11 44.76
3. New Product Development Cost 911.63 262.11 - 1173.74 159.51 176.88 - 336.39 837.35 752.13
Total 45977.31 14551.57 455.25 60073.63 13549.67 2898.85 388.85 16059.67 44013.96 32427.64
Share in Joint Ventures 1.19 777.94 - 779.13 0.86 28.89 - 29.75 749.38 0.33
Grand Total 45978.50 15329.51 455.25 60852.76 13550.53 2927.74*388.85 16089.42 44763.34 32427.97
Grand Total (Previous Year) 38707.10 7352.42 79.66 45978.50 11044.22 2516.67 10.38 13550.53 32427.98

Capital Work In Progress Including Advances - Tangible Assets 1145.97 9205.35


Capital Work In Progress Including Advances - Intangible Assets 840.81 961.77
1986.78 10167.12

* Includes Depreciation of Rs 82.44 Lacs (Previous Year Rs. 9.02 Lacs) taken and shown in expenditure incurred during construction
period pending allocation. 71
** Leasehold land Includes Rs. 221.50 Lacs (Previous Year Nil ) - in respect of which lease deed is pending for execution.
31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs
SCHEDULE — 5A
EXPENDITURE INCURRED DURING CONSTRUCTION PERIOD (Pending Allocation)
Opening Balances 571.37 44.95
Raw Material Consumption 241.39 2.97
Manufacturing Expenses 30.01 1.56
Bank Charges 19.24 24.87
Brokerage and Commission - 4.41
Depreciation 82.42 9.02
Miscellaneous Expenses 6.25 6.00
Administrative & Other Miscellaneous Expenses 10.88 -
Foreign Travel - 2.08
Filing Fees - 13.89
Lease Rent 41.89 3.87
Travelling, Conveyance & Vehicle Expenses 183.33 162.15
Legal & Professional Charges 35.53 78.36
Meeting & Conference Expenses - 0.71
Printing & Stationery 31.22 9.06
Salaries & Allowances 334.89 233.47
Contribution to Provident & Other Funds 26.74 14.54
Employee Welfare Expenses 27.15 28.95
Business Promotion 4.50 6.43
Insurance 11.69 4.58
Interest on Loan 270.97 43.97
Security Expenses 12.28 4.57
Other Repairs & Maintenance 35.54 2.08
Forwarding Expenses 10.38 0.53
Rates & Taxes 21.68 1.14
Freight & Octroi Charges 17.56 2.70
Power & Fuel 88.33 16.28
Donation 5.02 10.00
Sample Expenses - 0.03
Audit Fee 0.24 2.21
Total Expenses 2120.50 735.38
Less : Interest received from Bank (0.46) (34.63)
[TDS Deducted Rs. 0.10 Lacs (Previous Year Rs. 4.35 Lacs)]
Less : Other Income (252.81) (253.27) (154.51) (189.14)
1867.23 546.24
Add : Provision for Income Tax - 10.70
Add : Provision for FBT 0.03 11.93
Share in Joint Ventures - 2.50
Less : Capitalised / Allocated during the Year 1864.76 -
2.50 571.37
Less : Share in Joint Venture - Written off during the Year 2.50 -
- 571.37

SCHEDULE — 6
INVESTMENTS
LONG TERM (Valued At Cost)
UNQUOTED, FULLY PAID UP :
In Trade Investments :
i) 1,33,334 Equity Shares (Previous Year 1,33,334) of Rs. 10/- each 20.00 20.00
in Roop Automotive Ltd.
ii) 49,29,636 Equity Shares (Previous Year 49,29,636) of Euro 1 each, 2932.10 2932.10
in Fuji Autotech Europe S.A.S. (Incorporated in France)
iii) 30,00,000 Equity Shares (Previous Year 30,00,000) of Rs. 10/- each, 300.00 300.00
in Sona Mobility Services Ltd.
72
3252.10 3252.10
31st March, 2010 3 1st March, 2009
Rs./Lacs Rs./Lacs

SCHEDULE — 7
INVENTORIES
(At cost or net realisable value, whichever is lower)
Stores and Spare Parts 444.16 270.94
Raw Materials and Components* 2751.39 1729.82
Work-in-process 502.50 410.92
Finished Goods** 470.22 165.43
Tools 842.20 387.83
5010.47 2964.94
Less : Provision for slow moving inventory - (29.54)
5010.47 2935.40
Share in Joint Ventures 73.78 52.58
5084.25 2987.98

* Includes material in transit Rs. 26.61 Lacs (Previous Year Nil)


** Includes material in transit Rs. 60.88 Lacs (Previous Year Nil)

SCHEDULE — 8
SUNDRY DEBTORS
(Unsecured, considered good)
Debts outstanding for a period exceeding six months 104.32 188.12
Other Debts 9065.01 7737.69
9169.33 7925.81
Share in Joint Ventures 154.03 21.54
9323.36 7947.35

SCHEDULE — 9
CASH AND BANK BALANCES
Cash and Cheques in hand 12.13 5.48
Balances with Scheduled Banks
- in Current Accounts 514.65 278.36
- in Current Accounts with Other Banks 1.57 -
- in Fixed Deposit Accounts 0.40 37.97
528.75 321.81
Share in Joint Ventures 58.97 54.38
587.72 376.19

SCHEDULE — 10
OTHER CURRENT ASSETS
(Unsecured, considered good)
Claims Receivable 53.75 36.14
53.75 36.14

73
31st March, 2010 3 1st March, 2009
Rs./Lacs Rs./Lacs
SCHEDULE — 11
LOANS AND ADVANCES
(Unsecured, considered good unless otherwise stated)
Advances recoverable in cash or in kind or for value to be received
- Considered good 1593.89 2653.27
- Considered doubtful 19.61 1535.26
1613.50 4188.53
Less : Provision for Doubtful Advances (19.61) -
1593.89 4188.53
Security Deposits 442.86 428.19
Balance with Excise and Port Trust Authorities 3370.13 3245.70
Advance payment against Income Tax (Net of Provisions) 731.29 675.06
6138.17 8537.48
Share in Joint Ventures 41.33 34.40
6179.50 8571.88

SCHEDULE — 12
CURRENT LIABILITIES AND PROVISIONS
A. CURRENT LIABILITIES
Sundry Creditors
- Due to Micro & Small Enterprises - -
- Due to Others 13568.25 16289.88
- Unclaimed Dividends* 34.20 37.69
- Unclaimed Redeemed Debentures - 3.57
- Advance from Customers 0.01 -
Other Liabilities 905.29 1112.52
Interest Accrued but not due on Loans 18.14 29.44
14525.89 17473.10
Share in Joint Ventures 192.90 107.97
14718.79 17581.07
* There is no amount due and outstanding to be credited to
Investor Education & Protection Fund

B. PROVISIONS
Proposed Dividend 596.23 -
Corporate Dividend Tax 99.03 -
Gratuity 9.04 8.66
Leave Encashment 273.57 74.31
Warranty 97.69 94.12
Provision for Tax 5.16 -
1080.72 177.09
Share in Joint Ventures 2.94 4.69

1083.66 181.78

74
31st March, 2010 3 1st March, 2009
Rs./Lacs Rs./Lacs

SCHEDULE — 13
OTHER INCOME
Lease Rental Income - 0.44
Income from Sale of Scrap 252.87 273.09
Dividend from Long Term Trade Investments 7.00 2.00
Interest Income 67.39 48.34
[TDS Deducted Rs. 2.82 Lacs (Previous Year Rs. 7.93 Lacs)]
Miscellaneous Income 101.67 102.02
Profit on disposal of Fixed Assets - 0.12
Exchange Gain/Loss on Foreign Currency Loans 304.86 -
Job Work 1.72 4.53
735.51 430.54
Share in Joint Ventures 18.65 63.48
754.16 494.02

SCHEDULE — 14
(INCREASE)/DECREASE IN STOCK OF FINISHED
GOODS AND WORK IN PROCESS
INVENTORY as at 31.03.2009
Finished Goods 165.43 61.18
Work-in-process 410.92 417.71
Stock of Scrap 2.00 578.35 0.03 478.92
INVENTORY as at 31.03.2010
Finished Goods 470.22 165.43
Work-in-process 502.50 410.92
Stock of Scrap - 972.72 2.00 578.35
(394.37) (99.43)
Share in Joint Ventures 41.56 (19.22)
(352.81) (118.65)

SCHEDULE — 15
MANUFACTURING EXPENSES
Stores and spare parts consumed 944.13 959.53
Loose tools consumed 541.28 473.66
Power and fuel 1216.57 1012.79
Freight & Octroi charges 390.97 394.21
Machine repairs and maintenance 326.40 258.42
Royalty 374.07 255.12
Job Work 18.70 13.23
Testing Charges 0.96 0.60
3813.08 3367.56
Share in Joint Ventures 55.69 0.21
3868.77 3367.77
SCHEDULE — 16
EMPLOYEES’ REMUNERATION AND BENEFITS
Salaries, wages and allowances 4656.84 4113.01
Contribution to Provident and other Funds 498.02 562.58
Employees’ welfare expenses 679.93 806.08
5834.79 5481.67
Share in Joint Ventures 70.08 27.76
75
5904.87 5509.43
31st March, 2010 3 1st March, 2009
31st March, 2010 3 1st March, 2009
Rs./Lacs Rs./Lacs
Rs./Lacs Rs./Lacs

SCHEDULE — 17
ADMINISTRATIVE, SELLING AND OTHER EXPENSES
Rent 100.21 123.85
Rates and taxes 32.25 6.79
Insurance 39.89 69.53
Building repairs and maintenance 41.43 39.20
Other repairs and maintenance 207.29 154.59
Travelling, Conveyance and Vehicle Expenses 462.69 449.45
Communication & Stationery Expenses 153.42 160.65
Legal & Professional Charges 484.11 484.83
Security Charges 94.27 84.18
Business Promotion 47.97 33.84
Forwarding Expenses 1018.29 1070.77
Directors’ Sitting Fees 6.85 8.79
Exchange Loss on Foreign Currency Loans - 507.78
Provision for Slow Moving Inventory - 29.54
Provision for Doubtful Advances 19.61 -
Loss on Disposal of Fixed Assets 23.85 -
Miscellaneous Expenses 444.20 60.96
Auditors’ Remuneration
Audit Fee 11.28 6.60
Fee for other services (i) Taxation Matters 3.46 2.10
(ii) Limited Review Fee 3.00 2.25
(iii) Certifications 2.91 3.10
3196.98 3298.80
Share in Joint Ventures 49.41 16.31
3246.39 3315.11

SCHEDULE — 18
FINANCE CHARGES
Interest on fixed loans 2603.55 2415.37
Other interest 66.50 239.23
Bank and other finance charges 472.23 361.82
Cash discount 397.51 224.42
3539.79 3240.84
Share in Joint Ventures 92.97 0.01
3632.76 3240.85

SCHEDULE – 19
NOTES TO THE ACCOUNTS
1. SIGNIFICANT ACCOUNTING POLICIES
I. Group Companies :
Sona Koyo Steering Systems Limited has three Subsidiaries and three Joint Venture Companies as given in Table
below:
Sl.No. Name of Company Relationship Country of % of ownership
Incorporation interest as on 31st March, 2010

1. Sona Fuji Kiko Automotive Ltd. Subsidiary India 51


2. JTEKT SONA Automotive India Ltd. Subsidiary India 49*
3. Arjan Stampings Ltd. Subsidiary India 51.48
4. Sona Autocomp Europe SARL Joint Venture France 24
5. Sona Autocomp Inc. USA Joint Venture USA 24
6. AAM Sona Axle Pvt. Ltd. Joint Venture India 30
*Subsidiary due to control of the composition of the Board of Directors.

76
II. Accounting Convention :
The financial statements have been prepared on historical cost basis and in accordance with the applicable accounting
standards and other applicable relevant statutes. A summary of important accounting policies is set out below.
III. Basis for preparation and principle of consolidation :
The consolidated financial statements of the Group have been prepared and presented under the historical cost
convention on an accrual basis. The Financial Statements of the parent company and the subsidiaries have been
combined on a line to line basis by adding together the book values of like items of assets and liabilities, income and
expenses after eliminating intra group balances/transactions in full as per Accounting Standard -21 on “Consolidated
Financial Statements” issued by the Institute of Chartered Accountants of India. The Financial Statements of the
Joint Venture Companies over which the Company exercises joint control are accounted for using proportionate
consolidation method as per Accounting Standard 27 on “Financial Reporting of Interests in Joint Ventures” issued
by the Institute of Chartered Accountants of India. All unrealised surplus and deficits on transactions between the
group companies are eliminated. Accounting policies between group companies are consistent to the extent
practicable. Appropriate disclosure is made of significant deviations from the company’s accounting policies, which
have not been adjusted.
IV. Goodwill :
Goodwill arising on acquisition is tested for impairment on each Balance Sheet date.
V. (a) The transactions of Sona Autocomp Inc., USA, are not significant and variance in accounting policies, if any, may
not materially vary these consolidated financial statements.
(b) In respect of Sona Autocomp Europe SARL., inventory is valued at last cost of purchase method instead of
weighted average method followed by the Company. However, the impact on the consolidated financial
statements is not material.
VI. Other Significant Accounting Policies :
Significant accounting policies followed by Sona Koyo Steering Systems Ltd. are annexed to the independent non-
consolidated financial statements. The accounting policy of the joint ventures and subsidiaries are not in major variance.
- Use of Estimates :
The preparation of financial statements is in conformity with generally accepted accounting principles (GAAP)
requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the year. Actual results could differ from those estimates. Any
revision to accounting estimates is recognised prospectively in current and future periods.
- Fixed Assets and Depreciation :
Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation. Cost comprises of
the purchase price, incidental expenses, erection/commissioning expenses and financial charges upto the date
the fixed asset is ready for its intended use.
The Group provides depreciation on fixed assets on the straight-line method at the rates specified in Schedule
XIV to the Companies Act, 1956 on a pro-rata basis from the month in which the asset is put to use, except as
stated below:
- Leasehold improvements are depreciated at the rate of 20% per annum or over the period of lease if less
than five years.
- Assets situated at employees’ residence are depreciated at the rate of 33.33% per annum.
- Vehicles are depreciated at the rate of 12% per annum from April, 2003.
- The Foreign Joint Venture Companies provide depreciation based on useful life of assets as per local
regulations.
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss
is charged to the Profit & Loss Account in the year in which an asset is identified as impaired. The impairment loss
recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable
amount.
- Intangible Assets and Amortization thereof :
Intangible assets comprise new product development expenses and computer software and are stated at cost
less accumulated amortization and impairment losses, if any.
Product development costs incurred including technical fees paid to collaborator for the development of new
products for which letters of intent have been received from customers are accumulated & recognised as
intangible assets (included under fixed assets) and are amortised over a period of six years. Un-amortized
products development fee in respect of models discontinued during the year is fully charged off in Profit & Loss
Account.
Software, which is not an integral part of the related computer hardware is classified as an intangible asset and
is being amortised over a period of 72 months, being the estimated useful life.
Amortization expenses is charged on a pro-rata basis for assets purchased during the year. The appropriateness 77
of the amortization period and the amortization method is reviewed at each financial year end.
- Operating Lease :
Lease arrangements, where the risks and rewards incidental to ownership of an asset substantially vest with the
lessor, are recognised as operating lease.
Operating lease payments are recognised as an expense in the Profit & Loss Account on a straight line basis over
the lease term.
- Investments :
Long term investments are valued at their acquisition cost. Provision for diminution, other than temporary, is
made wherever necessary.
- Inventory Valuation :
a) Stores and spare parts are valued at lower of weighted average cost and net realisable value.
b) All tools (including loose tools) are written off over their useful life and un-issued tools are valued at lower of
weighted average cost and market value.
c) Raw materials and Components and Work-in-Process are valued at lower of weighted average cost and net
realisable value.
d) Finished Goods are valued at lower of weighted average cost and net realisable value.
Finished Goods and Work in Process include costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
- Foreign Currency Transactions :
Foreign currency transactions are recorded on the basis of average of the exchange rates in force during the
relevant week of each month. Gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit &
Loss Account. In case of transaction covered by forward contracts, the difference between the contract rate and
exchange rate prevailing on the date of transaction is charged to Profit & Loss Account, proportionately over the
contract period. All assets and liabilities denominated in foreign currency are restated at relevant year end rates.
Foreign Joint Venture companies are not considered as an integral part of the operation of the parent company
hence all monetary and non monetary assets and liablities have been translated at exchange rate prevailing at
the closing date of joint venture companies financial year. Income and expenditure have been translated at
quarterly average rate of exhange prevailing for the joint venture companies financial year. Translation losses
and gains on the above are carried to “Foreign Currency Translation Reserve” for future adjustments.
- Excise :
Excise duty on finished goods manufactured is accounted on the basis of production of goods.
- Research & Development :
a) Capital Expenditure for Research & Development is capitalised in the year of installation.
b) Revenue expenses incurred for Research & Development for existing products are charged to Profit & Loss
Account of the year.
- Income :
Revenue recognition - Revenue from domestic and export sales are recognised on transfer of all significant risks
and rewards or ownership to the buyer, which generally coincides with dispatch of goods from factory/port
respectively.
Price escalation claims from customers and discounts from suppliers are accounted in the year under audit, only
if they are settled with the customers and suppliers respectively up to the date of finalisation of accounts.
Dividend on investment is accounted in the year in which it is declared.
All export benefits are recognised as income when there is substantial certainty as to their realisability e.g.
a) DEPB license recognized as income on the relevant application being filed.
b) Duty draw back is accounted in the year of export.
- Expenses :
a) Discounts to customers and price escalation to suppliers to the extent not settled at the Balance Sheet date
are accounted on the basis of reasonable estimates made after considering negotiations with vendors/
customers.
b) Jigs and fixtures costing less than Rs. 5,000/- each are written off in the year of purchase.
c) Goods received are accounted as purchases on satisfactory completion of inspection.
- Borrowing Cost :
Borrowing costs on loans relatable to qualifying assets are capitalized to the extent incurred prior to these assets
78 being put to use. Other borrowing costs are written off in the year to which they pertain.
- Employees’ Benefits :
a) Provident Fund
Contributions to defined contribution schemes such as Provident Fund, etc. are charged to the Profit & Loss
Account as incurred. In respect of certain employees, Provident Fund contirbutions are made to a Trust
administered by the Company. The interest rate payable to the members of the Trust shall not be lower than
the statutory rate of interest declared by the Central Government under the Employees Provident Funds and
Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. The remaining
contributions are made to a government administered Provident Fund towards which the Company has no
further obligations beyond its monthly contributions.
b) Gratuity
The obligation towards gratuity is a defined benefit retirement plan covering eligible employees. The Employee
Gratuity Fund is managed by Insurance Institutions. The liability of Gratuity Benefits payable in future is
accounted or provided based on an independent actuarial valuation.
c) Leave Encashment
The encashment of leave with pay is provided subject to certain rules for certain grade of employees. The
eligible employees are entitled to accumulate leave subject to certain limits, for future encashment/availment.
The liability is provided based on the number of days of unutilized leave at each balance sheet date on the
basis of an independent actuarial valuation.
d) Termination Benefits
Termination benefits are recognised as an expense as and when incurred or only when the obligation can be
reliably estimated.
- Taxation :
Taxes on income for the current year are determined on the basis of provisions of Income Tax Act.
Deferred Tax is recognised on timing differences between the accounting income and the taxable income for
the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet
date.
Deferred Tax assets are recognised and carried forward to the extent that there is a virtual certainty that sufficient
future taxable income will be available against which such deferred tax asset can be realised.
- Contingencies :
Loss contingencies arising from claims, litigations, assessments, fines, penalties, etc., are recorded when it is
probable that a liability will be incurred, and the amount can be reasonably estimated.
Warranty cost is provided on the basis of cost of warranty claims received from the customers and a reasonable
estimate for future claims is made based on empirical data.
- Earning Per Share :
Annualised basic earning per Equity Share is arrived at based on net profit/(loss) after taxation to the basic/
weighted average number of equity shares.
Current Year Previous Year
Rs./Lacs Rs./Lacs
2. Capital Commitment :
Estimated amount of contracts remaining 1869.25 5972.59
to be executed on capital account not provided for
3. Contingent Liabilities :
I. Claims against the Group not acknowledged
as debt on account of
a) Excise Duty 847.36 683.72
b) Warranties 22.11 0.00
c) Service Tax 299.22 76.21
d) Income Tax - Matters in Appeal 83.96 102.16
II. Customer Bills Discounted 0.00 1925.00
III. Letter of Credit opened by banks for purchase of inventory/capital goods 1324.51 540.25

4. The Profit/Loss after tax of Joint Venture Companies namely Sona Autocomp Inc., USA & AAM Sona Axle Pvt. Ltd., has been
based on unaudited financial statement ended 31st March, 2010 and for Sona Autocomp Europe SARL has been based
on the unaudited financial statement ended 31st December, 2009. It is unlikely that the audited results would be
materially, different from the unaudited results. There are no material transaction from 1st January, 2010 to 31st March,
2010 in respect of Joint Venture Company Sona Autocomp Europe SARL. There is no change in Company’s interest in 79
aforesaid Joint Venture from 1st January, 2010 to 31st March, 2010.
Current Year Previous Year
(Rs./ Lacs) (Rs./ Lacs)
5. Fixed Assets / Capital work in progress during the year includes:
a) Technical Know-how Fees 169.79 218.46
b) Professional Charges 8.53 19.52
c) Development Expenses 70.24 29.21
d) Components, Tools & Spares 204.24 795.46
e) Travelling Expenses 17.64 140.57
f) Interest & Bank Charges 0.00 127.78
g) Others 33.95 30.02
h) Salary 4.18 325.73
i) Training 0.00 6.18
TOTAL 508.57 1692.93

Note - Excluding figures reported in Schedule 5A.


6. The amount of Excise Duty and other Taxes paid on sales is reduced from income and comprise Sales Tax of Rs. 3487.78 Lacs
(Previous Year of Rs. 2671.43 Lacs) and Excise Duty of Rs. 7879.59 Lacs (Previous Year of Rs. 9016.83 Lacs).
7. Defined Benefit Plans :
i) The group has recognised, in the Profit & Loss Account for the year ended March 31, 2010 an amount of Rs. 336.70 Lacs
(Previous Year Rs. 335.82 Lacs) expenses under defined contribution plans. Contribution to defined contribution plans
include:
a) Provident Fund 241.94 247.21
b) Superannuation Fund 83.44 75.74
c) Employee State Insurance Corporation 11.32 12.87
336.70 335.82

The expense is disclosed in the line item - Contribution to provident and other funds in Schedule 16.
ii) The group operates post retirement defined benefit plan for retirement gratuity, which is funded.
iii) Detail of the post retirement funded gratuity plan and leaves, which is unfunded, are as follows
Gratuity (Funded) Leaves (Unfunded)
Current Year Previous Year Current Year Previous Year
(Rs./ Lacs) (Rs./ Lacs) (Rs./ Lacs) (Rs./ Lacs)
1. Reconciliation of opening and closing balances of obligations:
a) Obligation as at April 1, 2009 691.88 426.50 74.31 166.34
b) Current Service Cost 66.66 61.19 161.82 29.10
c) Interest Cost 51.90 34.13 5.26 12.27
d) Actuarial (Gain) / Loss (64.11) 193.82 81.64 88.21
e) Benefits paid (30.23) (24.29) (49.46) (221.62)
f) Obligation as at March 31, 2010 716.10 691.35 273.57 74.30
2. Change in Plan Assets (Reconciliation of opening and closing balances):
a) Fair Value of Plan Assets as at April 1, 2009 682.69 405.19 0.00 0.00
b) Prior Period Adjustment 0.00 29.16 0.00 0.00
c) Expected return on Plan Asset 63.68 39.09 0.00 0.00
d) Contributions 143.63 225.10 0.00 0.00
e) Benefits paid (30.23) (24.29) 0.00 0.00
f) Actuarial Gain / (Loss) on Plan Assets 6.24 8.44 0.00 0.00
g) Fair Value of Plan Assets as at March 31, 2010 866.01 682.69 0.00 0.00
3. Reconciliation of fair value of assets and obligations:
a) Present value of obligation as at March 31, 2010 716.10 691.35 273.57 74.30
b) Fair Value of Plan Assets as at March 31, 2010 (866.01) (682.69) 0.00 0.00
c) Unfunded amount recognised in the Balance Sheet (149.91) 8.66 273.57 74.30
4. Expense recognised during the year:
a) Current Service Cost 66.66 61.19 161.82 29.10
b) Interest Cost 51.90 34.13 5.26 12.27
c) Expected return on Plan Assets (63.68) (39.09) 0.00 0.00
80 d) Actuarial (Gain) / Loss (70.35) 185.38 81.64 88.21
e) Expenses recognised during the year (15.47) 241.61 248.72 129.58
5. Assumptions:
a) Discount Rate (per annum) 7.5% to 8%
b) Expected rate of return on Plan Assets (per annum) 8% to 9.4%
c) Rate of increase in compensation level (per annum) 5% to 10%

The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion
and other relevant factors.
The discount rate is based on the prevailing market yields of Government Bonds as at the date of valuation.
The expected return on assets over the accounting period is based on an assumed rate of return.
iv) Investment detail of plan assets:
The Gratuity Trust has taken up a group policy with Life Insurance Corporation of India.
8. Forward Contracts outstanding and un-hedged Foreign Currencies exposures are as given below :
The Group uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates. These
foreign exchange contracts are not used for trading or speculation purposes.
The Group has a risk of foreign currency exposure on the following derivative Instruments that are outstanding at the year
end:

Current Year Previous Year


Nature of Contracts
Number of Foreign Currency Amount Number of Foreign Currency Amount
Contracts (In Lacs) Contracts (In Lacs)
Forward Contracts (JPY) 48 10403.81 57 10234.33

Rupee Equivalent Value - 5059.37 - 5341.30

Forward Contracts (USD) 5 6.78 25 19.96

Rupee Equivalent Value - 306.32 - 1019.96

Un-hedged Foreign Currency Exposure


Current Year (Amount in Lacs) Previous Year (Amount in Lacs)
CHF EURO USD YEN CHF EURO USD YEN

Creditors - 0.20 23.04 1133.69 0.16 1.34 13.14 16.17

Rupee Equivalent Value - 12.20 1040.64 551.43 7.05 89.70 665.67 8.32

Debtors & Loans & Advances - 5.88 16.73 8430.44 - 6.07 49.94 96.51

Rupee Equivalent Value - 353.51 767.06 4034.81 - 406.33 2529.96 49.64

9. The Group is primarily engaged in the business of auto components of four wheelers, which are governed by the same set
of risk and returns, and hence there is only one primary segment. The Group operates mainly to the needs of domestic
market and export turnover is less than ten percent of the total turnover and hence there are no reportable secondary
geographical segments.
10. Deferred Tax Liability (Net) of Rs. 2064.22 Lacs (Previous Year Rs. 1127.18 Lacs) as shown in the Balance Sheet consist of:
Current Year Previous Year
(Rs./Lacs) (Rs./Lacs)
A. Deferred tax liability representing tax arising out of timing
difference on account of
(i) Depreciation 3553.74 3049.25
(ii) Deferred Revenue Expenditure 0.00 0.00
(iii) Custom Duty & Excise Duty 29.43 23.79
3583.17 3073.04
B. Deferred tax asset representing future tax benefit on
difference on account of
(i) Leave encashment Provision 121.89 22.36
(ii) Others 39.04 0.16
(iii) Gratuity 1.31 0.00
(iv) Unabsorbed Depreciation and Business Loss 1356.71 1923.33
1518.95 1945.85
Net Deferred Tax Liability (A-B) 2064.22 1127.18

The Deferred Tax Asset on Unabsorbed Depreciation and Business Loss has been recognised based on the profits as per the 81
Letter of Intent in hand from customers.
Current Year Previous Year
Rs./Lacs Rs./Lacs

11. Earning Per Share (EPS) :


- Net Profit after Tax 1695.28 (3146.63)
- Profit/(Loss) attributable to the Equity Shareholders (A) 1695.28 (3146.63)
- Basic/Weighted Average number of Equity Shares (
outstanding during the year (Nos.) (B)No 198,741,832 198,337,884
- Nominal Value of Equity Shares (In Rs.) 1.00 1.00
- Basic and Diluted Earnings Per Share (In Rs.) (A/B) 0.85 (1.59)

12. Operating Lease :


The Group has taken various residential, vehicle and office premises under operating lease or licence agreements. These are
cancellable, have a term of 11 months and five years. The agreements for premises cannot be terminated by either party
before the expiry of one year. Agreements for leasing of vehicles can generally be terminated early by payment of nominal
fees. The lease arrangements are generally renewable on the expiry of lease period subject to mutual agreement. Lease
payments are recognised in the Profit & Loss Account in the year incurred.
The Company has taken cars for its employees under operating lease agreement. An amount of Rs. 74.82 Lacs (Previous Year
Rs. 32.44 Lacs) is recognised as lease expenses in the Profit & Loss Account for the year ended March 31, 2010. The future
lease payment under leases are:

(i) upto 1 year Rs. 58.92 Lacs (Previous Year Rs. 95.19 Lacs)
(ii) between 1 to 5 years Rs. 69.72 Lacs (Previous Year Rs. 169.70 Lacs)
13. Provision for warranty account details as required by AS-29 (Rs./Lacs)
Description Current Year Previous Year

Opening Balance 94.12 59.00


Add: Addition During The Year 3.57 35.12
Closing Balance 97.69 94.12

The warranty expenses of Rs. 121.58 Lacs (Previous Year Rs. 161.68 Lacs) are charged off to Profit & Loss Account included
under the head Forwarding Expenses (Schedule 17).
14. “Goodwill on consolidation” arising on acquisition which was hitherto amortized on straight line basis is now being tested
for impairment at each reporting date. Consequently an amount of Rs 22.50 Lacs has not been amortised in the current year's
Consolidated Financial Statements. Due to this change, the Consolidated Profit After Tax is higher by Rs. 22.50 Lacs and
Goodwill on Consolidation and Reserves & Surplus in the Consolidated Balance Sheet are overstated to that extent.
15. Based on Joint Venture Agreement executed between Sona Koyo Steering Systems Ltd. and Arjan Auto Private Ltd., the
valuation of Goodwill/Securities premium has been revalued/recalculated for change in shareholding of Holding Company in
earlier years.
16. Prior period adjustment shown in Consolidated Profit & Loss Account relates to rectification of errors in earlier years.
17. Raw Material and components consumed includes purchase of Traded Goods of Rs. 521.40 Lacs (Previous Year Rs. 413.68
Lacs). It includes share in Joint Venture of Rs.120.78 Lacs (Previous Year Rs. 198.48 Lacs).
18. Miscellaneous Income in Schedule 13 includes Rs. 29.54 Lacs (Previous Year Nil) being provision for slow moving inventory
written back.
19. Previous year figures have been regrouped/recast wherever necessary.

82
SCHEDULE — 20
CONSOLIDATED RELATED PARTY DISCLOSURES
TRANSACTIONS WITH RELATED PARTIES
(Rs./Lacs)
SIGNIFICANT SUBSTANTIAL JOINT OTHERS KEY RELATIVE TOTAL
CONTROL INTEREST VENTURE (SIGNIFICANT MANAGEMENT OF KEY
INFLUENCE) PERSONNEL MANAGEMENT
PERSONNEL
(1) (2) (3) (4) (5) (6) (7)
PURCHASE OF GOODS 12396.07 0.00 7924.42 20320.49
Purchase of Goods (Previous Year) (13233.24) (0.43) (6478.44) (19712.11)
SALE OF GOODS 60.10 586.67 53487.49 54134.26
Sale of Goods (Previous Year) (0.18) (963.30) (43560.70) (44524.18)
RENDERING OF SERVICES 12.60 0.00 193.06 205.66
Rendering of Services (Previous Year) (35.98) (84.21) (179.84) (300.02)
RECEIVING OF SERVICES 654.08 31.71 524.79 1210.58
Receiving of Services (Previous Year) (287.71) (43.35) (162.49) (493.55)
REIMBURSEMENT OF EXPENSES RECOVERED 50.99 0.00 42.84 93.83
Reimbursement of Expenses recovered (Previous Year) 0.00 0.00 (6.16) (6.16)
Purchase of Capital Goods (Previous Year) (2.41) (2.41)
REIMBURSEMENT OF EXPENSES 12.48 8.31 0.00 20.79
Reimbursement of Expenses (Previous Year) 0.00 (7.47) 0.00 (7.47)
LEASING OF PREMISES 26.27 11.11 37.38
Leasing of Premises (Previous Year) 0.00 0.00 (12.14) (12.14)
SHARE CAPITAL 1310.19 1310.19
Share Capital (Previous Year) 0.00 0.00 (1.00) (1.00)
Investment in Share Capital (Previous Year) 0.00 0.00 (300.00) (300.00)
REMUNERATION * 39.38 213.17 252.55
Remuneration (Previous Year) (27.24) 0.00 0.00 0.00 (140.46) (167.70)
DIRECTORS’ SITTING FEE 1.00 1.00
Directors’ Sitting Fee (Previous Year) 0.00 0.00 0.00 (0.62) (0.82) (1.44)
Dividend Paid (Previous Year) (139.81) 0.00 (48.30) (0.20) (188.31)
OUTSTANDING BALANCE AS ON 31.03.2010 (DEBIT) 0.00 308.17 1469.27 1777.45
Outstanding balance as on 31.03.2009 (Debit) (378.89) (2315.95) (2694.84)
OUTSTANDING BALANCE AS ON 31.03.2010 (CREDIT) 5343.27 547.09 5890.36
Outstanding balance as on 31.03.2009 (Credit) (5210.78) (632.08) (5842.86)

1. Figures in bracket are in respect of the previous year.


2. * Remuneration included Superannuation and Provident Fund.
Name of Related Parties & Description of Relationship is as below
1. The Individual/Entity Exercise Control over the Company 1. Dr. Surinder Kapur

2. The entity having substantial interest in the Company 1. JTEKT Corporation


3. Joint Ventures 1. Sona Autocomp Inc. 2. Sona Autocomp Europe SARL
3. AAM Sona Axle Pvt. Ltd.
4. Others (Significant Influence) 1. Sona Somic Lemforder Components Ltd. 2. Sona Okegawa Precision Forgings Ltd.
3. Mahindra Sona Ltd. 4. Maruti Suzuki India Ltd.
5. Sona e-Design and Technologies Ltd. 6. Fuji Autotech AB, Sweden
7. Pune Heat Treat Pvt. Ltd. 8. DRSK Management Services Pvt. Ltd.
9. Sona Mobility Services Ltd. 10. Sona Autocomp Holding Pvt. Ltd.
11. Kapur Properties & Investment 12. Fuji Autotech Europe SAS

5. Key Management Personnel 1. Dr. Surinder Kapur - (Transactions disclosed under category (1) above)
2. Mr. Sunder Rajan 3. Mr. P.V. Prabhu Parriker
4. Mr. Kiran M. Deshmukh 5. Mr. Sudhir Chopra
6. Mr. Sunjay Kapur

6. Relative of Key Individual Exercise Control 1. Mr. Sunjay Kapur


(Transactions Disclosed under category (6) above w.e.f. 22nd Oct., 08)

Signature to Schedule 1 to 20
As per our report of even date attached
For S.P. Puri & Co.,
Chartered Accountants

(Rajiv Puri - Partner) For and on behalf of the Board


Membership No. 84318
FRN 001152 N
Place : Gurgaon Sudhir Chopra - Company Secretary Sunjay Kapur-Vice Chairman & Managing Director
Dated : 30th April, 2010 Rajiv Chanana - Chief Financial Officer Ravi Bhoothalingam - Director
83
CONSOLIDATED CASH FLOW STATEMENT
Year Ended Year ended
31st March, 2010 31st March, 2009
Rs./Lacs Rs./Lacs
A. CASH FLOW FROM OPERATING ACTIVITIES :
Net Profit before tax and Minority Interest 2540.25 (4609.38)
Adjustment for :
Depreciation 2845.30 2507.63
Miscellaneous Expenditure Written Off 0.00 303.26
(Profit)/Loss on sale of Fixed Assets 23.85 (0.12)
Dividend from Long Term Investment-Trade (7.00) (2.00)
Provision for Bad and Doubtful Debts Written Back 0.00 (18.62)
Provision for Doubtful Advances 19.61 0.00
Provision for Slow Moving Inventory (29.54) 29.54
(Gain)/Loss on Revaluation of Foreign Currency Term Loans (304.86) 507.78
Minority Interest 7.26 0.00
Income Tax Refund Including Interest (50.39) (56.32)
Interest Expense 2670.05 2654.60
Interest Income (17.00) 5157.28 (48.34) 5877.41
Operating Profit before Working Capital Changes 7697.53 1268.03
(Increase)/Decrease in Sundry Debtors (1376.01) (1040.60)
(Increase)/Decrease in Inventories (2066.75) (437.80)
(Increase)/Decrease in Loans & Advances/Other Current Assets 2411.40 (1704.27)
Increase/(Decrease) in Current Liabilities & Provisions (2644.36) (3675.72) 6615.96 3433.29
Cash generated from operations 4021.81 4701.32
Income Tax Paid (82.19) (222.21)
Income Tax Refund Including Interest 50.39 56.32
Net Cash from operating activities 3990.01 4535.43

B. CASH FLOW FROM INVESTING ACTIVITIES:


Purchase of Fixed Assets (including CWIP) (6495.21) (15170.44)
Proceeds from Sale of Fixed Assets 42.56 68.20
Expenditure Incurred During Constrution Period (Pending Allocation) 0.00 (499.53)
Proceeds for purchase of Investment 0.00 (300.00)
Foreign Currency Translation Reserve 0.00 (1.99)
Dividend Received 7.00 2.00
Interest Received 17.00 83.98
Net cash (used)/raised from investing activities (6428.65) (15817.78)

C . CASH FLOW FROM FINANCING ACTIVITIES:


Issue of Equity Shares 0.00 1886.12
Share Premium Received 0.00 1420.03
Refund of Share Application Money (58.80) 0.00
Proceeds From Fresh Borrowings 16560.31 9134.63
Repayment of Borrowings (7814.60) (3842.85)
Interest Paid (2681.36) (2720.39)
Dividend Paid 0.00 (695.60)
Tax on Dividend Paid 0.00 (118.22)
Net Cash used in financing activities 6005.55 5063.72
Net increase in cash & cash equivalents (A+B+C) 3566.91 (6218.63)

Cash & Cash Equivalents as at 31.03.2009


Cash & Bank Balances 376.19 3520.76
Cash Credit Accounts (3865.29) (3489.10) (791.23) 2729.53
Cash & Cash Equivalents as at 31.03.2010
Cash & Bank Balances 587.72 376.19
Cash Credit Accounts (509.91) 77.81 (3865.29) (3489.10)

NOTES TO THE CASH FLOW STATEMENT :


1. Figures in brackets indicate cash outflow and without brackets indicate cash inflow.
2. Cash & cash equivalents include cash flows from cash credit borrowings from banks.
As per our report of even date attached
For S.P. Puri & Co.,
Chartered Accountants

(Rajiv Puri - Partner) For and on behalf of the Board


Membership No. 84318
FRN 001152 N
84 Place : Gurgaon Sudhir Chopra - Company Secretary Sunjay Kapur-Vice Chairman & Managing Director
Dated : 30th April, 2010 Rajiv Chanana - Chief Financial Officer Ravi Bhoothalingam - Director