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DIRECTORS REPORT
TO THE MEMBERS, Your Directors have pleasure in presenting the Annual Report together with audited accounts of the Company for the year ended 31st March, 2010. Performance 2009-10 Rs./Lacs Sales and Other Income 85579 Profit before Interest & Depreciation 9316 - Interest 3361 - Depreciation & Write Offs 2658 Profit before Tax 3297 Less : Provision for Tax 25 Provision for Deferred Tax Liability/(Assets) 1107 Provision for Fringe Benefit Tax 0 Profit after Tax 2165 Add : Profit Brought Forward (653) 1512 Profit available for appropriations 2008-09 Rs./Lacs 69742 1480 3217 2796 (4533) 0 (1497) 67 (3103) 2450 (653)

Auto Private Limited, India, with a business objective of Sheet Metal Processing, comprising of press work and welding within Automotive Component sector. ASL has got its works located at Farukhnagar, Gurgaon and the Commercial production has already started with effect from January, 2008. During the year ended 31st March, 2010, the Company has achieved total income of Rs. 5.19 crores and incurred loss of Rs. 67.96 lacs. Due to global economic meltdown as well as due to all projects being in initial stages, the performance of all the subsidiaries have remained under stress, however, with various steps taken by the Companies to overcome the difficulties, it is expected that the subsidiaries would do better in the times to come. Subsidiary Companies Accounts In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copy of the Balance Sheets, Profit & Loss Accounts, reports of the Board of Directors and Auditors of the Subsidiary Companies have not been attached with the Balance Sheet of the Company. These documents will 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 been furnished under Summarised Statement of Financials of Subsidiary Companies forming part of the Annual Report. Further, pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company includes financial information of its subsidiaries. Consolidation of Accounts In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-27 on Financial Reporting for Interest in Joint Ventures, the Audited Consolidated Financial Statements are provided in the Annual Report. Corporate Governance The Company has been pro-active in following the principles and practices of good Corporate Governance. The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreements with the Stock Exchanges are complied in its letter and spirit. A separate statement on Corporate Governance is produced as a part of the Annual Report along with the Auditors Certificate on its compliance. Listing The Securities of your Company are listed at National Stock Exchange and Bombay Stock Exchange and the Company has paid the Listing Fee due to them. Fixed Deposits During the year the Company has not invited any deposits from the public. Directors During the year under review Maruti Suzuki India Limited (MSIL) has withdrawn the nomination of Mr. Noriyuki Fujita and nominated Mr. Kazuhiko Ayabe in his place. The Board of Directors of the Company, in their meeting held on 30th January, 2010, have appointed Mr. Ayabe to fill the casual vacancy caused due to 37 withdrawal of nomination of Mr. Noriyuki Fujita by MSIL.

Appropriations Proposed Dividend Tax on Dividend Transfer to General Reserve Balance Carried Forward Dividend Your Directors have recommended a Dividend of 30% on Equity Share capital of the Company for the Financial Year 2009-2010. Subsidiary Companies The Company has the following Subsidiaries: a) JTEKT SONA Automotive India Limited (JSAI) In JSAI, the Company is holding 49% of the Equity Capital but it has the right to nominate majority of the Directors on the Board of JSAI. This Joint Venture Company has been established with JTEKT Corporation, Japan with a business objective of manufacturing Column Type Electric Power Steering (C-EPS) Systems. The Plant of JSAI is located in Bawal, Haryana and the Commercial production has already started with effect from 1st February, 2010. During the year ended 31st March, 2010, the Company has achieved total income of Rs. 4.75 crores and incurred loss of Rs. 27.77 lacs. b) Sona Fuji Kiko Automotive Limited (SFAL) In SFAL, the Company is holding 51% of the Equity Capital. This Joint Venture Company has been established with FUJI KIKO Co. Ltd., Japan with a business objective of manufacturing Columns to be used in the manufacturing of C-EPS by JSAI. The Plant of SFAL is located in Bawal, Haryana and the Commercial production has already started with effect from 1st November, 2009. During the year ended 31st March, 2010, the Company has achieved total income of Rs. 1.35 crores and incurred loss of Rs. 1.46 crores. c) Arjan Stampings Limited (ASL) In ASL, the Company is holding 51.5% of the Equity Capital. This Joint Venture Company has been established with Arjan 596 99 200 617 1512 0 0 0 (653) (653)

Mr. Kazuhiko Ayabe, Nominee of MSIL shall retire at the forthcoming Annual General Meeting pursuant to the provisions of Section 262 of the Companies Act, 1956. Requisite notice under Section 257 of the Companies Act, 1956 has been received from a member for his re-appointment. The resolution is commended for the Members approval. Pursuant to Article 122 of the Articles of Association of the Company Mr. P.K. Chadha, Mr. Ramesh Suri and Lt. Gen. (Retd.) Shamsher Singh Mehta will retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment. Audit Committee Pursuant to the provisions of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreements with Stock Exchanges, the Audit Committee of Directors of the Company consists of the following members: i) ii) iii) iv) Mr. Ravi Bhoothalingam; Mr. P.K. Chadha; Mr. Sunjay Kapur Lt. Gen. (Retd.) Shamsher Singh Mehta

Auditors M/s. S.P. Puri & Co., Chartered Accountants, holds office as Auditors until the conclusion of the forthcoming Annual General Meeting and has indicated their willingness to be re-appointed as Auditors. The requisite certificate under Section 224(1B) of the Companies Act, 1956, has been received from them. The notes to accounts referred to in the Auditors Report are self-explanatory. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo. A statement containing the necessary information as required under the Companies (Disclosure of particulars in the Report of Directors) Rules, 1988 and forming part of the Directors Report for the year ended March 31, 2010 is given as Annexure - A to this report. Employees In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the particulars of employees are given in Annexure - B forming part of this report. Acknowledgements Your Directors acknowledge with gratitude the co-operation and support extended by SONAs customers namely Maruti Suzuki India Limited, Hyundai Motors (India) Ltd., Toyota Kirloskar, Tata Motors Ltd., Mahindra & Mahindra, Hindustan Motors Ltd., JTEKT Corporation, Japan, Mando Corporation, Korea and Fuji Autotech Europe S.A.S, the Financial Institutions, Banks, various agencies of the Government, SONAs collaborators JTEKT Corporation, Japan, Mando Corporation, Korea and Fuji Autotech AB, Sweden. Your Directors also wish to place on record their sincere appreciation of the services rendered by all employees of the Company and are thankful to the Shareholders for their continued patronage.

The Audit Committee in its meeting held on 20th May, 2002, had appointed Mr. Ravi Bhoothalingam as the Chairman of the Audit Committee. Directors Responsibility Statement As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm having: i) followed in the preparation of the Annual Accounts, the applicable accounting standards with proper explanation relating to material departures; selected such accounting policies and applied them consistently and made judgement and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit/loss of your Company for that period. taken proper and sufficient care for the maintenance of 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 prepared the Annual Accounts on a going concern basis.

ii)

iii)

For and on behalf of the Board

iv)

Place : Gurgaon Dated : 30th April, 2010

Dr. Surinder Kapur Chairman

38

ANNEXURE - A TO THE DIRECTORS REPORT


Form - A : Particulars with respect to Conservation of Energy
Power and Fuel Consumption Gurgaon* 1. HSEB / TNEB Power purchased (KWH) Total Amount Rate per unit Captive Generation DG Set (KWH) Total Amount Rate per unit Diesel Consumption Total Amount Rate per litre Litre per unit (Units) Rs. Rs. (Units) Rs. Rs. (Litres) Rs. Rs. 32,15,646 1,50,44,363 4.68 63,77,932 5,61,38,411 8.80 6,48,747 1,88,52,588 29.06 0.29 11,34,456 2,78,16,861 24.52 0.25 2009-2010 Dharuhera# 4,91,289 23,02,114 4.69 16,74,050 1,79,57,207 10.73 5,10,043 1,46,26,744 28.68 0.30 Chennai 18,76,273 98,51,251 5.25 11,95,718 1,18,06,739 9.87 2,27,600 76,73,579 33.72 5.25 2008-2009 Gurgaon* Dharuhera# 28,05,423 1,25,17,468 4.46 59,87,130 4,48,74,882 7.50 5,34,407 1,59,41,361 29.83 0.297 11,51,558 2,98,94,446 25.96 0.274 2,24,829 Chennai 21,11,461

10,18,755 1,14,48,862 4.53 5.42 9,82,329 27,70,769

2.

79,48,365 1,88,49,229 8.09 6.80 2,31,544 69,29,610 29.93 0.306 1,84,680 72,36,193 39.18 0.087

3.

4.

Furnace Oil Consumption (Litres) Total Amount Rs. Rate per litre Rs. Litre per unit

* Total saving achieved at Gurgaon Plant during Financial Year 2009-10 Rs. 28.55 lacs. Above saving achieved by taking the following initiatives : i) ii) iii) iv) v) Shifted 100 KW non critical load from DG sets to HSEB / State supply, and resulted into saving of Rs. 16 lacs. Maintained power factor above 0.98 and saved Rs. 5.25 lacs. Reduced air pressure of Air Guns by regulators at 110 nos. of place and saved Rs. 4 lacs. Installed energy efficient pump on cooling tower and machines and saved Rs. 2 lacs. 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) ii) iii) iv) v) FDV, CEPS A/C, Admn. A/C and Exhaust Blower stopped during lunch and dinner time and saved Rs. 1.75 lacs. Independent feeder started to reduce diesel consumption and DG rent and saved Rs. 14.34 lacs. 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. Stop second DG during Dinner time and saved Rs. 2.82 lacs. 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. Developed high performance advanced tilt Steering Column with low friction sliding shaft for the new passenger car from a major global OEM. Developed Steering Gear for CEPS System for the global project of the largest OEM in country with full engineering responsibility. Developed high performance Intermediate Shafts for high power CEPS System for the new projects of global OEMs with full engineering responsibility. Developed low cost and lightweight Steering System for the largest OEM keeping the performance same as the original requirement. The Company is the first in country to offer electronically controlled Power Steering System (ECPS). This adds an advanced product to Companys portfolio.

b)

c)

d)

e)

2. Benefits derived as a result of above efforts e.g. Product Improvement, Cost Reduction, Product Development, Import Substitution etc.

a)

39

b)

c)

d)

e)

B. Research and Development 1. Specific areas in which R&D carried out by the Company. a) b) c) 2. Benefits derived as a result of the above R&D. a)

With the development of advanced Steering Column for global OEM for domestic market, there is good opportunity to export the same part to OEMs global operations. 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. 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. 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 profitability. Research on development of low cost Electric Power Steering (EPS) for specialized vehicles. Research on development of control unit for electric bike. Development of controller for Autonomous Steering for Off highway vehicle. The above R&D initiatives would enable the Company to experience future growth through technological innovations by developing new concepts and futuristic electromechancial products with fuller knowledge, indigenous designs and technology protected with patents. The Company aims to develop advanced futuristic product technologies for its interest in the long run with the association of research institutes. Capital Expenditure of Rs. 7.07 lacs. Revenue Expenditure of Rs. 154.76 lacs.

b)

3. Expenditure on R&D

a) b)

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 Companys 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 No. Age Designation/ (Years) Nature of Duties Remuneration Qualification(s) (Rs.) Experience Date of (Years) Employment Last Employment (Designation)

1.

Mr. Chanana Rajiv Mr. Chopra Sudhir

43

Chief Financial Officer President (Legal) & Company Secretary Dy. Managing Director Vice Chairman & Managing Director Chairman

27,99,284/- B.Com(Hons.), C.A. 35,36,674/- B.Com, FCS, LL.B.

19

25.03.2009

2.

52

32

15.05.1993

Deutsche Post Bank Home Finance Ltd. (Vice President-Treasury) Samtel India Limited (Company Secretary) Bharat Gears Ltd. (Dy. Manager-Development) Sona Management Services Ltd. (Managing Director) Bharat Gears Ltd. (Vice Chairman & Managing Director) Schlumberger (Divisional Technical Manager) Bharat Gears Ltd. (Gen. Manager-Comm.) Hindustan Aluminium Corp. Ltd. (Sr. Executive Eng.) Sona Autocomp Holding P.Ltd. (V.P.-Strategy & innovations)

3. 4.

Mr. Deshmukh K.M. Mr. Kapur Sunjay

56 36

53,79,561/- B.Tech (Metallurgy)

33

01.08.1986 22.10.2008

5.

Dr. Kapur Surinder

66

6. 7. 8. 9.

Mr. Maity Atanu Mr. Parriker P.V. Prabhu Mr. Rao A.D. Mr. Rajan Govindrajan Sunder

47 63 51 47

Sr. Vice PresidentStrategy Planning Group Chief-Supply 33,75,527/- M.E. (Mech.) 36 Chain Management Vice President24,86,098/- M.Sc., B.E. (Mech.) 27 Operations Chief Executive 36,75,964/- B.Sc. MBA & Master 25 Officer of Info. Management

53,49,694/- Graduate in Business 14 Admn. from Buckingham University (UK) 39,38,000/- Ph.D.(Mech.Engg) 36 Michigan State University, (U.S.A.) 30,83,288/- B.Tech., MBA 23

01.10.1990

28.01.2002 01.02.1991 16.02.1987 01.12.2008

40

NOTES : 1. Remuneration received includes Salary, Allowances, Commission, payment in respect of Rent / Furnished Accommodation, Companys 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
TO THE MEMBERS OF SONA KOYO STEERING SYSTEMS LIMITED We have audited the attached Balance Sheet of SONA KOYO STEERING SYSTEMS LIMITED (the Company) as at 31st March 2010, the Profit & Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Auditing Standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 1. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the Order) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in Paragraphs 4 & 5 of the said Order. Further to our comments in the Annexure referred to in paragraph 1 above, we report that: i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit; In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii. The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; iv. In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; Based on confirmations received from other public Companies in which directors of the Company are directors and/or written representations made by the directors of the Company as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as on 31st March, 2010 from being appointed as a director in terms of clause (g) of subsection (1) of Section 274 of the Companies Act, 1956; In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; b) in the case of the Profit & Loss Account, of the PROFIT for the year ended on that date; and c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date. For S.P. Puri & Co., Chartered Accountants (Rajiv Puri - Partner) Membership No. 84318 FRN. 001152 N

v.

vi.

2.

ii.

Place : Dated :

Gurgaon 30th April, 2010

41

The Annexure referred to in paragraph 1 of the Auditors Report of even date to the members of Sona Koyo Steering Systems Limited for the year ended 31st March, 2010. On the basis of such checks as we considered appropriate, we further report that : i. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) All the fixed assets of the Company have not been physically verified by the management during the year but there is a regular phased programme of physical verification which, in our opinion, is reasonable having regard to the size of the Company and nature of its fixed assets. No material discrepancies were noticed on such verification. (c) In our opinion, and according to the information and explanations given to us, fixed assets disposals during the year were not substantial and therefore do not affect the going concern assumption.

vi.

The Company has not accepted any deposits from the public covered under section 58A, 58AA or any other relevant provisions of the Companies Act, 1956. The Company has an adequate internal audit system, which in our opinion, is commensurate with the size of the Company and the nature of its business.

vii.

viii. We have broadly reviewed the books of account maintained by the Company in respect of manufacture of Companys automotive products pursuant to the order made by the Central Government for the maintenance of cost records under section 209(l)(d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete. ix. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess were outstanding, as at 31st March, 2010 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, and on the basis of our examination of the books of account, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited on account of any dispute. x. The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses in the current financial year but had incurred cash losses in the immediately preceding financial year. Based on our audit procedures and on the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers. There are no dues to a financial institution or debenture holders. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

ii.

(a) Physical verification of inventory, except stocks lying with vendors and goods-in-transit has been conducted by the management during the year. In respect of inventory lying with vendors, these have been confirmed by them. In our opinion, the frequency of such verification is reasonable. (b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were found reasonable and adequate in relation to the size of the Company and the nature of its business. (c) On the basis of examination of records of the inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records, which in our opinion were not material, have been properly dealt with in the books of account.

iii.

According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has neither granted or taken any loans, secured or unsecured, to or from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the paragraphs 4 iii(b), 4 iii(c), 4 iii(d), 4 iii(f) and 4 iii(g) of the Order are not applicable to the Company. In our opinion, having regard to the information and explanations given to us that some of the inventory items purchased are of specialised nature and for which alternative quotations are not available, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for sale of goods and services. During the course of our audit, no major weaknesses have been noticed in the internal controls. Based on the audit procedures applied by us and according to the information and explanations given to us, the Company has not entered into any transactions during the year that needs to be entered into the Register maintained under section 301 of the Companies Act, 1956.

xi.

xii.

iv.

xiii. The Company is not a chit fund or a nidhi/ mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditors Report) Order, 2003 is not applicable to the Company. xiv. According to information and explanations given to us, the Company is not dealing or trading in Shares, Securities, Debentures and other investments. According to the information and explanations given to us, the Company has not given any guarantee for any loan taken by others from a bank or financial institution.

v.

xv.

42

xvi.

Based on our audit procedures and on the information and explanations given by the management, the term loans have been applied for the purpose for which they were raised.

xxi.

Based on the audit procedures performed and the information and explanations given by the management, we report that no fraud on or by the Company has been 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. xviii. The Company has not made any preferential allotment of shares during the year. xix. xx. The Company has no outstanding debentures during the year. The Company has not raised any money by public issue during the year. Place : Dated : Gurgaon 30th April, 2010

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

(Rajiv Puri - Partner) Membership No. 84318 FRN. 001152 N

43

BALANCE SHEET AS AT 31ST MARCH, 2010


Particulars Schedule As at 31st March, 2010 Rs./Lacs As at 31st March, 2009 Rs./Lacs

I.

SOURCES OF FUNDS 1. Shareholders Fund a) b) 2. Share Capital Reserves & Surplus 1 2 Sub-Total 3 4 Sub-Total 19(16) Total 1987.42 16149.72 18137.14 21912.12 0.00 21912.12 2279.25 42328.51 1987.42 14680.45 16667.87 18149.19 5750.00 23899.19 1172.11 41739.17

Loan Funds a) b) Secured Loans Unsecured Loans

3.

Deferred Tax Liability (Net)

II.

APPLICATION OF FUNDS 1. Fixed Assets a) Gross Block Less : Depreciation Net Block Capital Work In Progress 6 Sub-Total 3. Current Assets, Loans and Advances a) b) c) d) e) Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances 7 8 9 10 11 Sub-Total Less : Current Liabilities and Provisions a) b) Current Liabilities Provisions Sub-Total Net Current Assets Total 12 13661.92 1032.65 14694.57 3253.11 42328.51 13985.02 163.96 14148.98 3151.58 41739.17 3902.07 9131.23 78.61 53.75 4782.02 17947.68 2793.34 8070.23 232.63 36.14 6168.22 17300.56 5 45773.70 15794.32 29979.38 1962.45 31941.83 7133.57 39075.40 44238.67 13525.14 30713.53 1999.30

b)

32712.83 5874.76 38587.59

2. Investments

Significant Accounting Policies & Notes to the Accounts Related Party Disclosures

19 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) Membership No. 84318 FRN 001152 N Place : Gurgaon Dated : 30th April, 2010 For and on behalf of the Board

44

Sudhir Chopra - Company Secretary Rajiv Chanana - Chief Financial Officer

Sunjay Kapur-Vice Chairman & Managing Director Ravi Bhoothalingam - Director

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010
Particulars INCOME Gross Sales Less : Excise Duty and Other Taxes Net Sales Other Income 13 Total EXPENDITURE Raw Materials and Components Consumed (Increase) / Decrease in Stock of Finished Goods and Work-in-Process Excise Duty on Increase / (Decrease) in finished goods Manufacturing Expenses Employees Remuneration and Benefits Administrative, Selling & Other Expenses Research & Development Expenses Finance Charges 15 16 17 19(6) 18 14 (207.08) 15.74 3702.21 5556.13 2985.02 154.76 3361.24 79624.76 Cash Profit Miscellaneous Expenditure Written off Depreciation & Amortisation Profit before Tax Provision for Tax - Current Year Provision for Fringe Benefit Tax - Current Year Minimum Alternate Tax (MAT) Credit entitlement Increase/(Decrease) in Deferred Tax Liability Profit after Tax Balance Brought forward from Previous Year Profit available for appropriation Proposed Dividend Tax on Dividend Transfer to General Reserve Balance carried to Balance Sheet EARNING PER SHARE (Face value Re. 1/- each) Basic & Diluted Earning Per Share (In Rs.) Significant Accounting Policies and Notes to the Accounts 19(17) 19 5954.69 0.00 2658.03 3296.66 591.89 0.00 (566.90) 1107.14 2164.53 (652.53) 1512.00 596.23 99.03 200.00 616.74 1.09 (29.29) 0.58 3315.51 5384.15 3259.54 92.64 3216.79 71479.71 (1737.25) 302.15 2493.46 (4532.86) 0.00 67.00 0.00 (1496.75) (3103.11) 2450.58 (652.53) 0.00 0.00 0.00 (652.53) (1.56) Schedule Year ended 31st March, 2010 Rs./Lacs 96387.77 11357.87 85029.90 549.55 85579.45 Year ended 31st March, 2009 Rs./Lacs 81004.71 11688.26 69316.45 426.01 69742.46

64056.74

56239.79

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) Membership No. 84318 FRN 001152 N Place : Gurgaon Dated : 30th April, 2010 For and on behalf of the Board

Sudhir Chopra - Company Secretary Rajiv Chanana - Chief Financial Officer

Sunjay Kapur-Vice Chairman & Managing Director Ravi Bhoothalingam - Director

45

SCHEDULES FORMING PART

OF

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

SCHEDULE

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

SCHEDULE 2 RESERVES & SURPLUS


Capital Reserve (On account of reissue of forfeited Equity Shares) Capital Redemption Reserve Securities Premium Account General Reserve - As per Last Balance Sheet - Add transfer from Profit & Loss Account Profit & Loss Account - Balance as per Profit & Loss Account 616.74 16149.72 (652.53) 14680.45 6290.71 200.00 6490.71 6290.71 120.66 8921.17 120.66 8921.17 0.44 0.44

SCHEDULE 3 SECURED LOANS


Term Loans from Banks Term Loans from Others Short Term Loans from Banks Sales Tax Loan 20504.35 972.17 435.60 0.00 21912.12 13899.82 237.10 3801.38 210.89 18149.19

46

NOTES :
1. Term Loans from Banks include : a) b) 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. 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. 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).

c)

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. The Short Term Loans from Banks are secured by hypothecation of inventories, book debts and other receivables both present & future. 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.

3. 4.

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 Rs./Lacs

31st March, 2009 Rs./Lacs

SCHEDULE 4 UNSECURED LOANS


Short Term Loan and Advances from Banks 0.00 0.00 5750.00 5750.00

SCHEDULE 5 FIXED ASSETS


Sl. Assets No.
Tangible Assets 1. Free Hold Land 2. Lease Hold Land 3. Building 4. Lease Hold Improvements 5. Plant & Machinery 6. Jigs & Fixture 7. Electric Installation 8. Furniture & Fixture 1949.04 0.00 5476.76 174.63 30080.16 359.68 1606.01 780.64 0.00 221.50 102.20 19.51 1197.26 1.46 56.84 11.15 43.39 77.46 7.07 0.00 0.00 0.00 0.12 174.63 85.34 0.00 0.59 79.59 29.36 85.62 0.00 0.00 1949.04 221.50* 5578.84 19.51 31192.08 361.14 1662.26 712.20 2053.65 246.84 439.56 88.34 0.00 0.00 719.03 163.89 10174.60 103.77 366.68 375.89 1211.52 113.34 55.74 54.43 0.00 0.21 182.57 0.00 0.00 0.01 0.00 0.21 901.59 0.34

Gross Block (At Cost) As At Additions Sales/ 01.04.09 Disposal

As at 31.03.10

Upto 31.03.09

Depreciation For the Written As at Year Back 31.03.10

(Rs./Lacs) Net Block As at As at 31.03.10 31.03.09

1949.04 1949.04 221.29 0.00

4677.25 4757.73 19.17 10.74

2.48 166.03 1902.03 23.47 108.23 38.31 147.54 26.02 23.79 15.11

74.55 12002.08 19190.00 19905.56 0.00 0.09 78.57 27.11 42.49 0.00 0.00 127.24 474.82 335.63 1331.95 96.87 79.53 69.54 233.90 255.91

1187.44 1239.33 376.57 721.70 149.97 360.03 18.80 404.75 828.10 141.66 376.75 33.91

9. Office Equipment (Incl. Computers) 2039.62 10.Vehicles 11.R&D-Plant & Machinery 12.R&D-Office Equipment Intangible Assets 1. R&D-Computer Software 2. Computer Software 55.73 30.39 255.00 432.49 88.34

0.00 0.00 252.44

0.00 0.00 0.00

55.73 30.39 1162.62

20.69 7.53 158.03

7.62 4.93 175.72

0.00 0.00 0.00

28.31 12.46 333.75

27.42 17.93 828.87

35.04 22.86 752.15

3. New Product Development Cost 910.18 Total Total (Previous Year) 44238.67 37457.19

1990.28 455.25 6859.95 78.47

45773.70 13525.14 2658.03 388.85 15794.32 29979.38 30713.53 44238.67 11042.05 2493.46 10.37 13525.14 30713.53 1144.76 817.69 1037.50 961.80

Capital Work In Progress - Tangible Assets Capital Work In Progress - Intangible Assets

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 Rs./Lacs

31st March, 2009 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, in Roop Automotive Ltd. ii) 49,29,636 Equity Shares (Previous Year 49,29,636) of Euro 1 each, in Fuji Autotech Europe S.A.S. (Incorporated in France) iii) 24,000 Equity Shares (Previous Year 24,000) of USD 1 each, in Sona Autocomp Inc., (Incorporated in USA) iv) 12,000 Equity Shares (Previous Year 12,000) of Euro 1 each, in Sona Autocomp Europe SARL., (Incorporated in France) v) 27,60,000 Equity Shares (Previous Year 27,60,000) of Rs. 10/- each, in AAM Sona Axle Pvt. Ltd. vi) 30,00,000 Equity Shares (Previous Year 30,00,000) of Rs. 10/- each, in Sona Mobility Services Ltd. 20.00 2932.10 10.79 6.87 276.00 300.00 20.00 2932.10 10.79 6.87 276.00 300.00

In Subsidiary Companies : vii) 50,99,993 Equity Shares (Previous Year 50,99,993) of Rs 10/- each, in Sona Fuji Kiko Automotive Ltd. viii) 2,77,78,094 Equity Shares (Previous Year 1,51,89,994) of Rs. 10/- each, 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, in Arjan Stampings Ltd. 510.00 2777.81 510.00 1519.00

300.00 7133.57

300.00 5874.76

SCHEDULE 7 INVENTORIES
(At cost or net realisable value, whichever is lower) Stores and Spare Parts Raw Materials and Components* Work-in-process Finished Goods** Tools Less : Provision for slow moving inventory
* Includes material in transit Rs. 26.61 Lacs (Previous Year Nil) ** Includes material in transit Rs. 46.59 Lacs (Previous Year Nil)

403.86 2392.80 455.10 255.70 394.61 3902.07 0.00 3902.07

260.12 1671.21 380.63 123.09 387.83 2822.88 29.54 2793.34

SCHEDULE 8 SUNDRY DEBTORS


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

SCHEDULE 9 CASH AND BANK BALANCES


Cash and Cheques in hand Balances with Scheduled Banks in Current Accounts 10.23 68.38 78.61 3.88 228.75 232.63

48

31st March, 2010 Rs./Lacs

31st March, 2009 Rs./Lacs

SCHEDULE 10 OTHER CURRENT ASSETS


(Unsecured, considered good) Claims Receivable 53.75 53.75 36.14 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 - Considered doubtful Less : Provision for Doubtful Advances Security Deposits Balance with Excise and Port Trust Authorities Advance payment against Income Tax (Net of Provisions)

1404.77 19.61 1424.38 19.61 1404.77 328.86 2319.85 728.54 4782.02

2636.42 0.00 2636.42 0.00 2636.42 380.08 2472.87 678.85 6168.22

SCHEDULE 12 CURRENT LIABILITIES AND PROVISIONS


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

SCHEDULE

13
11.48 252.76 7.00 67.39 109.42 101.50 0.00 549.55 0.44 273.09 2.00 48.34 102.02 0.00 0.12 426.01

OTHER INCOME
Lease Rental Income Income from Sale of Scrap Dividend from Long Term Trade Investments Interest Income
[TDS Deducted Rs. 2.82 Lacs (Previous Year Rs. 7.93 Lacs)]

Miscellaneous Income Exchange Gain on Foreign Currency Loans Profit on disposal of Fixed Assets

49

31st March, 2010 Rs./Lacs

31st March, 2009 Rs./Lacs

SCHEDULE

14

(INCREASE)/DECREASE IN STOCK OF FINISHED GOODS AND WORK IN PROCESS


INVENTORY as at 31.03.2009 Finished Goods Work-in-process INVENTORY as at 31.03.2010 Finished Goods Work-in-process 255.70 455.10 710.80 (207.08) 503.72 (29.29) 123.09 380.63 503.72 474.43

SCHEDULE 15 MANUFACTURING EXPENSES


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

SCHEDULE 16 EMPLOYEES REMUNERATION AND BENEFITS


Salaries, wages and allowances Contribution to Provident and other Funds Employees welfare expenses 4410.57 480.48 665.08 5556.13 4019.57 560.91 803.67 5384.15

50

31st March, 2010 Rs./Lacs

31st March, 2009 Rs./Lacs

SCHEDULE 17 ADMINISTRATIVE, SELLING AND OTHER EXPENSES


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

SCHEDULE 18 FINANCE CHARGES


Interest on fixed loans Other interest Bank and other finance charges Cash discount 2441.00 51.72 471.02 397.50 3361.24 2400.79 232.46 359.13 224.41 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. III. Basis of Accounting : The financial statements are prepared under the historical cost convention on an accrual basis. 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.

52

X.

Excise : 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 Rs./Lacs 2. Capital Commitment : Estimated amount of contracts (Net of Advances) remaining 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) b) c) d) Excise Duty Service Tax Income Tax - Matters in Appeal Warranties 847.36 299.22 83.96 22.11 1324.51 683.72 76.21 102.16 0.00 1925.00 184.92 1548.49 1875.78 Previous Year Rs./Lacs

II. Customer Bills Discounted III. Letter of Credit opened by banks for purchase of inventory/capital goods 4. a) b) 5. 6.

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. Raw Material and Components consumed includes purchase of traded goods of Rs. 521.40 Lacs (Previous Year Rs. 215.20 Lacs).

Miscellaneous Income in Schedule 13 includes Rs. 29.54 Lacs (Previous Year NIL) being provision for slow moving inventory written back. 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) b) c) d) e) Travelling Expenses Salary & Allowances Components, Tools & Spares Professional Charges Others TOTAL 7.54 143.73 2.11 0.47 0.91 154.76 6.13 79.12 5.31 2.08 92.64

7.

Fixed Assets / Capital work in progress during the year includes : a) b) c) d) e) f) h) i) Technical know-how Fees Professional Charges Development Expenses Components, Tools & Spares Travelling Expenses Interest & Bank Charges Others Salary TOTAL 169.79 8.53 70.24 204.24 17.64 0.00 0.00 33.95 4.18 508.57 218.46 19.52 29.21 795.46 140.57 127.78 6.18 30.02 325.73 1692.93

g) Training

8.

54

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).

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 MSMED Act, 2006 The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of each accounting year. The amount of interest paid by the buyer in terms of Section 16, of 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 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 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. 31st March, 2010 (Rs./Lacs) Principal - 32.69 Interest - 0.00 0.00 31st March, 2009 (Rs./Lacs) Principal - 61.17 Interest- 0.00 0.00

0.00

0.00

0.00

0.00

Current Year (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) c) Provident Fund Employee State Insurance Corporation 227.56 83.44 10.58 321.58 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) Current Year (Rs./ Lacs) 1. Reconciliation of opening and closing balances of obligations: a) b) c) d) e) f) 2. a) b) c) d) e) f) g) 3. Obligation as at April 1, 2009 Current Service Cost Interest Cost Actuarial (Gain) / Loss Benefits paid Obligation as at March 31, 2010 Fair Value of Plan Assets as at April 1, 2009 Prior Period Adjustment Expected return on Plan Asset Contributions Benefits paid Actuarial Gain / (Loss) on Plan Assets Fair Value of Plan Assets as at March 31, 2010 687.86 55.39 51.59 (64.05) (30.23) 700.56 682.69 63.49 137.83 (30.23) 6.24 860.02 426.50 57.70 34.13 193.82 (24.29) 687.86 405.19 29.16 39.09 225.10 (24.29) 8.44 682.69 65.79 142.80 4.60 77.23 (48.03) 242.39 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Previous Year (Rs./ Lacs)

Previous Year (Rs./ Lacs)

235.96 75.74 12.81 324.51

b) Superannuation Fund

Leaves (Unfunded) Current Year (Rs./ Lacs) Previous Year (Rs./ Lacs) 166.34 20.59 12.27 88.21 (221.62) 65.79 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Change in Plan Assets (Reconciliation of opening and closing balances):

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 Tax approved irrevocable Trust Fund.

55

Gratuity (Funded) Current Year (Rs./ Lacs) 4. Expense recognised during the year: a) Current Service Cost b) Interest Cost c) Expected return on Plan Assets d) Actuarial (Gain) / Loss e) Expenses recognised during the year Assumptions: a) b) c) 55.39 51.59 (63.49) (70.29) (26.80) 57.70 34.13 (39.09) 185.38 238.12 7.50% 9.30% 5.00% Previous Year (Rs./ Lacs)

Leaves (Unfunded) Current Year Previous Year (Rs./ Lacs) (Rs./ Lacs) 142.80 4.60 0.00 77.23 224.63 8.00% N.A. 5.00% 20.59 12.27 0.00 88.21 121.07 7.00% N.A. 3.00%

5.

Discount Rate (per annum) 8.00% Expected rate of return on Plan Assets (per annum) 9.40% Rate of increase in compensation level (per annum) 5.00%

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 Year Steering Product Group Driveline Product Group B) Production, Sale & Closing Stock of Finished Goods i) Opening Stock & Production Item Current Year Nos. Value Steering Gear Assembly 17198 Axle Assembly including Components 1005 Rack & Pinion Assy. 3697 Column & UJ Assy. 3644 Others including sale of bought out components as spares Total 42.86 3.34 35.34 26.16 1.99 107.70 Opening Stock Previous Year Nos. Value 12819 38 354 1832 26.10 0.71 11.79 22.58 61.18 Production Current Year Nos. 2329064 915443 751132 1177189 Previous Year Nos. 1702806 733350 816117 1145940 (Rs./Lacs) 6089000 1316700 Previous Year 5401900 1255000

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 Item Sales Current Year Nos. Value Steering Gear Assembly incl. Components 2232728 Axle Assembly including Components 913448 Rack & Pinion Assy. 753732 Column & UJ Assy. 1124830 Others incl. sale of bought out Components as Spares* Total Previous Year Nos. Value Closing Stock Current Year Nos. Value 136.85 6.54 18.54 89.52 251.45 Previous Year Nos. Value 17198 42.86 1005 3.34 3697 35.34 3644 26.16 107.70 (Rs./Lacs)

56991.96 1698427 12379.02 732383 13866.50 812774 8645.32 1144128 4504.98 96387.77

44148.68 113534 10335.22 3000 13297.47 1097 8324.89 56003 4898.45 81004.71

56

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.

C) Raw Material and Components consumed Item Current Year Qty./M.Ton Raw Material : Steel Bars (In M.T.) Components Total 807.58 807.58 Value 510.65 63546.09 64056.74

(Rs./Lacs) Previous Year Qty./M.Ton 604.89 604.89 Value 338.65 55901.14 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 Rs./Lacs Previous Year

Rs./Lacs

Raw Material & Components Imported Indigenous Stores & Spares Imported Indigenous Tools (Includes Loose Tools) Imported Indigenous

21157.94 42898.80 64056.74 6.18 930.29 936.47 3.57 537.71 541.28

33.03% 66.97% 100.00% 0.66% 99.34% 100.00% 0.66% 99.34% 100.00%

20370.05 35869.74 56239.79 71.92 873.14 945.06 86.35 387.31 473.66

36.22% 63.78% 100.00% 7.61% 92.39% 100.00% 18.23% 81.77% 100.00%

Current Year Rs./Lacs E) CIF Value of Direct Imports Capital Goods Raw Material, Components, Spares & Tools
F) Trading Account (Current Year)
Description of Goods Reservoir Opening Stock Sets Rs. in lacs 6592 15.39 Sets Purchase Rs. in lacs Sets Sales Rs. in lacs

Previous Year Rs./Lacs 443.84 21446.30 21890.14

229.27 19528.89 19758.16

Closing Stock Sets Rs. in lacs 2452 4.25

94618

160.1

98758

257.94
Sales Rs. in lacs

Trading Account (Previous Year) Description of Goods Opening Stock Sets Rs. in lacs
Reservoir (Sets) 1020 2.12

Sets

Purchase Rs. in lacs

Sets

Closing Stock Sets Rs. in lacs 6592 15.39

67379

110.44

61807

168.04

G) Expenditure in Foreign Currency (on Cash Basis) Books and Periodicals Royalty (Net of Taxes) Technical Services (Net of Taxes) Foreign Travels Legal and Professional Charges (Net of Taxes) Registration Fee Training Fees Warehouse Charges Interest (Net of Taxes) Others (Net of Taxes) 0.04 255.70 242.84 39.33 45.56 0.00 0.00 9.41 123.05 16.33 732.26 0.63 96.83 86.57 43.79 61.50 0.15 1.03 11.36 0.00 0.00 301.86

57

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

Previous Year Rs./Lacs 162.76 428 23251092 2007-08

6281.89 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
Nature of Contracts Number of Contracts Foreign Currency Amount (In Lacs) 10403.81 5059.37 6.78 306.32

Previous Year
Number of Contracts Foreign Currency Amount (In Lacs) 10234.33 5341.30 19.96 1019.96

Forward Contracts (JPY) Rupees Equivalent Value Forward Contracts (USD) Rupees Equivalent Value

48 5

57 25 -

Un-hedged Foreign Currency Exposure Current Year (Amount in Lacs)


CHF Creditors Rupees Equivalent Value Debtors & Loans & Advances Rupees Equivalent Value EURO 0.20 12.20 5.88 353.51 USD 22.11 998.93 16.70 747.33 YEN 356.68 173.45 20.74 9.93

Previous Year (Amount in Lacs)


CHF 0.16 7.15 EURO 1.34 90.95 6.07 406.33 USD 13.14 671.45 49.94 2529.96 YEN 16.17 8.44 96.51 49.64

Current Year Rs./Lacs


13. Directors Remuneration I) Chairman, Vice Chairman & Managing Director and Dy. Managing Director a) b) c) d) Salary Commission Perquisites Contribution to Provident & Superannuation Funds 118.49 0.00 12.35 15.83 146.67 II) Non Whole Time Directors a) Commission Grand Total 14.00 160.67

Previous Year Rs./Lacs

46.00 0.00 0.00 6.12 52.12

0.00 52.12

58

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.

Current Year Rs./Lacs III) Calculation of Commission payable to Directors including Chairman, Vice Chairman & Managing Director and Dy. Managing Director Profit before Tax Add:Depreciation as per Profit & Loss Account Profit on sale of assets as per Sec. 350 of The Companies Act Loss on sale of assets as per Profit & Loss Account Less: Depreciation as per Sec.350 of Companies Act Profit on sale of assets as per Profit & Loss Account Loss on sale of assets as per Sec. 350 of The Companies Act Net profit on sale of investments Adjusted Profit before tax Less:Excess of expenditure over income brought forward from previous financial year Add: Directors Remuneration Net Profit u/s 198 for the year 11% of the above (Previous Year 6%) Commission restricted to maximum payable as per resolution a) Chairman / Vice Chairman & Managing Director / Dy. Managing Director b) Non Whole Time Directors 14. Interest in Joint Ventures 0.00 14.00 (1987.28) 160.67 1470.05 161.71 2658.03 0.00 (23.85) 2658.03 0.00 (23.85) 0.00 2634.18 3296.66 2634.18 3296.66 2493.46 0.12 0.00 2493.46 0.12 0.00 0.00

Previous Year Rs./Lacs

(4532.86)

2493.58

2493.58 (4532.86) 0.00 52.12 (4480.74) (268.84) 0.00 0.00

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) Capital work in progress Investments 2. Current Assets, Loans and Advances Inventories Sundry debtors Cash and Bank Balance Other Current Assets B) Liabilities 1. 2. 3. C) Loan Funds Current Liabilities and Provisions Capital & Reserves 0.00 4.40 (3.73) 0.00 1.02 8.02 0.00 0.00 0.48 0.00 0.00 0.00 1.07 8.80 0.19 0.00 0.00 0.34 0.00 0.00

Income 1. Sales and Services (Net) 2. Other Income

14.04 0.00

42.74 0.00

D)

Expenditure 1. Salaries 2. 3. 4. 5. Insurance Fixed Expenses Taxes Others

18.64 0.00 3.09 2.07 5.39 (15.15)

19.05 0.24 8.63 2.89 5.66 6.27

E)

Profit After Tax

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 Rs./Lacs A) Assets 1. Fixed Assets (Net Block) Investments 2. Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balance Other Current Assets B) Liabilities 1. Loan Funds 2. Current Liabilities and Provisions 3. Shareholder Fund C) Income 1. Sales and Services (Net) 2. Other Income Expenditure 1. Cost of Sales 2. Salaries and Wages 3. Selling and Admn. Expenses 4. Provision for Taxation E) Profit After Tax Previous Year Rs./Lacs

0.00 0.00

0.00 0.00

6.56 26.08 12.19 26.01

19.22 18.31 13.39 19.54

0.36 55.70 14.78

1.76 89.21 12.86

179.78 3.59

179.12 15.28

D)

162.72 5.45 11.98 0.98 2.24

179.27 5.72 5.25 1.52 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 Companys 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 Companys share of each of assets, liabilities, income and expenses etc. related to its interest in this joint venture is as follows: A) Assets 1. 2. Fixed assets (Net block) Including CWIP Investment Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balance Other Current Assets B) Liabilities 1. Loan Funds 2. 3. C) Current Liabilities and Provisions Shareholder Fund 67.22 127.95 46.30 15.32 0.00 3.22 39.91 6.06 749.20 0.00 751.67 0.00

825.97 135.74 44.28

448.58 19.98 334.80

Income 1. Sales and Services (Net) 2. Other Income

315.03 1.02

0.00 0.00

60

Current Year Rs./Lacs D) Expenditure 1. Cost of Sales 2. 3. 4. 5. E) 15. Salaries and Wages Selling and Admn. Expenses Provision for Taxation Others

Previous Year Rs./Lacs

352.70 45.98 27.54 0.00 121.55 (231.72)

0.00 0.00 0.00 0.00 0.00 0.00

Profit After Tax

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. 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) (ii) Depreciation Effect of Custom Duty & Excise Duty allowed for tax purposes in the current year but will be debited to Profit & Loss Account in the following year 3079.07 29.43 3039.26 23.79

16.

3108.50 B) Deferred tax asset representing future tax benefit on (i) (ii) (iii) Leave Encashment Provision Effect of expenditure debited to Profit & Loss Account in the current year but allowed for tax purposes in the following year Carry forward of unabsorbed Depreciation and Business Losses 114.89 38.73 675.63 829.25 Net Deferred Tax Liability (A-B) 2279.25

3063.05 22.36 0.00 1868.58 1890.94 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 - Profit/(Loss) attributable to the Equity Shareholders - Basic/Weighted Average number of Equity Shares ( outstanding during the year (Nos.) - Nominal Value of Equity Shares (In Rs.) - Basic and Diluted Earnings Per Share (In Rs.) 18. Operating Lease (A) (B)No (A/B) 2164.53 2164.53 198,741,832 1.00 1.09 (3103.11) (3103.11) 198,337,884 1.00 (1.56)

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) Current Year


93.00 2.00 95.00

Description
Opening Balance Add : Addition During the Year Closing Balance

Previous Year
59.00 34.00 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. 21.

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). Previous year figures have been regrouped/recast wherever necessary.

61

SCHEDULE 20 RELATED PARTY DISCLOSURES


TRANSACTIONS WITH RELATED PARTIES
Significant control Substantial Interest Joint Venture Others Subsidiaries Key (Significant Management Influence) Personnel (4) 7924.42 (6431.57) 53487.49 (43551.05) 193.06 (177.84) 524.79 (147.86) 42.84 0.00 0.00 0.00 11.11 (12.14) (300.00) (5) 692.54 (452.92) 315.79 (74.81) 7.38 (136.71) 2.04 0.00 0.00 0.00 0.46 0.00 12.13 0.00 1258.81 (539.00) (102.00) 18.12 (80.00) 213.17 (95.00) (0.62) (139.81) 0.00 5126.56 (5210.78) (48.30) 1469.27 (2313.35) 547.09 (623.12) (0.20) 2.48 169.15 (73.92) (0.62) (6) Relative of key Management Personnel (7)

(Rs./Lacs)
Total

(1) PURCHASE OF GOODS Purchase of Goods (Previous Year) SALE OF GOODS Sale of Goods (Previous Year) RENDERING OF SERVICES Rendering of Services (Previous Year) RECEIVING OF SERVICES Receiving of Services (Previous Year) REIMBURSEMENT OF EXPENSES RECOVERED Reimbursement of Expenses recovered (Previous Year) REIMBURSEMENT OF EXPENSES Reimbursement of Expenses (Previous Year) LEASING OF PREMISES Leasing of Premises (Previous Year) INVESTMENT IN SHARE CAPITAL Investment in Share Capital (Previous Year) REFUND OF APPLICATION MONEY Refund of Application Money (Previous Year) ADVANCE RECEIVED Advance Received (Previous Year) REMUNERATION* Remuneration (Previous Year) DIRECTORS SITTING FEE Directors Sitting Fee (Previous Year) DIVIDEND PAID Dividend Paid (Previous Year) OUTSTANDING BALANCE AS ON 31.03.2010 (DEBIT) Outstanding balance as on 31.03.2009 (Debit) OUTSTANDING BALANCE AS ON 31.03.2010 (CREDIT) Outstanding balance as on 31.03.2009 (Credit)

(2) 12218.80 (13233.24) 8.18 (0.18) 12.60 (35.98) 399.18 (287.71) 0.13 0.00 0.00 0.00 26.27 0.00

(3) 0.00 (0.43) 586.67 (963.30) 0.00 (84.21) 31.71 (43.35) 0.00 0.00 8.31 (7.47) 0.00

(8) 20835.77 (20118.15) 54398.13 (44589.34) 213.04 (434.74) 957.72 (478.92) 42.97 0.00 8.77 (7.47) 49.51 (12.14) 1258.81 (839.00) 0.00 (102.00) 18.12 (80.00) 252.55 (122.24) 0.00 (1.24) 0.00 (188.31) 1779.92 (2692.24) 5842.79 (5907.82)

0.00 39.38 (27.24)

0.00

0.00

308.17 (378.89)

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. 4. Joint Ventures Others (Significant Influence) 1. 3. 1. 3. 5. 7. 9. 11. 1. 3. 1. 2. 4. 6. 1. Sona Autocomp Inc. 2. Sona Autocomp Europe SARL AAM Sona Axle Pvt. Ltd. Sona Somic Lemforder Components Ltd. 2. Sona Okegawa Precision Forgings Ltd. Mahindra Sona Ltd. 4. Maruti Suzuki India Ltd. Sona e-Design and Technologies Ltd. 6. Fuji Autotech AB, Sweden Pune Heat Treat Pvt. Ltd. 8. DRSK Management Services Pvt. Ltd. Sona Mobility Services Ltd. 10. Sona Autocomp Holding Pvt. Ltd. Kapur Properties & Investment 12. Fuji Autotech Europe SAS Sona Fuji Kiko Automotive Ltd. 2. Arjan Stampings Ltd. JTEKT SONA Automotive India Ltd. Dr. Surinder Kapur - (Transactions disclosed under category (1) above) Mr. Sunder Rajan 3. Mr. P.V. Prabhu Parriker Mr. Kiran M. Deshmukh 5. Mr. Sudhir Chopra Mr. Sunjay Kapur Mr. Sunjay Kapur (Transactions Disclosed under category (6) Above w.ef. 22nd Oct, 08)

5. 6.

Subsidiaries Key Management Personnel

7.

Relative of Key Individual Exercise Control

Signature to Schedule 1 to 20

As per our report of even date attached For S.P. Puri & Co., Chartered Accountants (Rajiv Puri - Partner) Membership No. 84318 FRN 001152 N Place : Gurgaon Dated : 30th April, 2010 For and on behalf of the Board

Sudhir Chopra - Company Secretary Rajiv Chanana - Chief Financial Officer

Sunjay Kapur-Vice Chairman & Managing Director Ravi Bhoothalingam - Director

62

CASH FLOW STATEMENT


Year Ended 31st March, 2010 Rs./Lacs A. CASH FLOW FROM OPERATING ACTIVITIES : Net Profit before tax and extraordinary items Adjustment for : Depreciation Miscellaneous Expenditure Written Off (Profit)/Loss on sale of Fixed Assets Dividend from Long Term Investment-Trade Provision for Bad and Doubtful Debts Written Back Provision for Doubtful Advances Provision for Slow Moving Inventory Written Back Provision for Slow Moving Inventory (Gain)/Loss on Revaluation of Foreign Currency Loans Income Tax Refund Including Interest Interest Paid Interest Received Operating Profit before Working Capital Changes (Increase)/Decrease in Sundry Debtors (Increase)/Decrease in Inventories (Increase)/Decrease in Loans & Advances/Other Current Assets Increase/(Decrease) in Current Liabilities & Provisions Cash generated from operations Income Tax Paid Income Tax Refund Including Interest Net Cash from operating activities B. CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets (including CWIP) Proceeds from sale of Fixed Assets Proceeds from sale of Investment Proceeds for purchase of Investment Dividend Received Interest Received Net cash (used)/raised from investing activities C . CASH FLOW FROM FINANCING ACTIVITIES: Issue of Equity Shares Share Premium Proceeds From Fresh Borrowings Repayment of Borrowings Interest Paid Dividend Paid Tax on Dividend Paid Net Cash used in financing activities Net increase in cash & cash equivalents (A+B+C) Cash & Cash Equivalents as at 31.03.2009 Cash & Bank Balances Cash Credit Accounts Cash & Cash Equivalents as at 31.03.2010 Cash & Bank Balances Cash Credit Accounts 3296.66 2658.03 0.00 23.85 (7.00) 0.00 19.61 (29.54) 0.00 (101.50) (50.39) 2492.72 (17.00) (1061.00) (1079.21) 1398.68 (132.86) 2493.46 302.15 (0.12) (2.00) (18.62) 0.00 0.00 29.54 507.78 (56.32) 2633.25 (48.34) (992.56) (287.73) (459.08) 2992.25 Year ended 31st March, 2009 Rs./Lacs (4532.86)

4988.78 8285.44

5840.78 1307.92

(874.39) 7411.05 (74.68) 50.39 7386.76

1252.88 2560.80 (198.95) 56.32 2418.17

(1953.42) 42.56 0.00 (1258.81) 7.00 17.00 (3145.67)

(5931.69) 68.20 0.00 (739.50) 2.00 48.34 (6552.65)

0.00 0.00 9498.17 (8017.96) (2509.54) 0.00 0.00 (1029.33) 3211.76

43.63 1420.03 5718.39 (3842.85) (2655.06) (695.60) (118.22) (129.68) (4264.16)

232.63 (3801.38) 78.61 (435.60)

(3568.75)

1486.61 (791.20) 232.63 (3801.38)

695.41

(356.99)

(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) Membership No. 84318 FRN 001152 N Place : Gurgaon Dated : 30th April, 2010 For and on behalf of the Board

Sudhir Chopra - Company Secretary Rajiv Chanana - Chief Financial Officer

Sunjay Kapur-Vice Chairman & Managing Director Ravi Bhoothalingam - Director

63

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 No. 1. Arjan Stampings Ltd. (w.e.f 18/10/07) Capital Reserves 72.14 99.05 Total Assets 746.60 Total Liabilities 746.60 Detail of Turnover Profit before Provision for Profit after Proposed Investments Taxation Taxation Taxation Dividend 518.42 277.27 (93.89) (108.68) 25.93 80.91 (67.96) (27.77) -

2. JTEKT SONA 5669.00 Automotive India Ltd. (w.e.f 10/10/07) 3. Sona Fuji Kiko Automotive Ltd. (w.e.f 22/11/07)

(31.55) 13931.75 13931.75

1000.00 (148.95)

2998.90

2998.90

128.79

(209.65)

63.26

(146.39)

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.
No. 1. The Financial Year of the subsidiary company ended on: 2. Number of shares in the subsidiary company held by Sona Koyo Steering Systems Limited at the above date. Extent of holding (%) 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 subsidiarys Financial Year ended on 31st March, 2010 b) for previous Financial Years of the subsidiary 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 subsidiarys Financial Year ended on 31st March, 2010 (Rs./Lacs) b) for previous Financial Years of the subsidiary since it become subsidiary of Sona Koyo Steering Systems Limited (Rs./Lacs) (67.96) (66.07) (27.77) (3.78) (146.39) (2.56) Nil Nil Nil Nil Nil Nil Particulars Arjan Stampings Ltd. 31.03.2010 37142 51.48% JTEKT SONA Automotive India Ltd. 31.03.2010 27778094 49% Sona Fuji Kiko Automotive Ltd. 31.03.2010 5099993 51%

For and on behalf of the Board Place : Gurgaon Dated : 30th April, 2010 64 Sudhir Chopra - Company Secretary Rajiv Chanana - Chief Financial Officer Sunjay Kapur - Vice Chairman & Managing Director Ravi Bhoothalingam - Director

SONA KOYO STEERING SYSTEMS LIMITED BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE
I. Registration Details L29113DL1984PLC018415 Registration No. Balance Sheet Date II. Capital Raised during the year (Amount in Rs. Thousand) Public issue Bonus issue III. State Code 31 Date 03 Month 55 2010 Year

Rights issue Private issue

Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousand) Total Liabilities 4232851 Sources of Funds Paid up Capital 198742 Deferred Tax Liability 227925 Secured Loan 2191212 Applications of Funds Net Fixed Assets 3194183 Net Current Assets 325311 Accumulated Losses Investments 713357 Misc. Expenditure Unsecured Loan Reserves & Surplus 1614972 Total Assets 4232851

IV. Performance of Company (Amount in Rs. Thousand) Total Income 8557945 Profit / (Loss) Before Tax 329666 Earning Per Share in Rs. 1.09 V. Total Expenditure 8228279 Profit /(Loss) After Tax 216453 Dividend Rate % 30%

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 EPS Wagon R Product Description Item Code No. 1-A024900000 Product Description AXLE 8-SEATER

For S.P. Puri & Co., Chartered Accountants (Rajiv Puri - Partner) Membership No. 84318 FRN 001152 N Place : Gurgaon Dated : 30th April, 2010 For and on behalf of the Board

Sudhir Chopra - Company Secretary Rajiv Chanana - Chief Financial Officer

Sunjay Kapur-Vice Chairman & Managing Director Ravi Bhoothalingam - Director

65

FINANCIAL STATISTICS
REVENUE ACCOUNT
Year Ended Sales Profit Before Taxes Taxes Dividend Capital

(IN US DOLLARS)

CAPITAL ACCOUNT
Reserves Borrowings Gross Block Earning Per Share Dividend Net Worth Per Per Share Share (US$)
39927 53100 94114 86573 0.08 0.07 0.07 (0.03) 0.02 0.02 0.02 0.02 0.00 0.01 0.43 0.32 0.47 0.21 0.20

(US$000)
31.03.2006 91976 5634 9538 9910 (8871) 7297 1980 3180 3580 (2798) 2506 1127 1821 2045 0 1539 1976 4236 4872 3889 4399

(US$000)
16933 26370 40718 28729 35745 23726 22002 46497 46769

31.03.2007 161542 31.03.2008 207861 31.03.2009 158522 31.03.2010 213342

48500 101314

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. 2. A. Increase in capital B. Premium on Share Capital Funds generated from operations A. Profit/(Loss) after Tax B. Depreciation C. Deferred Tax Investment (Net) Borrowings Decrease in Working Capital 4791 5883 2451 21023 34148 APPLICATION OF FUNDS 1. 2. 3. 4. 5. 6. Capital Expenditure Capital Redemption Reserve for Bonus Issue Dividends Investments Increase in Working Capital Repayment of Loan 4177 1539 2786 225 25421 34148 11552 1448 636 13636 33177 2045 5458 1550 19058 61288 14493 2017 1821 23 5199 23553 8955 1127 24 484 3074 13664 95 3088 (6073) 4880 (2929) 11191 3384 13636 232 7551 6330 4215 1442 60 41457 61288 2219 6566 6358 2851 366 2982 2210 23553 3654 2414 282 7314 13664

3. 4. 5.

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

66

A UDITORS R EPORT ON C ONSOLIDATED FINANCIAL STATEMENTS


TO THE BOARD OF DIRECTORS SONA KOYO STEERING SYSTEMS LIMITED We have audited the attached Consolidated Balance Sheet of SONA KOYO STEERING SYSTEMS LIMITED (the Company) and its Subsidiaries and Joint Ventures (the group) as at 31st March, 2010, the consolidated Profit & Loss Account and the consolidated Cash Flow Statement for the year ended on that date, annexed thereto. These consolidated financial statements are the responsibility of the Companys Management and have been prepared by the management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 1. We did not audit the financial statements of the Joint Ventures for the year ended 31 st March, 2010, whose financial statements reflect total assets of Rs. 1077.49 lakhs (previous year Rs. 917.41 lakhs) as at 31st March, 2010 or 31st December, 2009 as the case may be, total revenue of Rs. 513.46 lakhs (previous year Rs. 227.31 lakhs) and net cash flows from operating activities of Rs. (292.19) lakhs (previous year Rs. (-) 12.47 lakhs) for the year ended 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 not available and the impact of which is not likely to be material. We have relied upon the unaudited financial 2.

statements as at 31st December, 2009 / 31st March, 2010 provided by the management of these Companies for the purpose of our examination of consolidated financial statements. We report that the consolidated financial statements have been prepared by the Companys management in accordance with the requirements of Accounting Standard 21 Consolidated Financial Statements and Accounting Standard 27 Financial Reporting of interest in Joint Ventures, as notified by the Companies (Accounting Standard) Rules, 2006 and on the basis of separate audited financial statements of Sona Koyo Steering Systems Limited and its subsidiaries and joint ventures included in the consolidated financial statements. On the basis of information and explanation given to us and on consideration of separate audit reports on individual audited financial statements of Sona Koyo Steering Systems Limited and its subsidiaries and unaudited financial statements and other relevant financial information of the joint ventures, in our opinion and to the best of our information and according to the explanations given to us, the said consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India :a. in the case of the consolidated Balance Sheet, of the consolidated state of affairs of the Group as at 31st March, 2010; in the case of the consolidated Profit & Loss Account, of the consolidated results of operation of group for the year ended on that date; and in the case of consolidated Cash Flow Statement, of the consolidated cash flows of the group for the year ended on that date. For S.P. Puri & Co., Chartered Accountants

3.

b.

c.

Place : Dated :

Gurgaon 30th April, 2010

(Rajiv Puri - Partner) Membership No. 84318 FRN. 001152 N

67

CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2010


Particulars Schedule As at 31st March, 2010 Rs./Lacs As at 31st March, 2009 Rs./Lacs

I.

SOURCES OF FUNDS 1. Shareholders Fund a) Share Capital b) Share Application Money c) Reserves & Surplus Minority Interest 2. Loan Funds a) b) 3. Secured Loans Unsecured Loans 3 4 Sub-Total 19(10) Total 24378.99 8115.84 32494.83 2064.22 55540.85 19627.62 7781.76 27409.38 1127.18 48708.38 1 2 Sub-Total 1987.42 15619.21 3375.17 20981.80 1987.42 58.80 14625.14 3500.46 20171.82

Deferred Tax Liability (Net)

II.

APPLICATION OF FUNDS 1. Fixed Assets a) 5 60852.76 16089.42 44763.34 1986.78 46750.12 45978.50 13550.53 32427.97 10167.12 Gross Block Less : Depreciation Net Block Capital Work In Progress Expenditure Incurred During Construction Period 5A (Pending Allocation) 6 Sub-Total 4. Current Assets, Loans and Advances a) b) c) d) e) Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances 7 8 9 10 11 Sub-Total Less : Current Liabilities and Provisions a) b) Current Liabilities Provisions Sub-Total Net Current Assets Total 12 14718.79 1083.66 15802.45 5426.13 55540.85 17581.07 181.78 17762.85 2156.69 48708.38 5084.25 9323.36 587.72 53.75 6179.50 21228.58 2987.98 7947.35 376.19 36.14 8571.88 19919.54

b) c)

42595.09 571.37

2. Investments 3. Goodwill on Consolidation

3252.10 112.50 50114.72

3252.10 133.13 46551.69

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) Membership No. 84318 FRN 001152 N Place : Gurgaon Dated : 30th April, 2010 For and on behalf of the Board

68

Sudhir Chopra - Company Secretary Rajiv Chanana - Chief Financial Officer

Sunjay Kapur-Vice Chairman & Managing Director Ravi Bhoothalingam - Director

CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010
Particulars INCOME Gross Sales
[Including share of Joint Ventures Rs. 494.81 Lacs (Previous Year Rs. 179.12 Lacs)]

Schedule

Year ended 31st March, 2010 Rs./Lacs 96647.23 11367.37 85279.86 754.16 86034.02

Year ended 31st March, 2009 Rs./Lacs 80925.81 11726.30 69199.51 494.02 69693.53 56080.92

Less : Excise Duty and Other Taxes Net Sales Other Income

13

EXPENDITURE Raw Materials and Components Consumed


[Including share of Joint Ventures Rs. 418.51 Lacs (Previous Year Rs. 198.48 Lacs)]

64168.02

(Increase) / Decrease in Stock of Finished Goods and Work-in-Process Excise Duty on Increase / (Decrease) in finished goods Manufacturing Expenses Employees Remuneration and Benefits Administrative, Selling & Other Expenses Research & Development Expenses Finance Charges

14 15 16 17 18

(352.81) 25.71 3868.77 5904.87 3246.39 154.76 3632.76 80648.47

(118.65) 3.95 3367.77 5509.43 3315.11 92.64 3240.85 71492.02 (1798.49) 303.26 2507.63 (4609.38) 6.97 70.54 (1526.62) (3160.27) (13.63) (3173.90) 2415.22 (758.68) (758.68) (1.59)

Cash Profit Miscellaneous Expenditure Written off Depreciation & Amortisation Consolidated Profit/(Loss) before Tax Provision for Tax - Current Year
[Including share of Joint Ventures Rs. 0.98 Lacs (Previous Year Rs. 5.45 Lacs)]

5385.55 2845.30 2540.25 592.87 (566.90) 937.03 1577.25 118.03 1695.28 (758.68) 40.33 976.93 596.23 99.03 200.00 81.67

Minimum Alternate Tax (MAT) Credit Entitlement Provision for Tax - Fringe Benefit Tax - Current Year
[Including share of Joint Ventures Nil (Previous Year Rs. 2.82 Lacs)]

Increase/(Decrease) in Deferred Tax Liability Consolidated Profit / (Loss) after Tax Add : Share of Loss Transferred to Minority Consolidated Profits After Tax & Minority Interest Balance brought forward from Previous Year (Less) / Add : Prior Period Adjustments Amount Available for Appropriation Proposed Dividend Tax on proposed Dividend Transfer to General Reserve Balance carried to Balance Sheet EARNING PER SHARE

Basic and Diluted Earning Per Share (In Rs.) 19(11) 0.85 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) Membership No. 84318 FRN 001152 N Place : Gurgaon Dated : 30th April, 2010 For and on behalf of the Board

Sudhir Chopra - Company Secretary Rajiv Chanana - Chief Financial Officer

Sunjay Kapur-Vice Chairman & Managing Director Ravi Bhoothalingam - Director

69

CONSOLIDATED SCHEDULES FORMING PART OF ACCOUNTS


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

SCHEDULE 1 SHARE CAPITAL


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

1987.42

1987.42

SCHEDULE 2 RESERVES & SURPLUS


Capital Reserve (On account of reissue of forfeited Equity Shares) Capital Redemption Reserve Securities Premium Account - As per Last Balance Sheet - Add : Securities Premium on account of Preferential Issue of Shares - Add : Addition on Consolidation General Reserve - As per Last Balance Sheet - Add : Transferred from Consolidated Profit & Loss Account - Add : Transferred from Minority Interest Profit & Loss Account - Balance as per Profit & Loss Account [Including Share of Joint Ventures Rs. 242.90 Lacs (Previous Year Rs. 8.92 Lacs)] Foreign Currency Translation Reserve - Share of Joint Ventures 81.67 15614.65 4.56 15619.21 (758.68) 14624.92 0.22 14625.14 0.44 120.66 8921.17 8921.17 7397.51 1523.66 8921.17 54.15 0.44 120.66

8921.17

8975.32

6287.18 200.00 3.53

6490.71

6287.18 -

6287.18

SCHEDULE 3 SECURED LOANS


Term Loans from Banks Term Loans from Others Short Term Loans from Banks Sales Tax Loan 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 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.

22894.59 974.49 509.91 24378.99

15310.32 241.12 3865.29 210.89 19627.62

70

2.

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). Term Loans from Others include : Rs 2.32 Lacs secured by hypothecation of specific asset financed. 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. The Short Term Loans from Banks and Financial Institution are secured by hypothecation of inventories, book debts and other receivables both present & future. 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. a) b)

c)

3. 4.

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 Rs./Lacs

31st March, 2009 Rs./Lacs

SCHEDULE 4 UNSECURED LOANS


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

SCHEDULE 5 FIXED ASSETS


Sl. No. Particulars As at 01.04.09 Gross Block (At Cost) Additions Sales/ Disposal As at 31.03.10 Upto 01.04.09

(Rs./Lacs)
Depreciation Net Block For the Written As at As at As at Year Back 31.03.10 31.03.10 31.03.09

Tangible Assets 1. Land 2. Lease Hold Land** 3. Building 4. Lease Hold Improvements 5. Plant & Machinery 6. Jigs & Fixture 7. Electric Installation 8. Furniture & Fixture 9. Office Equipment 10. Vehicles 11. R&D-Plant & Machinery 12. R&D-Computers Intangible Assets 1. R&D-Computer Softwares 2. Software Others Total Share in Joint Ventures Grand Total Grand Total (Previous Year) 55.73 52.29 45977.31 1.19 45978.50 38707.10 21.65 262.11 14551.57 777.94 15329.51 7352.42 455.25 455.25 79.66 55.73 73.94 1173.74 779.13 20.69 7.53 159.51 0.86 7.62 10.30 176.88 28.89 28.31 17.83 336.39 29.75 27.42 56.11 837.35 749.38 35.04 44.76 752.13 0.33 3180.82 5636.01 174.63 30220.25 374.93 1626.64 825.37 2136.26 261.92 432.49 88.34 221.50 4140.94 19.51 8684.67 110.16 675.87 54.22 272.56 81.31 7.07 0.12 174.63 85.34 0.59 79.59 29.36 85.62 3180.82 221.50 9776.83 19.51 485.09 2301.92 800.00 2379.46 257.61 439.56 88.34 724.36 163.88 104.19 368.07 379.66 1212.45 113.89 55.75 55.43 0.21 268.98 1995.10 26.41 120.15 52.91 172.06 26.85 23.79 15.11 0.01 0.21 0.33 130.60 354.00 98.25 79.54 70.54 3180.82 3180.82 221.29 19.18 354.49 446.00 159.36 360.02 17.80 10.75 270.74 445.71 923.80 148.03 376.75 32.92

993.33 8783.50 4911.65

2.48 166.03 0.09 78.57 42.49 -

38819.58 10184.26

74.55 12104.81 26714.77 20035.96 488.13 1813.79 1258.58

27.11 1357.40 1022.06

3. New Product Development Cost 911.63

60073.63 13549.67 60852.76 13550.53

2898.85 388.85 16059.67 44013.96 32427.64 2927.74*388.85 16089.42 44763.34 32427.97 10.38 13550.53 32427.98 1145.97 9205.35 840.81 961.77

45978.50 11044.22 2516.67

Capital Work In Progress Including Advances - Tangible Assets Capital Work In Progress Including Advances - Intangible Assets

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 71 period pending allocation. ** Leasehold land Includes Rs. 221.50 Lacs (Previous Year Nil ) - in respect of which lease deed is pending for execution.

31st March, 2010 Rs./Lacs

31st March, 2009 Rs./Lacs

SCHEDULE 5A EXPENDITURE INCURRED DURING CONSTRUCTION PERIOD (Pending Allocation)


Opening Balances Raw Material Consumption Manufacturing Expenses Bank Charges Brokerage and Commission Depreciation Miscellaneous Expenses Administrative & Other Miscellaneous Expenses Foreign Travel Filing Fees Lease Rent Travelling, Conveyance & Vehicle Expenses Legal & Professional Charges Meeting & Conference Expenses Printing & Stationery Salaries & Allowances Contribution to Provident & Other Funds Employee Welfare Expenses Business Promotion Insurance Interest on Loan Security Expenses Other Repairs & Maintenance Forwarding Expenses Rates & Taxes Freight & Octroi Charges Power & Fuel Donation Sample Expenses Audit Fee Total Expenses Less : Interest received from Bank
[TDS Deducted Rs. 0.10 Lacs (Previous Year Rs. 4.35 Lacs)]

571.37 241.39 30.01 19.24 82.42 6.25 10.88 41.89 183.33 35.53 31.22 334.89 26.74 27.15 4.50 11.69 270.97 12.28 35.54 10.38 21.68 17.56 88.33 5.02 0.24 2120.50 (0.46) (252.81) (253.27) 1867.23 0.03 1864.76 2.50 2.50 (34.63) (154.51)

44.95 2.97 1.56 24.87 4.41 9.02 6.00 2.08 13.89 3.87 162.15 78.36 0.71 9.06 233.47 14.54 28.95 6.43 4.58 43.97 4.57 2.08 0.53 1.14 2.70 16.28 10.00 0.03 2.21 735.38

Less : Other Income Add : Add : Share Less : Provision for Income Tax Provision for FBT in Joint Ventures Capitalised / Allocated during the Year

(189.14) 546.24 10.70 11.93 2.50 571.37 571.37

Less : Share in Joint Venture - Written off during the Year

SCHEDULE 6 INVESTMENTS
LONG TERM (Valued At Cost)
UNQUOTED, FULLY PAID UP : In Trade Investments : i) ii) 1,33,334 Equity Shares (Previous Year 1,33,334) of Rs. 10/- each in Roop Automotive Ltd. 49,29,636 Equity Shares (Previous Year 49,29,636) of Euro 1 each, in Fuji Autotech Europe S.A.S. (Incorporated in France) 20.00 2932.10 300.00 3252.10 20.00 2932.10 300.00 3252.10

72

iii) 30,00,000 Equity Shares (Previous Year 30,00,000) of Rs. 10/- each, in Sona Mobility Services Ltd.

31st March, 2010 Rs./Lacs

3 1st March, 2009 Rs./Lacs

SCHEDULE 7 INVENTORIES
(At cost or net realisable value, whichever is lower) Stores and Spare Parts Raw Materials and Components* Work-in-process Finished Goods** Tools 444.16 2751.39 502.50 470.22 842.20 5010.47 Less : Provision for slow moving inventory 5010.47 Share in Joint Ventures 73.78 5084.25 * Includes material in transit Rs. 26.61 Lacs (Previous Year Nil) ** Includes material in transit Rs. 60.88 Lacs (Previous Year Nil) 270.94 1729.82 410.92 165.43 387.83 2964.94 (29.54) 2935.40 52.58 2987.98

SCHEDULE 8 SUNDRY DEBTORS


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

SCHEDULE 9 CASH AND BANK BALANCES


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

SCHEDULE 10 OTHER CURRENT ASSETS


(Unsecured, considered good) Claims Receivable 53.75 53.75 36.14 36.14

73

31st March, 2010 Rs./Lacs

3 1st March, 2009 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 - Considered doubtful Less : Provision for Doubtful Advances Security Deposits Balance with Excise and Port Trust Authorities Advance payment against Income Tax (Net of Provisions) Share in Joint Ventures 1593.89 19.61 1613.50 (19.61) 1593.89 442.86 3370.13 731.29 6138.17 41.33 6179.50 2653.27 1535.26 4188.53 4188.53 428.19 3245.70 675.06 8537.48 34.40 8571.88

SCHEDULE 12 CURRENT LIABILITIES AND PROVISIONS


A. CURRENT LIABILITIES Sundry Creditors - Due to Micro & Small Enterprises - Due to Others - Unclaimed Dividends* - Unclaimed Redeemed Debentures - Advance from Customers Other Liabilities Interest Accrued but not due on Loans Share in Joint Ventures * There is no amount due and outstanding to be credited to Investor Education & Protection Fund B. PROVISIONS Proposed Dividend Corporate Dividend Tax Gratuity Leave Encashment Warranty Provision for Tax Share in Joint Ventures 596.23 99.03 9.04 273.57 97.69 5.16 1080.72 2.94 1083.66 8.66 74.31 94.12 177.09 4.69 181.78 13568.25 34.20 0.01 905.29 18.14 14525.89 192.90 14718.79 16289.88 37.69 3.57 1112.52 29.44 17473.10 107.97 17581.07

74

31st March, 2010 Rs./Lacs

3 1st March, 2009 Rs./Lacs

SCHEDULE

13
252.87 7.00 67.39 101.67 304.86 1.72 735.51 18.65 754.16 0.44 273.09 2.00 48.34 102.02 0.12 4.53 430.54 63.48 494.02

OTHER INCOME
Lease Rental Income Income from Sale of Scrap Dividend from Long Term Trade Investments Interest Income
[TDS Deducted Rs. 2.82 Lacs (Previous Year Rs. 7.93 Lacs)]

Miscellaneous Income Profit on disposal of Fixed Assets Exchange Gain/Loss on Foreign Currency Loans Job Work Share in Joint Ventures

SCHEDULE

14

(INCREASE)/DECREASE IN STOCK OF FINISHED GOODS AND WORK IN PROCESS


INVENTORY as at 31.03.2009 Finished Goods Work-in-process Stock of Scrap INVENTORY as at 31.03.2010 Finished Goods Work-in-process Stock of Scrap Share in Joint Ventures 165.43 410.92 2.00 470.22 502.50 61.18 417.71 0.03 165.43 410.92 2.00

578.35

478.92

972.72 (394.37) 41.56 (352.81)

578.35 (99.43) (19.22) (118.65)

SCHEDULE 15 MANUFACTURING EXPENSES


Stores and spare parts consumed Loose tools consumed Power and fuel Freight & Octroi charges Machine repairs and maintenance Royalty Job Work Testing Charges Share in Joint Ventures 944.13 541.28 1216.57 390.97 326.40 374.07 18.70 0.96 3813.08 55.69 3868.77 959.53 473.66 1012.79 394.21 258.42 255.12 13.23 0.60 3367.56 0.21 3367.77

SCHEDULE 16 EMPLOYEES REMUNERATION AND BENEFITS


Salaries, wages and allowances Contribution to Provident and other Funds Employees welfare expenses Share in Joint Ventures 4656.84 498.02 679.93 5834.79 70.08 5904.87 4113.01 562.58 806.08 5481.67 27.76 5509.43

75

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

3 1st March, 2009 3 1st March, 2009 Rs./Lacs Rs./Lacs

SCHEDULE 17 ADMINISTRATIVE, SELLING AND OTHER EXPENSES


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

SCHEDULE 18 FINANCE CHARGES


Interest on fixed loans Other interest Bank and other finance charges Cash discount Share in Joint Ventures 2603.55 66.50 472.23 397.51 3539.79 92.97 3632.76 2415.37 239.23 361.82 224.42 3240.84 0.01 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 1. 2. 3. 4. 5. 6. Relationship Country of Incorporation India India India France USA India % of ownership interest as on 31st March, 2010 51 49* 51.48 24 24 30

Sona Fuji Kiko Automotive Ltd. Subsidiary JTEKT SONA Automotive India Ltd. Subsidiary Arjan Stampings Ltd. Subsidiary Sona Autocomp Europe SARL Joint Venture Sona Autocomp Inc. USA Joint Venture AAM Sona Axle Pvt. Ltd. Joint Venture

*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 companys accounting policies, which have not been adjusted.

IV. V.

Goodwill : Goodwill arising on acquisition is tested for impairment on each Balance Sheet date. (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 nonconsolidated 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 of the amortization period and the amortization method is reviewed at each financial year end.

77

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 :

78

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.

- 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 Rs./Lacs 2. Capital Commitment : Estimated amount of contracts remaining 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) b) c) d) Excise Duty Warranties Service Tax Income Tax - Matters in Appeal 847.36 22.11 299.22 83.96 0.00 1324.51 683.72 0.00 76.21 102.16 1925.00 540.25 1869.25 5972.59 Previous Year Rs./Lacs

II. Customer Bills Discounted III. Letter of Credit opened by banks for purchase of inventory/capital goods 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 Companys interest in 79 aforesaid Joint Venture from 1st January, 2010 to 31st March, 2010.

Current Year (Rs./ Lacs) 5. Fixed Assets / Capital work in progress during the year includes: a) b) c) d) e) f) g) h) i) Technical Know-how Fees Professional Charges Development Expenses Components, Tools & Spares Travelling Expenses Interest & Bank Charges Others Salary Training TOTAL Note - Excluding figures reported in Schedule 5A. 6. 7. 169.79 8.53 70.24 204.24 17.64 0.00 33.95 4.18 0.00 508.57

Previous Year (Rs./ Lacs)

218.46 19.52 29.21 795.46 140.57 127.78 30.02 325.73 6.18 1692.93

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). 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) c) Superannuation Fund Employee State Insurance Corporation 83.44 11.32 336.70 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) Current Year (Rs./ Lacs) 1. Reconciliation of opening and closing balances of obligations: a) b) c) d) e) f) 2. Obligation as at April 1, 2009 Current Service Cost Interest Cost Actuarial (Gain) / Loss Benefits paid Obligation as at March 31, 2010 691.88 66.66 51.90 (64.11) (30.23) 716.10 426.50 61.19 34.13 193.82 (24.29) 691.35 74.31 161.82 5.26 81.64 (49.46) 273.57 166.34 29.10 12.27 88.21 (221.62) 74.30 Previous Year (Rs./ Lacs) Leaves (Unfunded) Current Year (Rs./ Lacs) Previous Year (Rs./ Lacs) 75.74 12.87 335.82

Change in Plan Assets (Reconciliation of opening and closing balances): a) b) c) d) e) f) g) Fair Value of Plan Assets as at April 1, 2009 Prior Period Adjustment Expected return on Plan Asset Contributions Benefits paid Actuarial Gain / (Loss) on Plan Assets Fair Value of Plan Assets as at March 31, 2010 682.69 0.00 63.68 143.63 (30.23) 6.24 866.01 405.19 29.16 39.09 225.10 (24.29) 8.44 682.69 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

3.

Reconciliation of fair value of assets and obligations: a) b) c) Present value of obligation as at March 31, 2010 716.10 Fair Value of Plan Assets as at March 31, 2010 (866.01) Unfunded amount recognised in the Balance Sheet (149.91) Current Service Cost Interest Cost Expected return on Plan Assets Actuarial (Gain) / Loss Expenses recognised during the year 66.66 51.90 (63.68) (70.35) (15.47) 691.35 (682.69) 8.66 61.19 34.13 (39.09) 185.38 241.61 273.57 0.00 273.57 161.82 5.26 0.00 81.64 248.72 74.30 0.00 74.30 29.10 12.27 0.00 88.21 129.58

4.

Expense recognised during the year: a) b) c) d) e)

80

5.

Assumptions: a) Discount Rate (per annum) b) c) Expected rate of return on Plan Assets (per annum) Rate of increase in compensation level (per annum)

7.5% to 8% 8% to 9.4% 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:
Nature of Contracts

Current Year Number of Contracts Foreign Currency Amount (In Lacs) 10403.81 5059.37 6.78 306.32

Previous Year Number of Contracts 57 25 Foreign Currency Amount (In Lacs) 10234.33 5341.30 19.96 1019.96

Forward Contracts (JPY) Rupee Equivalent Value Forward Contracts (USD) Rupee Equivalent Value

48 5 -

Un-hedged Foreign Currency Exposure Current Year (Amount in Lacs) CHF Creditors Rupee Equivalent Value Debtors & Loans & Advances Rupee Equivalent Value 9. EURO 0.20 12.20 5.88 353.51 USD 23.04 1040.64 16.73 767.06 YEN 1133.69 551.43 8430.44 4034.81 Previous Year (Amount in Lacs) CHF 0.16 7.05 EURO 1.34 89.70 6.07 406.33 USD 13.14 665.67 49.94 2529.96 YEN 16.17 8.32 96.51 49.64

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. 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 (Rs./Lacs) A. Deferred tax liability representing tax arising out of timing difference on account of (i) Depreciation (ii) Deferred Revenue Expenditure (iii) Custom Duty & Excise Duty B. Deferred tax asset representing future tax benefit on difference on account of (i) Leave encashment Provision (ii) Others (iii) Gratuity (iv) Unabsorbed Depreciation and Business Loss Net Deferred Tax Liability (A-B) Previous Year (Rs./Lacs)

10.

3553.74 0.00 29.43 3583.17

3049.25 0.00 23.79 3073.04

121.89 39.04 1.31 1356.71 1518.95 2064.22

22.36 0.16 0.00 1923.33 1945.85 1127.18

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.

81

Current Year Rs./Lacs 11. Earning Per Share (EPS) : - Net Profit after Tax - Profit/(Loss) attributable to the Equity Shareholders - Basic/Weighted Average number of Equity Shares ( outstanding during the year (Nos.) - Nominal Value of Equity Shares (In Rs.) - Basic and Diluted Earnings Per Share (In Rs.) (A) (B)No (A/B) 1695.28 1695.28 198,741,832 1.00 0.85

Previous Year Rs./Lacs

(3146.63) (3146.63) 198,337,884 1.00 (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) (ii) upto 1 year Rs. 58.92 Lacs between 1 to 5 years Rs. 69.72 Lacs (Previous Year Rs. 95.19 Lacs) (Previous Year Rs. 169.70 Lacs) (Rs./Lacs) Current Year 94.12 3.57 97.69 Previous Year 59.00 35.12 94.12

13.

Provision for warranty account details as required by AS-29 Description Opening Balance Add: Addition During The Year Closing Balance

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. 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. Prior period adjustment shown in Consolidated Profit & Loss Account relates to rectification of errors in earlier years. 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). Miscellaneous Income in Schedule 13 includes Rs. 29.54 Lacs (Previous Year Nil) being provision for slow moving inventory written back. Previous year figures have been regrouped/recast wherever necessary.

15.

16. 17. 18. 19.

82

SCHEDULE 20 CONSOLIDATED RELATED PARTY DISCLOSURES


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

(Rs./Lacs)
TOTAL

(7) 20320.49 (19712.11) 54134.26 (44524.18) 205.66 (300.02) 1210.58 (493.55) 93.83 (6.16) (2.41) 20.79 (7.47) 37.38 (12.14) 1310.19 (1.00) (300.00) 252.55 (167.70) 1.00 (1.44) (188.31) 1777.45 (2694.84) 5890.36 (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. 2. 3. 4. The Individual/Entity Exercise Control over the Company The entity having substantial interest in the Company Joint Ventures Others (Significant Influence) 1. Dr. Surinder Kapur 1. JTEKT Corporation 1. Sona Autocomp Inc. 3. AAM Sona Axle Pvt. Ltd. 1. 3. 5. 7. 9. 11. 1. 2. 4. 6. Sona Somic Lemforder Components Ltd. Mahindra Sona Ltd. Sona e-Design and Technologies Ltd. Pune Heat Treat Pvt. Ltd. Sona Mobility Services Ltd. Kapur Properties & Investment 2. Sona Autocomp Europe SARL 2. Sona Okegawa Precision Forgings Ltd. 4. Maruti Suzuki India Ltd. 6. Fuji Autotech AB, Sweden 8. DRSK Management Services Pvt. Ltd. 10. Sona Autocomp Holding Pvt. Ltd. 12. Fuji Autotech Europe SAS

5.

Key Management Personnel

Dr. Surinder Kapur - (Transactions disclosed under category (1) above) Mr. Sunder Rajan 3. Mr. P.V. Prabhu Parriker Mr. Kiran M. Deshmukh 5. Mr. Sudhir Chopra 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) Membership No. 84318 FRN 001152 N Place : Gurgaon Dated : 30th April, 2010 For and on behalf of the Board

Sudhir Chopra - Company Secretary Rajiv Chanana - Chief Financial Officer

Sunjay Kapur-Vice Chairman & Managing Director Ravi Bhoothalingam - Director

83

CONSOLIDATED CASH FLOW STATEMENT


Year Ended 31st March, 2010 Rs./Lacs A. CASH FLOW FROM OPERATING ACTIVITIES : Net Profit before tax and Minority Interest Adjustment for : Depreciation Miscellaneous Expenditure Written Off (Profit)/Loss on sale of Fixed Assets Dividend from Long Term Investment-Trade Provision for Bad and Doubtful Debts Written Back Provision for Doubtful Advances Provision for Slow Moving Inventory (Gain)/Loss on Revaluation of Foreign Currency Term Loans Minority Interest Income Tax Refund Including Interest Interest Expense Interest Income Operating Profit before Working Capital Changes (Increase)/Decrease in Sundry Debtors (Increase)/Decrease in Inventories (Increase)/Decrease in Loans & Advances/Other Current Assets Increase/(Decrease) in Current Liabilities & Provisions Cash generated from operations Income Tax Paid Income Tax Refund Including Interest Net Cash from operating activities B. CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets (including CWIP) (6495.21) Proceeds from Sale of Fixed Assets 42.56 Expenditure Incurred During Constrution Period (Pending Allocation) 0.00 Proceeds for purchase of Investment 0.00 Foreign Currency Translation Reserve 0.00 Dividend Received 7.00 Interest Received 17.00 Net cash (used)/raised from investing activities C . CASH FLOW FROM FINANCING ACTIVITIES: Issue of Equity Shares Share Premium Received Refund of Share Application Money Proceeds From Fresh Borrowings Repayment of Borrowings Interest Paid Dividend Paid Tax on Dividend Paid Net Cash used in financing activities Net increase in cash & cash equivalents (A+B+C) Cash & Cash Equivalents as at 31.03.2009 Cash & Bank Balances Cash Credit Accounts Cash & Cash Equivalents as at 31.03.2010 Cash & Bank Balances Cash Credit Accounts 2540.25 2845.30 0.00 23.85 (7.00) 0.00 19.61 (29.54) (304.86) 7.26 (50.39) 2670.05 (17.00) (1376.01) (2066.75) 2411.40 (2644.36) 2507.63 303.26 (0.12) (2.00) (18.62) 0.00 29.54 507.78 0.00 (56.32) 2654.60 (48.34) (1040.60) (437.80) (1704.27) 6615.96 Year ended 31st March, 2009 Rs./Lacs (4609.38)

5157.28 7697.53

5877.41 1268.03

(3675.72) 4021.81 (82.19) 50.39 3990.01

3433.29 4701.32 (222.21) 56.32 4535.43

(15170.44) 68.20 (499.53) (300.00) (1.99) 2.00 83.98 (6428.65) (15817.78)

0.00 0.00 (58.80) 16560.31 (7814.60) (2681.36) 0.00 0.00 6005.55 3566.91

1886.12 1420.03 0.00 9134.63 (3842.85) (2720.39) (695.60) (118.22) 5063.72 (6218.63)

376.19 (3865.29) 587.72 (509.91)

(3489.10)

3520.76 (791.23) 376.19 (3865.29)

2729.53

77.81

(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) Membership No. 84318 FRN 001152 N Place : Gurgaon Dated : 30th April, 2010 For and on behalf of the Board

84

Sudhir Chopra - Company Secretary Rajiv Chanana - Chief Financial Officer

Sunjay Kapur-Vice Chairman & Managing Director Ravi Bhoothalingam - Director