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48TH ANNUAL REPORT

2011-12

Performance Award from Honda Siel Power Products Ltd.

Good Quality Performance Award from Wabco India Ltd.

Award for Sincere Efforts and Superior Performance in the field of Quality from Suzuki Motorcycle India

Vendor Performance Award from Suzuki Motorcycle India

Award for Overall Contribution towards Supply for Global Operations from Renault Nissan India

Award for Outstanding Contribution to Supply Chain Management from Volvo-Eicher Commercial Vehicles

Board of Directors Shri Pradeep Dinodia Shri Hari S. Bhartia Shri Horst Binnig Shri Shinji Kawano Shri O.P. Khaitan Shri Ravinder Narain Shri C.Y. Pal Shri M. Sekimoto Shri Luv D. Shriram Shri Inderdeep Singh Shri A.K. Taneja Shri R. Srinivasan Smt. Meenakshi Dass Dr. Peter Neu Shri N. Okano Principal Executives Shri A.K. Taneja Shri R. Srinivasan Shri Rajiv Sethi Shri Anil Gadi Shri V.K. Jayaswal Shri P.S. Ladiwala Shri Devendra Mishra Shri Naveen Agarwal Shri Subrata Neogy Advisor Shri Rakesh Anand Technical Collaborators KS Kolbenschmidt GmbH, Germany Riken Corporation, Japan Honda Foundry Co. Ltd., Japan Fuji Oozx Inc., Japan Bankers UCO Bank State Bank of Hyderabad Corporation Bank Axis Bank Ltd. HDFC Bank Ltd. IDBI Bank Ltd. Citi Bank N.A. Auditors M/s Walker, Chandiok & Co., New Delhi Registered Office 3rd Floor, Himalaya House, 23, Kasturba Gandhi Marg, New Delhi - 110 001 Works Meerut Road, Ghaziabad (U.P.) Industrial Area, Pathredi, District Alwar, Rajasthan
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- Chairman

Managing Director & CEO Joint Managing Director Wholetime Director Alternate Director to Shri Horst Binnig Alternate Director to Shri M. Sekimoto Managing Director & CEO Joint Managing Director & Company Secretary Executive Director Executive Director Executive Director Dy. Executive Director & CFO Dy. Executive Director Dy. Executive Director Sr. General Manager (R&D)

DIRECTORS' REPORT
The Directors have pleasure in presenting their 48th Annual Report along with the audited accounts of the Company for the year ended 31st March, 2012. The gross profit for the year, after all interest charges, but before depreciation and taxes, is Rs. 1859 Million against Rs. 1758 Million last year. Profit after tax for the year is Rs. 839 Million against Rs. 827 Million last year. The Directors recommend that equity shareholders be paid dividend of Rs. 3.50 per share for the year, inclusive of Rs.1.50 per share Interim dividend already paid. The equity dividend alongwith dividend tax would absorb Rs. 91.01 Million against Rs. 91.15 Million last year. An amount of Rs. 748.11 Million is being transferred to General Reserve Account. The demand in domestic market increased both for OEMs and in the After market. Accordingly, Companys production and sales of all products increased during the year. Companys total revenue crossed Rs. 10 Billion mark during the year. Net sales increased by 19% during the year. Gross profit increased by 6% over the last year from Rs. 1758 Million to Rs. 1859 Million. Increase in raw material rates, more particularly Aluminum, Alloy Steel, Pig Iron and Silicon, increase in cost of own power generation due to hike in diesel cost, hike in Entry Tax on steel in U.P. and startup cost in the new plant at Pathredi had an adverse effect on the profits of the Company. However, despite these and several other adverse factors, company increased the gross profit due to focused management efforts on the optimum utilization of production capacity, cost and waste reduction and higher productivity. In view of continuous upgradation of automotive engines and stricter emission norms, technology remains the key differentiator for our products. The Company retained its leadership in offering latest technology products to OEMs with strong support from our Technology partners. The focus on Technology as a differentiator is being increased with higher allocation of resources towards in-house design, development & testing infrastructure, and also higher investment for the modernization of plant and equipment. Company is fully geared to meet the latest technology and quality standards, and revised emission norms. The Company exceeded its planned growth in exports with growth rate of 24% to Rs. 1846 million. Exports remains an important cornerstone of companys strategy for growth and to gain insight into global customers quality, technology and price expectations. The new Plant at Pathredi, near Bhiwadi (Rajasthan) commenced production of Engine Valves and Pins in May 2011. Production of Pistons and Steel Rings was ramped up during the year to reach 3 shift production. Second phase of expansion was initiated last year and production of Pistons under second phase of expansion commenced as per plan during the year. Production of Rings/ Pins/ Engine Valves under second Phase of expansion will commence in the current year. Annual accounts of M/s SPR International Auto Exports Limited, the subsidiary company and the related information are not enclosed in the Annual Report as per exemption granted by Ministry of Corporate Affairs and hard copy of Annual accounts would be made available to members seeking such information. Annual accounts of SPR International Auto Exports Limited shall also be kept for inspection by any member in the Head office and Registered office.
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In accordance with the Accounting Standard (AS - 21) on consolidated financial statements, the consolidated financial statements are attached, which form part of the Annual Report. The Directors confirm that: 1. in the preparation of the annual accounts, the applicable accounting standards of the Institute of Chartered Accountants of India have been followed. appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the profit of the Company for the same year. 3. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. the annual accounts have been prepared on a going concern basis.

2.

4.

Fixed Deposits amounting to Rs. 8.03 Million pertaining to 79 depositors remained unclaimed at the close of the year. Following reports which form an integral part of Directors report are enclosed: 1. 2. 3. Report on CORPORATE GOVERNANCE - as per annexure I. Report on MANAGEMENT DISCUSSION AND ANALYSIS - as per annexure II. Report on CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION and FOREIGN EXCHANGE EARNING & OUTGO as per annexure - III. Data of EMPLOYEES as per annexure IV.

4.

Shri Hari S. Bhartia, Shri Luv D. Shriram, Shri Inderdeep Singh and Shri O.P. Khaitan, Directors, retire by rotation and being eligible, offer themselves for re-appointment. The brief resume and other details, in relation to the aforesaid Directors are given in the Notice of the Annual General Meeting. The Directors place on record their appreciation of the support extended to the Company by the Collaborators, the Bankers, its business associates and their appreciation of the work of all ranks of companys personnel during the year.

On behalf of the Board

New Delhi 05 May, 2012


th

(PRADEEP DINODIA) CHAIRMAN

ANNEXURE I TO DIRECTORS' REPORT


"REPORT ON CORPORATE GOVERNANCE"
1.0) 2.0) 2.1) The Company has been following Good Corporate Governance practices. The corporate goals of the Company are to optimize shareholders' value while ensuring operational accountability and total transparency in all its operations. As on 31.03.2012, the Company had 3 Executive and 10 Non-Executive Directors. All Non-Executive Directors are Independent Directors except Shri Luv D. Shriram. During the year, 6 Board of Directors Meetings were held as under:2.2) 30th April, 2011 21st June, 2011 26th July, 2011 01st November, 2011 27th January, 2012 27th March, 2012

Data of Directors' attendance, Directorship in other Companies and membership in Board Committees is as under:Attendance at Directors See Note Board Meetings during Y.E. March 2012 Last AGM Directorship in other Indian Public Ltd. Cos. as on 31.3.2012 Board Committee Membership in other Indian Public Ltd. Cos. as on 31.3.2012 as Member Chairman

Non-Executive Directors Shri Pradeep Dinodia (Chairman) Shri Hari S. Bhartia Shri Horst Binnig Dr. Peter Neu (Alternate to Shri Horst Binnig) Shri Shinji Kawano Shri O.P. Khaitan Shri Ravinder Narain Shri C.Y. Pal Shri M. Sekimoto Shri N. Okano (Alternate to Shri M. Sekimoto) Shri Luv D. Shriram Shri Inderdeep Singh Executive Directors Shri A.K.Taneja (Managing Director) Shri R. Srinivasan (Jt. Managing Director) Smt. Meenakshi Dass (Wholetime Director )
Notes:

6 1 1 3 6 4 6 3 1 6 5

Yes No No Yes No Yes No Yes Yes No Yes Yes

8 9 NIL NIL NIL 7 3 5 NIL NIL 1 3

2 2 NIL NIL NIL 6 2 2 NIL NIL 1 NIL

4 NIL NIL NIL NIL 3 1 3 NIL NIL NIL NIL

6 6 1 5

Yes Yes Yes

2 NIL 4

1 NIL NIL

NIL NIL NIL

1. Shri Luv D. Shriram and Smt. Meenakshi Dass are related to each other and are promoters of the Company. 2. Directorships in other Companies of Directors excludes Companies formed under Section 25 of the Companies Act, 1956. 3. For calculating Board Committee membership/chairmanship, only Audit Committee and the Shareholders and Investors' Grievance Committee membership/chairmanship of Indian Public Limited Companies has been considered.

2.3)

Shareholding of Non-Executive Director Shri Luv D. Shriram 3334668 shares held jointly as 1st holder 3334668 shares held jointly as 2nd holder

(In capacity of Trustee shares belong to Deepak Shriram Family Benefit Trust) 3.0) The Company has an Audit Committee comprising of three Non-Executive Directors Shri O.P. Khaitan (Chairman), Shri Pradeep Dinodia and Shri C.Y. Pal, all of whom are Independent Directors. Shri R. Srinivasan, the Company Secretary is also the Secretary to the Audit Committee. Statutory Auditors and Internal Auditors are permanent invitees to the Audit Committee meetings. The role and powers of Companys Audit Committee are substantively as per the recommendations made by SEBI and as per provisions of the Companies Act, 1956 3.1) During the year, 4 Meetings of the Audit Committee were held as under :3.2) 30th April, 2011 26th July, 2011 01st November, 2011 27th January, 2012

Attendance at Audit Committee Meetings was as under:Directors Shri O.P. Khaitan (Chairman) Shri Pradeep Dinodia Shri C.Y. Pal Attendance 4 4 4

Notes: 1. Shri Pradeep Dinodia is a practicing Chartered Accountant and all other members of the Audit Committee have good exposure to financial matters.

3.3) 4.0)

The last Annual General Meeting of the Company was held on 21st June, 2011 and was attended by Shri O.P. Khaitan, the Chairman of the Audit Committee. The Company has a remuneration committee to recommend for Boards consideration, the remuneration of Managing Director & Whole time Directors. It comprises of 3 Directors - Shri Pradeep Dinodia, Shri O.P. Khaitan and Shri C.Y. Pal, all being Independent Directors. No meeting of the Remuneration Committee was held during the year.

4.1)

Remuneration of Non-Executive Directors is approved by the Board of Directors. Non-Executive Directors were paid sitting fee of Rs. 20,000 for every meeting of the Board and Rs. 15,000 for every meeting of the Board Committee attended during the year.

Commission of up to 1% of the Net Profits of the Company is paid to the Non-Executive Directors as determined by the Board. This is as approved by shareholders in Annual General Meeting of 26th June, 2010. The fees and commission paid/provided to Non-Executive Directors for the year ended 31st March, 2012 is as under:Sitting Fees for Board and Committee meetings paid during the year Million/Rs. Commission

Directors

Million/Rs.

Shri Pradeep Dinodia (Chairman) Shri Hari S. Bhartia Shri Horst Binnig Dr. Peter Neu (Alternate Director to Shri Horst Binnig) Shri Shinji Kawano Shri O.P. Khaitan Shri Ravinder Narain Shri C.Y. Pal Shri M. Sekimoto Shri N. Okano (Alternate Director to Shri M. Sekimoto) Shri Luv D. Shriram Shri Inderdeep Singh 4.2)

0.18 0.02 0.02 0.06 0.18 0.08 0.18 0.06 0.12 0.10

7.41 0.45 0.50 0.45 0.50 0.45 0.45 0.45

Remuneration paid / provided to Managing Director and Whole-time Directors for the year ended 31st March, 2012 is as under: Salary Directors Mn/Rs. Mn/Rs. Commission Company's Contribution to funds* Mn/Rs. Perquisites and allowances Mn/Rs. Total Contract Period

Mn/Rs.

Shri A.K. Taneja (Managing Director) Shri R. Srinivasan (Jt. Managing Director) Smt. Meenakshi Dass (Whole Time Director)

4.80

18.62

1.55

3.56

28.53

1st April, 2009 to 31st March, 2014 1st February, 2011 to 31st January, 2016 5th May, 2009 to 4th May, 2014

3.60

13.96

1.17

2.62

21.35

5.08

15.82

0.20

2.48

23.58

Notes: 1. The notice period is six months, on either side. 2. In the event of termination of appointment, compensation will be paid in accordance with the provisions of the Companies Act, 1956. 3. The Company does not have a scheme of stock options. *4. Aggregate of the Company's contribution to Provident Fund, Superannuation Fund & Gratuity Fund.

5.0)

The Company has a "Shareholders and Investors Grievance Committee". This Committee comprises of Shri Inderdeep Singh (Chairman) and Shri Pradeep Dinodia, both being Independent Directors. Shri A.K. Taneja and Shri R. Srinivasan are permanent invitees. Shri R. Srinivasan is also the Compliance Officer.
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There were no requests pending for share transfers as on 31st March, 2012. No shareholders complaint was received during the year. No shareholders complaint was pending at the beginning / close of the year. 6.0) Date, Venue and Time for the last three Annual General Meetings (AGM) is as under: FINANCIAL YEAR VENUE DATE TIME SPECIAL RESOLUTION PASSED

2008-09 2009-10

Hotel The Lalit, New Delhi Hotel The Lalit, New Delhi

20.06.2009 26.06.2010

4:00 p.m. 4:00 p.m.

No Special Resolution was passed during the year Payment of not more than 1% of the net profits of the Company to some or any of the Non- Executive Directors. No Special Resolution was passed during the year

2010-11

Hotel The Lalit, New Delhi

21.06.2011

4:30 p.m.

6.1) 6.2) 7.0)

No special resolution was passed last year through postal ballot. No Special Resolution is proposed to be conducted through postal ballot. DISCLOSURES (i) There were no transactions of the company of material nature with its promoters, directors or key management personnel or relatives, which could be construed to have potential conflict of interest with the company. Disclosures on Related party transactions as per the Accounting Standard 18 have been made at Note No. 33 of "Notes to Financial Statements" forming part of the Annual Accounts. (ii) (iii) (iv) There were no penalties or restrictions imposed on the Company by Stock Exchange or SEBI or any statutory authority on any matter related to capital market during the last 3 years. Mandatory requirements All requirements have been complied with. Adoption of Non Mandatory Requirements The Company has set up a Remuneration Committee of the Board. The details of the same are given at Para 4.0 of this report.

8.0)

Quarterly results are published in "Financial Express" and "Jansatta". The Quarterly results are also displayed on Companys website viz www.shrirampistons.com. The Management Discussion and Analysis Report forms part of Directors' Report.

9.0)

General Information for Shareholders:(i) 48th Annual General Meeting The 48th Annual General Meeting of the Company will be held on Tuesday, 12th June, 2012 at 4:30 p.m. at Hotel The Lalit, Barakhamba Avenue, Connaught Place, New Delhi. Financial Year of the Company The Financial Year of the Company is April 1 to March 31. Date of book closure The Register of Members and the Share Transfer Books of the Company will remain closed from 05th June, 2012 to 12th June, 2012(both days inclusive). Date of Dividend Payment Dividend will be paid on or after 12th June, 2012 (Date of AGM).
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(ii) (iii)

(iv)

(v)

Listing of Shares on Stock Exchange The shares of the Company are listed at the Delhi Stock Exchange Ltd. The listing fee for the year 2012-13 has been paid. Stock Code The Stock Code is 19149. Market Price Data The last transaction on Delhi Stock Exchange was undertaken at Rs. 31.55 on 03rd July, 1997. Performance in comparison to broad-based indices such as BSE Sensex, CRISIL index etc. This is not applicable as the Company's shares are not actively traded on the Stock Exchange. Registrar and Transfer agents M/s Alankit Assignments Ltd., having Corporate office at Alankit House, 2E/21 Jhandewalan Extension, New Delhi 110 055, Telephone numbers 42541234, 23541234 and Fax numbers 42541967, 23552001 are Registrar & Share Transfer Agents (RTA) of the Company who handle share transfer work in Physical and Electronic mode. Share Transfer System Securities lodged at the Registrar's address are normally processed within 30 days from the date of lodgment, if documents are complete in all respects. All requests for dematerialization are processed and the confirmation is given to the depositories within 21 days. Distribution of Equity Shareholding as on 31.03.2012 Equity Shares Held ShareholdersNos. Shareholding-% Upto 500 147 0.04 5011000 5 0.02 10012000 10 0.06 20013000 9 0.10 30014000 2 0.03 40015000 1 0.02 500110000 6 0.22 10001 and above 14 99.51 TOTAL

(vi) (vii) (viii) (ix)

(x)

(xi)

194 100

(xii)

Categories of Shareholders as on 31.03.2012 CATEGORY Promoters - Individuals - Bodies Corporate - Deepak Shriram Family Benefit Trust (through Trustees) - TOTAL (Promoters) Banks, Financial Institutions, Insurance Cos. Resident Individuals Resident Body Corporate Non Resident Companies TOTAL NO. OF SHARES HELD 12,41,119 27,78,157 66,69,336 1,06,88,612 23,18,758 2,00,463 48 91,67,031 2,23,74,912 % SHAREHOLDING 5.55 12.41 29.81 47.77 10.36 0.90 0.0002 40.97 100.00

(xiii)

Dematerialization of shares and liquidity Electronic Holding by members comprises 10.53% (previous year 10.52%) of the paid up share capital of the Company as on 31st March, 2012 held through National Securities Depository Limited and Central
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Depository Services (India) Ltd. Under the depository system, ISIN allotted to the Company's equity shares is INE526E01018. (xiv) Outstanding GDRs/ADRs/Warrants or any convertible instruments, conversion dates and likely impact on equity Company has not issued any warrants/ other instruments so far. (xv) Plant Location The company's plants are located at Meerut Road, Ghaziabad (U.P.) and Industrial Area, Pathredi, District Alwar (Rajasthan). (xvi) Investors' correspondence may be addressed to: The Company Secretary, Shriram Pistons & Rings Ltd. 3rd Floor, Himalaya House, 23, Kasturba Gandhi Marg, New Delhi - 110 001 Ph. 23315941, Fax: 23311203

AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE


To the Members of Shriram Pistons & Rings Ltd., New Delhi We have examined the compliance of conditions of corporate governance by Shriram Pistons & Rings Ltd. for the year ended on 31st March, 2012 as stipulated in clause 49 of the Listing Agreement of the said Company with the Delhi Stock Exchange. The compliance of conditions of corporate governance is the responsibility of the Management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the corporate governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of corporate governance as stipulated in the above mentioned Listing Agreement. As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we have to state that no investor grievance is pending for a period exceeding one month against the Company as per the records maintained by the Shareholders and Investors Grievance Committee. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company. For Walker Chandiok & Co. (Firm Registration No. 001076N) Chartered Accountants B.P. Singh Partner Membership No. 70116
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Place: New Delhi Date: 30th April, 2012

ANNEXURE II TO DIRECTORS REPORT


REPORT ON MANAGEMENT DISCUSSION AND ANALYSIS
1. Industry Structure and Development Production of all segments of vehicles except cars registered high growth during the year. Production of Heavy Commercial Vehicles grew by 9%, Light commercial vehicles by 19% and Small Commercial Vehicles by 35% during the year. Production of cars registered a low growth of 4% while production of Motorcycles grew by 16%. The Tractor segment witnessed growth of 21% on the strength of good agricultural performance. Lower growth in car segment was primarily due to strained industrial relations at one of the leading car manufacturers and also due to natural calamities in Japan/Thailand which affected the import of components and production of passenger vehicles of some OEMs. Opportunities & Threats Opportunities Overall growth rate of about 10-12% is expected in the automobile sector in India, during the financial year 2012-13. Growth in Small and Light commercial vehicles is expected to be much higher, in the range of 15-20% but lower growth is expected for Heavy commercial vehicles due to moderation in GDP growth, higher interest cost and an uninspiring sentiment about prospects of industrial growth in the year. Increase in disposable income and infrastructural facilities in rural areas and small cities are expected to have a positive impact on sale of Two-Wheelers, Tractors and Stationary Engines, although the growth rates are expected to be modest. The Company has presence in all market segments i.e. OEMs and After market, both in domestic and export markets. Further, the Company has presence across all vehicle segments i.e. Commercial Vehicles, Cars, Two Wheelers, Tractors and Stationary engines. Also, company has invested to make production lines as flexible as is reasonably possible. Therefore, the Company will be able to take advantage of growth in demand across various vehicle and customer segments. The company is targeting to achieve substantially higher growth rate than industry growth in 2012-13, based on new business acquired from key customers. Production facilities in the second plant at Pathredi are being further enhanced to meet higher demand. Threats Trend of rising prices of raw materials and consumables is a cause of concern for the Company. This is further compounded by the general inflationary pressure on all costs, including higher cost of power generation and personnel cost. Competition from low cost producing countries may affect the margins. Higher interest and depreciation cost owing to higher capital expenditure could affect the profits of the Company, if the anticipated growth in business does not materialize. Adverse and volatile exchange rates led to higher cost of imports in the year under review. This may impact profits of the Company in 2012-13 also. The Company is taking all possible steps to reduce cost by improving productivity, to offset the impact of increase in cost of Raw materials, Power, Consumables etc. Concept of green motoring is taking off globally, with the adoption of hybrid and full electric vehicles. Such trend may eventually come to India and impact the usage of Internal Combustion engines, possibly in the next ten years. Segment-wise performance The Company deals principally in only one segment i.e. automotive components. Therefore, segment-wise performance is not applicable. Outlook Slow pace of economic reforms leading to inadequate growth in infrastructure and high inflation/ interest rates continue to adversely impact the outlook of the industry. Government intervention is required to improve infrastructure which would also help in becoming more cost competitive for sustainable growth of exports. Price increase of raw materials more particularly, Aluminum, Alloy Steel, Pig Iron and Silicon may cause an adverse impact on operating margins. Risk & Concerns This year, lower growth in passenger vehicle segment due to macro-economic factors such as increase in the cost of fuel and interest created negative sentiments in the mind of growing and aspirational middle class population of the country and may have an impact in 2012-13 too. Customers, particularly OEMs continue to demand lower prices in spite of increasing costs; retaining current operating margins is a management challenge. Availability of trained manpower and retention is another major challenge for the Company. Internal Control Systems & their adequacy The Company has proper and adequate system of internal controls, which provide reasonable assurance regarding all financial and operating functions and compliance with statutory provisions. The Company has an internal audit section besides an external firm which is carrying out internal audits. The internal auditors reports are regularly reviewed by Senior Management and Audit Committee of the Board for its implementation and effectiveness. The Company endeavors to constantly upgrade internal controls and periodic evaluation of the same is being undertaken. Company has in place a system to periodically assess various risks and its likelihood and an action plan to pro-actively mitigate the impact of various risks. Financial/Operational performance Net sales of the Company during the year ended 31st March, 2012 were Rs. 9732 Million (growth of 19% over last year).
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2.

3. 4.

5.

6.

7.

8.

9.

Net profit (PAT) of the Company during the year ended 31st March, 2012 was Rs. 839 Million (increase of 1.5% over last year), primarily due to higher depreciation of new plant. Earnings per share increased from Rs. 36.96 in 2010-11 to Rs. 37.50 in 2011-12. Human Resources / Industrial Relations The Management considers people as its key resource and provides development opportunities through various training and welfare programs for employees and their families. Continuous steps are undertaken for maintaining excellent industrial relations. Dignity, fairness, transparency, respect and opportunity for growth for all employees are the key values of the Company and these are being continuously reinforced. Cautionary Statement Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors. ANNEXURE III TO DIRECTORS REPORT PARTICULARS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988

A.

B.

Conservation of Energy 1. Energy Conservation measures taken during the last year: Energy conservation is an environmentally sustainable and economically viable process and has been a priority focus area for the Company. Following measures were taken during the year: At Ghaziabad: (i) Manufacturing process change in Pin Plant Heat Treatment which is considerably more energy efficient. (ii) Installation of transformer with in-built on-load step-less rolling contact type on-line HT AVR. (iii) Installation of chip drying and demagnetizing system in Aluminum Foundry. (iv) Installation of medium frequency induction furnace by replacing main frequency induction furnace in Aluminum Foundry thereby reducing energy consumption. At Pathredi: (i) RCC buildings of sufficient height with natural light cut-outs / curtain glazing, ensuring continuous saving in air cooling / air conditioning & lighting energy consumption. (ii) Reduction in transmission and secondary energy losses by power distribution at 11 KV (for both SEB/DG power) and individual 11/0.4KV transformers, with in-built on-load step-less rolling contact type HT-AVRs, installed close to the points of actual usage. (iii) Energy efficient utilization of 11 KV supply, available up to production plants, for major loads like 11KV/575V step-down transformers of induction melting furnaces. (iv) Automatic VFD operated energy efficient screw compressors, matching refrigerated driers and precise demand management system for compressed air. (v) Optimum sizing of utility piping with an efficient ring-main system, continuously maintaining minimum pressure drop and hence minimum energy losses. (vi) Extensive use of variable frequency drives for pumps and blowers for optimum energy use based on actual demand. 2. Additional investments being implemented for reduction of consumption of energy:(i) Central UPS for critical machines for improvement in power quality and elimination of idle time for power change-overs, leading to improvement in energy efficiency. (ii) Installation of Chip melting furnace. (iii) To change over from 11KV to 132 KV incoming power supply from State Electricity Board at Pathredi for further reduction in transmission losses and reduce usage of D/G power. (iv) Pit type hardening/gas carburizing and direct quenching equipment for bigger size gudgeon pins. (v) Elimination of heat treatment process by installation of Extrusion Press. 3. Impact of the above measures: These measures have resulted in improvement in the energy efficiency as well as reduction in cost of production. 4. Energy consumption details: This is not applicable, since the company is not covered under the list of industries specified in schedule under Rule 2. Form B for Disclosure of Particulars with respect to Technology Absorption : Research and Development (R&D) 1. Specific areas in which R&D carried out by the Company Design Validation Facilities:Fully equipped Failure Analysis Laboratory, to enable design improvements has been installed Developed in-house calibration facility of the engine testing automation system Upgradation of water circulation system in engine testing, enabling more reliable test results Pistons:Developed in-house capability of Hydropulsator Test to validate casting design In-house capability to design cooling gallery piston through dedicated finite element analysis (FEA) software Rings:Developed in house software for design & verification of Rikvent ring Developed design standard for upgradation of coil spring quality Developed capability for offering closed gap control of 0.1mm for Heavy Duty Diesel application

13

C.

Developed capability for semi-inlaid chrome ceramic (CPC) coating for heavy duty application Engine Valves:Development of long taper neck valve by upset forging process using double solenoid valve at top cylinder of electrical upsetter 2. Benefits derived as a result of the above R&D:Optimum piston design for being first time right through dedicated software Unique piston / ring design to improve performance and create product differentiator Uninterrupted & simultaneous engine testing Improved product life Improved fuel efficiency Cost reduction Metallurgical Failure Analysis capability Reverse Engineering can be done faster Technology assimilated in products to meet latest Euro norms Winning new business & widening customer base 3. Future Plan of action:Pistons:Facility for on-line measurement of piston temperature under engine test condition Dedicated software for piston dynamic simulation Development of test rigs for Cooling jet optimization of oil cooling gallery piston Development of prototype cell for faster development of pistons Rings:Development of roundness controlled thin oil control (DVM) ring for passenger Diesel application Development of low tension ring pack for better fuel efficiency Development of new Zn-P process for PVD coated top ring Development of measurement system (by automatic counting) for cleanliness requirement of different EU customers Engine Valves:Triboloy coated valve for CNG application Forging Process Simulation software for Engine valves Dynamic Analysis Software for Engine Valves for valve face seating stress, valve thermal analysis, fatigue analysis etc. Pins:Development of cold forged pins Design Validation Facilities:Developing engine testing capability up to 350 KW To set up most modern test facility for 2-wheeler 4-stroke Gasoline Engines Upgrade test beds for EuroV compliant Diesel Engines General:Phase-II upgradation of analysis laboratory for dimensional analysis of critical parameters Introduction of PLM (Product Lifecycle Management) Software 4. Expenditure on R & D:Capital/intangible : Rs. 59.88 Million Recurring : Rs. 91.04 Million Total : Rs. 150.92 Million Total R&D expenditure as percentage of total turnover 1.5% : Technology Absorption, Adaptation and Innovation 1. Efforts, in brief, made towards technology absorption, adaptation and innovation:Continuous interaction with Collaborators for upgrading design & quality of products manufactured and to enhance technical expertise for in-house design and development. Visit of our engineers to Collaborators plants and visit of Collaborators engineers to our Plant for transfer of technology and latest production processes as per Collaborators practice. Visit of key R&D personnel of collaborators to OEMs for technical presentation & support. 2. Benefits derived as a result of the above effort:Product design & quality improvement and cost reduction were achieved through improved design/process capability and better utilization of Plant. Building trust & long term business relation with customers to emerge as most preferred supplier 3. Imported technology:Technology is being continuously received from Technical collaborators viz. M/s KS Kolbenschmidt GmbH, Germany, M/s Honda Foundry, Japan, M/s Riken Corporation, Japan and M/s Fuji Oozx, Japan under subsisting Technical Collaboration Agreements for manufacture of Pistons, Piston Rings and Engine Valves. Foreign Exchange Earnings & Outgo 1. Exports:Exports continue to remain focus area for the Company. The company made exports worth Rs. 1846 Million in the year as compared to Rs. 1492 Million in the previous year witnessing a growth of about 24% over the last year. We participated in domestic and international auto trade fairs. Responses to companys products were good resulting in fresh enquiries from various customers. Several initiatives have been taken to increase Companys export to global OEMs and in the aftermarket, in close coordination with our collaborators. Development of new markets for export of companys products continues to remain a focus area and export to two new countries commenced during the year. New models have been added to the product range both for on-going and new export markets developed by the company. We are planning further growth of about 25% in 2012-13. 2. Foreign Exchange earned - Rs. 1862 Million Foreign Exchange utilized - Rs. 2135 Million

14

ANNEXURE IV TO DIRECTORS' REPORT


PARTICULARS OF EMPLOYEES UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956
Name Naveen Agarwal Meenakshi Dass@* Anil Gadi Designation/ Duties Dy. Executive Director Wholetime Director Executive Director Remuneration Qualification (Rs.) 65,36,303 2,35,79,267 1,04,40,153 B. Com(H), LLB, AICWA, ACS Degree in Textile Designing B.E., PGDM Experience Commencement Age (Years) of Employment (Years) 33 23 35 Jun. 96 May 09 Mar. 06 51 48 59 Last Employment Held Dy. General Manager, Jay Engg. Works Ltd., Delhi Director, Pearey Lall & Sons (E.P.) Ltd., Delhi Managing Director, Energiser Lanka Ltd., Srilanka Director, JV Relationship, Tata Cummins Ltd., Jamshedpur Controller, Modi Spg. And Wvg. Mills Co. Ltd, Modinagar VP-Manufacturing, National Engineering Industries, Jaipur Officer, Usha Sales Pvt. Ltd., Delhi ET, Usha Sales Pvt. Ltd, Delhi Dy. Mktg. Manager, Usha Sales Pvt. Ltd., Delhi

V.K. Jayaswal

Executive Director

1,03,61,064

B. Sc. (Engg.), PGDBM B.Com, ACA

34

Oct. 08

57

P.S. Ladiwala

Dy. Executive Director & CFO Dy. Executive Director Executive Director Joint Managing Director & Company Secretary Managing Director & CEO

65,27,082

39

Oct. 74

61

Devendra Mishra #

54,48,322

B.E., PGPM

24

Jul. 11

47

Rajiv Sethi R. Srinivasan *

1,03,27,207 2,13,51,008

B.Com(H) B.Com(H), LLB, FICWA, FCS, AMP (Harvard) B.Tech

41 39

Aug. 73 Feb. 74

60 60

A.K. Taneja *

2,85,29,131

40

Apr. 78

61

Notes: 1. Year of experience include experience prior to joining the Company. 2. All employees are on regular employment. 3. Remuneration includes payment of Salaries, allowances, expenses on perquisites and contribution to provident fund, gratuity fund, superannuation fund & other benefits on payment basis. 4. @ Smt. Meenakshi Dass is a relative of Shri Luv D. Shriram, Director of the company. 5. # Worked for part of the year. 6. * Employees on Contract.

DECLARATION ON COMPLIANCE OF CODE OF CONDUCT


The Board of Directors have laid down a Code of Conduct to be observed and implemented by all Directors and Senior Management personnel of the Company in their official day-to-day activities, as required under Clause 49 of the Listing Agreement with Delhi Stock Exchange. All Board members and Senior Management personnel of the Company have affirmed to the Company that they have complied and implemented the Companys Code of Conduct in discharging their official day-to-day activities for the F.Y.E. March 31, 2012.

New Delhi 30th April, 2012

(A.K. TANEJA) MANAGING DIRECTOR & CEO

15

AUDITORS REPORT
To, The Members of Shriram Pistons & Rings Limited 1. We have audited the attached Balance Sheet of Shriram Pistons & Rings Limited, (the Company) as at March 31, 2012, and also the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto (collectively referred as the financial statements). 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 the 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. As required by the Companies (Auditors Report) Order, 2003 (the Order) (as amended), issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 (the Act), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. Further to our comments in the Annexure referred to above, we report that: a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; b. 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; c. The financial statements dealt with by this report are in agreement with the books of account; d. On the basis of written representations received from the directors, as on March 31, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act; e. In our opinion and to the best of our information and according to the explanations given to us, the financial statements dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act and the Rules framed there under and give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, in the case of: i) ii) iii) the Balance Sheet, of the state of affairs of the Company as at March 31, 2012; the Statement of Profit and Loss, of the profit for the year ended on that date; and the Cash Flow Statement, of the cash flows for the year ended on that date.

2.

3.

4.

For Walker, Chandiok & Co Chartered Accountants Firm Registration No: 001076N per B.P. Singh Partner Membership No.70116 Place : New Delhi Date : April 30, 2012
16

Annexure to the Auditors Report of even date to the members of Shriram Pistons & Rings Limited, on the financial statements for the year ended March 31, 2012
Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that: (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified on an annual basis. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. (c) In our opinion, a substantial part of fixed assets has not been disposed off during the year. (ii) (a) The inventory (except stock in transit) has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. (b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification. (iii) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to (d) of the Order are not applicable. (e) The Company has taken unsecured loans from 11 parties covered in the register maintained under section 301 of the Act. The maximum amount outstanding during the year was Rs. 113.79 million and the year end balance was Rs. 97.06 million. (f) In our opinion, the rate of interest and other terms and conditions for such loans are not, prima facie, prejudicial to the interest of the Company. (g) In respect of loans taken, repayment of principal amount is as stipulated and payment of interest has been regular. (iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. (v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Act have been so entered. (b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. (vi) In our opinion, the Company has complied with the provisions of sections 58A and 58AA and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. No Order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal. (vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business. (viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government under section 209 (1)(d) of the Act for the maintenance of cost records in respect of Companys products and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records with a view to determine whether they are accurate or complete. (ix) (a) The Company is regular in depositing the 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, as applicable, with the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year end for a period of more than six months from the date they become payable.
17

Annexure to the Auditors Report of even date to the members of Shriram Pistons & Rings Limited, on the financial statements for the year ended March 31, 2012
(b) The dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, excise duty, cess on account of any dispute, are as follows: Nature of dues Amount (Rs. in Million) 38.36 0.32 1.11 0.28 0.13 77.28 0.94 36.18 0.036 4.96 6.71 2.10 0.18 3.79 0.061 Amount paid under protest (Rs. in Million) 16.34 0.32 1.11 0.06 0.024 0.69 1.01 0.017 Period to which the amount relates A.Y 2006-07 A.Y. 2000-2001, 2004-05 A.Y. 2003-04 A.Y. 1997-1998, A.Y 1998-1999, 2005-06 A.Y. 1997-1998, 1998-1999, 2005-06 2007-08 and 2008-09 2008-09 to 2011-12 2000-01 to 2004-05 2003-04 2007-08 2006-07 2007-08 2007-08 2008-09 2004-05 Forum where dispute is pending Commissioner of Income Tax (Appeals), Delhi Income Tax Appellate Tribunal (ITAT), Delhi Deputy Commissioner, Income Tax, Delhi Income Tax Appellate Tribunal (ITAT), Delhi Deputy Commissioner, Income Tax, Delhi CESTAT, Delhi CESTAT, Delhi CESTAT, Delhi Dy. Commissioner, Ghaziabad Trade Tax Tribunal, Ghaziabad Trade Tax Tribunal, Ghaziabad Additional Commissioner (Appeal),Ghaziabad Trade Tax Tribunal, Ghaziabad Additional Commissioner (Appeal),Ghaziabad D.C. Appeal, Cochin

Name of the Statute

Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961 Wealth Tax Act,1957 Wealth Tax Act,1957 Central Excise Act,1944 Central Excise Act,1944 Finance Act, 1994 U.P. Trade Tax Act, 2008 Central Sales Tax Act 1956 Central Sales Tax Act 1956 U.P. Trade Tax Act, 2008 U.P. Trade Tax Act, 2008 U.P. Trade Tax Act, 2008 Kerala General Sales Tax Act, 1963 M.P. General Sales Tax Act, 1958 M.P. General Sales Tax Act, 1958

Income tax demand Income tax demand Income tax demand Wealth Tax demand Wealth Tax demand Excise demand Excise demand Service Tax Demand Sales Tax Demand Sales tax demand Sales tax demand Sales Tax Demand Sales Tax DemandSales Tax DemandSales tax demand Sales tax demand Sales tax demand

0.75

0.21

2003-04 and 2004-05

Commercial tax, Appellate Board, Bhopal Commercial tax, Appellate Board, Bhopal

0.11

0.11

2011-12

18

Annexure to the Auditors Report of even date to the members of Shriram Pistons & Rings Limited, on the financial statements for the year ended March 31, 2012
Name of the Statute Nature of dues Amount (Rs. in Million) 0.029 Amount paid under protest (Rs. in Million) Period to which the amount relates 2005-06 Forum where dispute is pending W.B. Commercial Tax Appellate and Revisional Board, Kolkatta Deputy Commercial Tax officer Deputy Commercial Tax officer

West Bengal VAT Act, 2003 A.P. VAT Act, 2005 Tamil Nadu VAT Act, 2006 (x)

Sales tax demand VAT demand VAT demand

0.30 1.12

0.04 -

2007 08 to 2009-10 2007 08, 2008-09 and 2009-10

In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year. (xi) In our opinion, the Company has not defaulted in repayment of dues to a financial institution or a bank. There were no outstanding debentures during the year. (xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Order are not applicable. (xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable. (xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable. (xv) The Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Order are not applicable. (xvi) In our opinion, the Company has applied the term loans for the purpose for which the loans were obtained. (xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment. (xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable. (xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable. (xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable. (xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit. For Walker, Chandiok & Co Chartered Accountants Firm Registration No: 001076N per B.P. Singh Partner Membership No.70116 Place : New Delhi Date : April 30, 2012
19

Balance Sheet as at March 31, 2012


(Rupees in million)
Notes As at March 31, 2012 As at March 31, 2011

EQUITY AND LIABILITIES Shareholders' funds Share capital Reserves and surplus Non-current liabilities Long term borrowings Deferred tax liabilities (net) Other long term liabilities Long term provisions Current liabilities Short term borrowings Trade payables Other current liabilities Short term provisions

5 6

223.75 4,409.83 4,633.58 1,936.94 289.92 41.02 277.31 2,545.19 717.10 718.44 1,711.52 122.28 3,269.34 10,448.11

223.75 3,676.77 3,900.52 1,416.89 249.26 37.56 219.68 1,923.39 261.59 400.08 1,581.64 102.76 2,346.07 8,169.98

7 8 9 10

11 47 12 10

ASSETS Non-current assets Fixed assets Tangible assets Intangible assets Capital work-in-progress Non current investments Long term loans and advances Other non current assets Current assets Inventories Trade receivables Cash and bank balance Short-term loans and advances Other current assets

13 14

5,516.12 28.98 735.81 0.50 344.68 40.32 6,666.41 1,842.18 1,443.05 79.95 317.40 99.12 3,781.70 10,448.11

4,541.42 24.36 348.80 0.50 110.80 51.82 5,077.70 1,307.00 1,152.27 363.42 182.03 87.56 3,092.28 8,169.98

15 16 17

18 19 20 16 17

Summary of significant accounting policies 4 The accompanying notes are an integral part of the financial statements
This is the Balance Sheet referred to in our report of even date For Walker, Chandiok & Co Chartered Accountants For and on behalf of the Board of Directors Pradeep Dinodia Chairman DIN 00027995 O.P. Khaitan Director DIN 00027798 A.K. Taneja Managing Director & CEO DIN 00124814 R. Srinivasan Jt. Managing Director & Company Secretary DIN 00124760 Place : New Delhi Date : April 30, 2012 P.S. Ladiwala Dy. Executive Director & CFO Meenakshi Dass Whole - Time Director DIN 00524865

per B.P. Singh Partner

SHRIRAM PISTONS & RINGS LIMITED

20

Statement of Profit and Loss for the year ended March 31, 2012
(Rupees in million)
Notes Year ended March 31, 2012 Year ended March 31, 2011

Revenue Revenue from operations Less : Excise duty Revenue from operations Other income Total revenue Expenses Cost of material consumed (Increase) in inventories of finished goods and work-in-progress Employee benefit expenses Finance costs Depreciation and amortisation expense Other expenses Total expenses Profit before tax Tax expense: - Current tax - Deferred tax Profit after tax Profit for the year Earning per share Basic/Diluted

21

10,779.10 (868.93) 9,910.17 98.38 10,008.55

9,063.29 (733.05) 8,330.24 69.40 8,399.64

22

23 24 25 26 27 28

3,373.01 (319.79) 1,682.80 204.59 707.59 3,208.92 8,857.12 1,151.43

2,689.04 (244.43) 1,312.15 179.97 587.42 2,704.91 7,229.06 1,170.58

271.65 40.66 839.12 839.12 30 37.50

361.67 (17.97) 826.88 826.88 36.96

Summary of significant accounting policies 4 The accompanying notes are an integral part of the financial statements
This is the Statement of Profit and Loss referred to in our report of even date For Walker, Chandiok & Co Chartered Accountants For and on behalf of the Board of Directors Pradeep Dinodia Chairman DIN 00027995 O.P. Khaitan Director DIN 00027798 A.K. Taneja Managing Director & CEO DIN 00124814 R. Srinivasan Jt. Managing Director & Company Secretary DIN 00124760 Place : New Delhi Date : April 30, 2012 P.S. Ladiwala Dy. Executive Director & CFO Meenakshi Dass Whole - Time Director DIN 00524865

per B.P. Singh Partner

SHRIRAM PISTONS & RINGS LIMITED

21

Cash flow statement for the year ended March 31, 2012
As at March 31, 2012
Rs. million

As at March 31, 2011


Rs. million

A. Cash flow from Operating Activities Net profit before tax Adjustments for : Depreciation/amortisation Finance costs Bad debts/advances written off Provision for doubtful debts (net) Income from mutual funds Interest income Unrealised exchange rate variation (net) Loss on sale/write off of fixed asset Operating profit before working capital changes Adjustments for: Inventories Trade receivables Loans and advances (short and long term) Other assets (current and non current) Trade and other payables Income tax paid Net cash from operating activities B. Cash Flow from Investing Activities Interest income Sale of mutual funds Purchase of mutual funds Sale of tangible assets Purchase of tangible assets Purchase of intangible assets Increase in restricted cash (Increase)/Decrease in capital advances Increase in capital work in progress Net cash (used) in investing activities C. Cash Flow from Financing Activities Finance costs Dividend paid Proceeds from long term borrowings Repayment of long term borrowings Short term loans from banks Proceeds from pubic deposits Payment of pubic deposits Net cash from/(used) in financing activities
SHRIRAM PISTONS & RINGS LIMITED

1,151.43

1,170.58

707.59 204.59 2.53 3.87 (20.16) (4.25) 2.56 2,048.16

587.42 177.79 0.70 (2.82) (1.38) (22.86) 3.13 7.43 1,919.99

(535.18) (286.39) (120.88) (0.06) 442.11 (294.90) 1,252.86

(377.43) (22.59) (92.99) (13.49) 386.41 (361.67) 1,438.23

20.16 10.48 (1,683.33) (31.66) (3.99) (227.65) (387.00) (2,302.99)

22.86 221.43 (220.05) 8.67 (1,185.51) (26.10) (6.72) 43.94 (185.86) (1,327.34)

(204.59) (91.01) 1,261.52 (656.64) 484.88 159.81 (191.30) 762.67

(177.79) (91.15) 779.42 (574.38) 99.91 179.14 (283.90) (68.75)


22

Cash flow statement for the year ended March 31, 2012
As at March 31, 2012
Rs. million

As at March 31, 2011


Rs. million

Net Increase/(Decrease) in cash and cash equivalents Cash and cash equivalents as on April 1, 2011 Cash and cash equivalents as on March 31, 2012

(287.46) 357.71 70.25

42.14 315.57 357.71

Components of cash and cash equivalents (refer note 20) Cash in hand Cheques, drafts in hand Balances with banks - current accounts - deposits with original maturity of less than three months Deposits with maturity more than 3 months but less than 12 months Other bank balances Dividend account Matured deposits account

0.86 0.91 8.48 60.00 70.25 0.40 9.30 79.95

0.30 6.41 351.00 357.71 0.34 5.37 363.42

Note: The Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard 3 on Cash Flow Statements of the Companies (Accounting Standard) Rules, 2006 This is the Cash Flow Statement referred to in our report of even date
For Walker, Chandiok & Co Chartered Accountants For and on behalf of the Board of Directors Pradeep Dinodia Chairman DIN 00027995 O.P. Khaitan Director DIN 00027798 A.K. Taneja Managing Director & CEO DIN 00124814 R. Srinivasan Jt. Managing Director & Company Secretary DIN 00124760 P.S. Ladiwala Dy. Executive Director & CFO Meenakshi Dass Whole - Time Director DIN 00524865
23

per B.P. Singh Partner

Place : New Delhi Date : April 30, 2012


SHRIRAM PISTONS & RINGS LIMITED

Notes to financial statements for the year ended March 31, 2012
1. Corporate information Shriram Pistons & Rings Limited (the Company) is a public company domiciled in India and incorporated on December 9, 1963 under the provisions of the Companies Act, 1956. The Company's shares are listed on Delhi Stock Exchange (DSE). The primary products manufactured by the Company are pistons, pins, piston rings and engine valves. The company caters to both domestic and international markets. 2. Basis of preparation The financial statements are prepared on accrual basis under the historical cost convention as supplemented by revaluation of certain assets, in accordance with the generally accepted accounting principles in India and to comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 including the Rules framed there under. During the year ended March 31, 2012, the revised schedule VI notified under the Companies Act, 1956, has become applicable to the Company, for preparation and presentation of its financial statements. The adoption of revised schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year. 3. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and the disclosure relating to contingent liabilities as at the date of financial statements and reported amount of income and expenses during the period. Difference between the actual results and estimates are recognised in the year in which the results are known or materialized. 4. Significant accounting policies a. Revenue recognition Revenue from sale of goods is recognised when significant risks and rewards in respect of ownership of the goods are transferred to the customer and is stated inclusive of excise duty and net of trade discounts, sales return and sales tax / VAT, wherever applicable. Other revenues are recognised on accrual basis, except where there are uncertainties in the determination / realisation of income, the same is not accounted for. b. Fixed assets Fixed Assets are stated at their original cost (net of cenvat availed) including taxes and other incidental expenses related to acquisition, installation and borrowing cost on loan taken for the acquisition of qualifying assets upto the date of commissioning of assets. Wherever assets are revalued, cost is adjusted by the amount added on revaluation based on Govt. approved valuers report and disclosed separately as required under the Companies Act, 1956. Capital work-in-progress represents expenditure incurred in respect of capital projects under development and are carried at cost. Cost includes related acquisition expenses, development/ construction costs, borrowing costs and other direct expenditure. c. Depreciation and amortisation Depreciation is provided on Fixed Assets over their estimated useful lives or lives based on the rates specified in Schedule XIV to the Companies Act, 1956, whichever is lower, on the following basis : Furniture, fixtures and office equipments - W.D.V method Other assets - Straight line method Lease money paid for leasehold land is amortised over the lease period. Where assets are revalued, depreciation is charged on the revalued amount based on remaining useful life of the asset specified by the valuer provided depreciation on such block of assets is not lower than depreciation chargeable on historical cost as per the Companies Act, 1956. Where there is a revision of the estimated useful life of asset, the unamortised depreciable amount is charged over the revised remaining useful life. Depreciation on assets acquired/sold/discarded during the year is charged on pro-rata basis except for Furniture, Fixtures and Equipments where full years depreciation is computed in the year of acquisition and no depreciation is provided in the year of sale. Assets costing upto Rs. 5,000 is fully depreciated in the year of acquisition. Intangible assets are amortised on straight-line basis. d. Investments Long term investments are stated at cost. Any diminution in the value of Long term Investments, other than temporary, is provided for in the books of account. Current investments are stated at lower of the cost or fair value. e. Inventories Inventories are valued on the following basis : i) Raw materials and components - at lower of cost determined on weighted average basis or net realisable value. ii) Stock in process at lower of cost or net realisable value. iii) Finished goods stock - at lower of cost including excise duty or net realisable value. Cost of finished goods and stock-in-process includes cost of material, labour and related overheads. f. Foreign currency transactions Transactions in foreign currency are recorded on initial recognition at the exchange rate prevailing on or closely approximating to the date of transaction. SHRIRAM PISTONS & RINGS LIMITED 24

Notes to financial statements for the year ended March 31, 2012
Monetary items denominated in foreign currency and covered by forward exchange contracts are translated at the rate ruling on the date of transaction as increased or decreased by the proportionate difference between the forward rate and exchange rate on the date of transaction, such difference is recognized in the Statement of Profit and Loss over the life of the contract. Other monetary items are translated at the year end rates and exchange rate difference on such translation is recognised in the Statement of Profit and Loss. The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates which are entered into on the basis of firm commitments and highly probable forecast transactions. The premium or discount arising at the inception of such forward exchange contracts are amortised as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the statement of profit and loss in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense in the period in which same is cancelled or rolled over. Employee benefits Contribution towards Provident Fund and Superannuation fund is paid as per the statutory provisions/company scheme. These benefits are considered as defined contribution plan and contributions are charged to the Statement of Profit and Loss of the year when it becomes due. Retirement benefit in the form of gratuity is considered as defined benefit plan. The liability is determined using projected unit credit method, with actuarial valuation being carried out at each balance sheet date. Actuarial gains and losses are recognised in the statement of profit and loss in the period in which they arise. Leave encashment benefit is provided as per Company scheme. Employees are entitled to accumulate leaves subject to certain limits as per Company scheme. The liability for unutilised leave at the year end is determined through an actuarial valuation using projected unit credit method. Research and development Revenue expenditure on research and development, inclusive of dies for model development, is charged as expense in the year in which incurred. Capital expenditure is included in fixed assets. Leases Lease rentals in respect of assets taken on operating lease are charged to the Statement of Profit and Loss on a straight-line basis over the term of lease. Assets acquired on finance lease which transfer risk and rewards of ownership to the Company are capitalised as assets by the Company at the lower of fair value of the leased property or the present value of the related lease payments or where applicable, estimated fair value of such assets. Amortisation of capitalised leased assets is computed on the straight line method over the useful life of the assets. Lease rental payable is apportioned between principal and finance charge using the internal rate of return method. The finance charge is allocated over the lease term so as to produce a constant periodic rate of interest on the remaining balance of liability. Taxes on income Tax expense comprises current income tax and deferred income tax. Current tax is determined as the amount of tax payable in respect of taxable income for the year, in accordance with the Income Tax Act, 1961. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable/virtual certainty, depending on the nature of the timing differences, that sufficient future taxable income will be available against which such deferred tax assets can be realised. Borrowing costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets are considered as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Statement of Profit and Loss as and when incurred. Earnings per share Basic earnings per share is calculated by dividing net profit or loss for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue, share split and any new equity issue. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. Impairment of assets The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost. Contingent liabilities and provisions The company recognizes a provision when there is a present obligation as a result of past events and it is probable that an outflow of resources would be required to settle the obligation and a reliable estimate can be made. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood on outflow of resources is remote, no provision or disclosure is made.

g.

h.

i.

j.

k.

l.

m.

n.

SHRIRAM PISTONS & RINGS LIMITED

25

Notes to financial statements for the year ended March 31, 2012
5. Share capital As at March 31, 2012 Rs. million Authorised Shares 50,000,000 (previous year 50,000,000) equity shares of Rs. 10 each 3,000,000 (previous year 3,000,000) preference shares of Rs. 100 each As at March 31, 2011 Rs. million

500.00 300.00 800.00

500.00 300.00 800.00

Issued, subscribed and fully paid up shares 22,374,912 (previous year 22,374,912) equity shares of Rs. 10 each

223.75 223.75

223.75 223.75

a.

Reconciliation of the shares outstanding at the beginning and at the end of the reporting year March 31, 2012 March 31, 2011 No. in million Rs. million No. in million Rs. million 22.37 22.37 223.75 223.75 22.37 22.37 223.75 223.75

At the beginning of the year Balance at the end of the year b. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share. c. Details of shareholders holding more than 5% shares in the Company March 31, 2012 No. in million % shareholding

March 31, 2011 No. in million % shareholding

Equity shares of Rs. 10 each fully paid Riken Corporation KS Kolbenschmidt GmbH Luv D. Shriram and Meenakshi Dass* Meenakshi Dass and Luv D. Shriram * National Insurance Company Limited Meenakshi Dass

4.69 4.47 3.33 3.33 1.43 1.24

20.97 20.00 14.90 14.90 6.38 5.54

4.69 4.47 3.33 3.33 1.43 1.24

20.97 20.00 14.90 14.90 6.38 5.54

* Shares held on behalf of Deepak Shriram Family Benefit Trust. The above information is furnished as per shareholder register as at the year end.

SHRIRAM PISTONS & RINGS LIMITED

26

Notes to financial statements for the year ended March 31, 2012
6. Reserves and Surplus As at March 31, 2012 Rs. million Preference share redemption reserve Revaluation reserve Balance at the beginning of the year Less : amount transferred to the statement of profit and loss as reduction from depreciation (refer note 27) Less: amount transferred to respective fixed assets on account of sale/write off of revalued assets Balance at the end of the year General reserve Balance at the beginning of the year Add: amount transferred from surplus in the statement of profit and loss Balance at the end of the year Surplus in statement of profit and loss Balance as per last financial statements Profit for the year Less: Appropriations Dividend on equity shares for the year - Interim - Final (proposed) Dividend distribution tax Transfer to general reserves Total appropriations Balance at the end of the year 100.00 As at March 31, 2011 Rs. million 100.00

151.11 14.04

173.74 20.72

1.01 136.06

1.91 151.11

3,125.66 748.11 3,873.77

2,439.93 685.73 3,125.66

300.00 839.12

250.00 826.88

33.56 44.75 12.70 748.11 839.12 300.00 4,409.83

33.56 44.75 12.84 685.73 776.88 300.00 3,676.77

During the year ended March 31, 2012, the dividend (including interim) of Rs. 3.50 per share (previous year: Rs. 3.50 per share) recognised as distribution to equity shareholders amounting to Rs. 91.01 million including dividend distribution tax (Previous year Rs. 91.15 million). The final dividend for the year ended March 31, 2012, of Rs. 52.01 million including dividend distribution tax proposed by the Board of Directors is subject to the approval by the shareholders in the ensuing Annual General Meeting.

SHRIRAM PISTONS & RINGS LIMITED

27

Notes to financial statements for the year ended March 31, 2012
7. Long-Term borrowings As at March 31, 2012 Long term Current maturities Rs. million Rs. million Secured Term Loans - from banks - from others Interest free trade tax loan Unsecured Other loan and advances Deposits from public Deposits from related parties (refer note 33) Less : Amounts disclosed as other current liabilities (Refer note 12) As at March 31, 2011 Long term Current maturities Rs. million Rs. million

1,782.28 -

454.96 9.04

1,181.71 9.04

439.75 1.24 9.66

110.70 43.96 1,936.94 1,936.94

138.63 24.50 627.13 627.13 -

181.40 44.74 1,416.89 1,416.89

65.27 32.00 547.92 547.92 -

(i) Term loans from banks of Rs. 1,268.60 million (previous year: Rs. 1,293.65 million) are secured by way of first pari passu charge and mortgage on all present and future immovable assets and hypothecation of all movable assets of the company, present and future subject to prior charge created and/or to be created in favour of the companys working capital bankers on the companys stocks and book debts. Amount outstanding As at As at March 31, 2012 March 31, 2011 Rs. million Rs. million 33.33 55.26 163.60 27.15 102.50 315.25 571.51 1,268.60 88.09 86.84 240.69 67.15 142.50 297.50 370.88 1,293.65 Repayment period from origination (years) 5.5 6 6 6 5 6 5.5 6 Installments outstanding as on 31.03.2012 No. Periodicity 4 7 4 3 11 Nil 17 20 Quarterly Quarterly Half Yearly Quarterly Quarterly Repaid fully Quarterly Quarterly

(ii) Term loans from banks of Rs. 968.64 million (previous year: Rs. 327.81 million) is secured by way of first pari passu charge and mortgage on all present and future immovable assets and hypothecation of all movable fixed assets of the company, present and future. Amount outstanding As at As at March 31, 2012 March 31, 2011 Rs. million Rs. million 278.64 445.00 245.00 968.64 327.81 327.81 Repayment period from origination (years) 6 6 7 Installments outstanding as on 31.03.2012 No. Periodicity 17 23 20 Quarterly Quarterly Quarterly

SHRIRAM PISTONS & RINGS LIMITED

28

Notes to financial statements for the year ended March 31, 2012
(iii) Term loan from others of Rs. Nil (previous year: Rs. 1.24 million) is secured against hypothecation of vehicles purchased out of this loan. (iv) Interest free trade tax loan of Rs. 9.04 million (previous year: 18.70 million) is secured by way of pari passu second charge on all assets of the Company, subject to prior charge of banks for working capital loans. (v) The long term deposits have been raised under section 58A of the Companies Act, 1956 for maturity period of 2 and 3 years. Amount outstanding As at As at March 31, 2012 March 31, 2011 Rs. million Rs. million 17.75 44.89 300.04 278.52 317.79 323.41 8. Deferred tax liability (net) As at March 31, 2012 Rs. million Deferred tax liability Impact of difference between tax depreciation and depreciation/ amortisation charged in books Deferred tax assets Liabilities on payment basis under section 43B of the Income Tax Act, 1961 Provision for doubtful debts/advances Net deferred tax liability As at March 31, 2011 Rs. million Repayment period from origination (years) 2 3

401.56 105.05 6.59 111.64 289.92

352.56 97.96 5.34 103.30 249.26

9.

Other long term liabilities As at March 31, 2012 Rs. million 41.02 41.02 As at March 31, 2011 Rs. million 37.56 37.56

Security deposits

The security deposits have been received by the Company from customers/vendors in the normal course of business.

10. Provisions As at March 31, 2012 Long term Short term Rs. million Rs. million Provision for employee benefits Proposed dividend Tax on dividend 277.31 277.31 70.27 44.75 7.26 122.28 As at March 31, 2011 Long term Short term Rs. million Rs. million 219.68 219.68 50.75 44.75 7.26 102.76

SHRIRAM PISTONS & RINGS LIMITED

29

Notes to financial statements for the year ended March 31, 2012
11. Short term borrowings As at March 31, 2012 Rs. million Secured Working capital loans repayable on demand from banks Unsecured Loans - from banks Public deposits 300.00 37.20 717.10 66.57 261.59 379.90 195.02 As at March 31, 2011 Rs. million

Working capital loans are secured by way of first pari passu charge on stocks and book debts of the Company and second pari passu charge on all fixed assets of the Company, present and future.

12. Other current liabilities As at March 31, 2012 Rs. million Current maturities of long term debt (refer note 7) Interest accrued but not due on borrowings Investor education and protection fund* - Unclaimed dividends - Unclaimed matured deposits and interest accrued thereon Other payables Advances from customers 0.40 9.30 999.33 40.47 1,711.52 * not due for deposit 0.34 5.37 963.80 32.37 1,581.64 34.89 31.84 627.13 As at March 31, 2011 Rs. million 547.92

SHRIRAM PISTONS & RINGS LIMITED

30

Notes to financial statements for the year ended March 31, 2012
13. Tangible assets Rs. million Particulars Original cost as at April 1, 2011 Land - Leasehold Buildings Plant and equipment Furniture & Fixtures Vehicles Office Equipment Dies TOTAL 360.42 739.34 6,673.61 56.98 103.22 190.46 119.01 8,243.04 Additions for the year Gross Block Adjustments for the year for borrowing costs 9.38 10.19 19.57 Deductions for the year Original cost as at March 31, 2012 337.05 1,066.47 7,884.51 73.09 131.57 225.84 137.20 9,855.73 As at April 1, 2011 Depreciation For the year Deductions for the year As at March 31, 2012 Written down value As at March 31, 2012 As at March 31, 2011

317.75 1,238.11 17.47 42.95 43.84 28.50 1,688.62

23.37 37.40 1.36 14.60 8.46 10.31 95.50

18.13 139.71 3,203.91 46.38 53.01 158.70 81.78 3,701.62

3.61 25.14 585.66 13.26 18.99 32.74 21.09 700.49

33.52 1.17 11.19 8.25 8.37 62.50

21.74 164.85 3,756.05 58.47 60.81 183.19 94.50 4,339.61

315.31 901.62 4,128.46 14.62 70.76 42.65 42.70 5,516.12

342.29 599.63 3,469.70 10.60 50.21 31.76 37.23 4,541.42

Particulars Original cost as at April 1, 2010 Land - Leasehold Buildings Plant and equipment Furniture & Fixtures Vehicles Office Equipment Dies TOTAL (i) 360.42 537.05 5,833.51 42.13 98.47 170.32 105.98 7,147.88 Additions for the year

Gross Block Adjustments for the year for borrowing costs 4.11 7.81 11.92 Deductions for the year Original cost as at March 31, 2011 360.42 739.34 6,673.61 56.98 103.22 190.46 119.01 8,243.04 As at April 1, 2010

Depreciation For the year Deductions for the year As at March 31, 2011

Written down value As at March 31, 2011 As at March 31, 2010

198.18 879.06 16.66 21.15 32.23 21.80 1,169.08

46.77 1.81 16.40 12.09 8.77 85.84

14.44 122.21 2,745.34 35.90 49.59 144.54 69.73 3,181.75

3.69 17.50 499.52 12.05 16.21 24.81 19.75 593.53

40.95 1.57 12.79 10.65 7.70 73.66

18.13 139.71 3,203.91 46.38 53.01 158.70 81.78 3,701.62

342.29 599.63 3,469.70 10.60 50.21 31.76 37.23 4,541.42

345.98 414.84 3,088.17 6.23 48.88 25.78 36.25 3,966.13

Management estimates the useful life of three year for dies and five years for furniture, fixture, office equipment and vehicles. For all other assets, useful life is based on rates specified in Schedule XIV of the Companies Act, 1956. As a result, depreciation charged in books is higher than depreciation chargeable u/s 350 of the Companies Act, 1956. (ii) Certain items of plant and machinery having WDV of Rs. 10.50 million (previous year: Rs. 7.86 million) are not in active use. Provision of Rs. 9.92 million (previous year: 7.59 million) has been made towards diminution in value. (iii) Furniture, fixtures and office equipments include Rs. 56.05 million (previous year: Rs. 44.67 million) provided to employees as perquisites. Confirmations have been obtained from respective employees.

14. Intangible assets Rs. million Particulars Original cost as at April 1, 2011 Computer Software Product design and development TOTAL 83.68 44.78 128.46 Gross Block Additions for the year Deductions for the year Original cost as at March 31, 2012 104.42 49.16 153.58 As at April 1, 2011 67.66 36.44 104.10 For the year Depreciation Deductions for the year As at March 31, 2012 86.70 37.90 124.60 Written down value As at March 31, 2012 17.72 11.26 28.98 As at March 31, 2011 16.02 8.34 24.36

27.28 4.38 31.66

6.54 6.54

19.68 1.46 21.14

0.64 0.64

Particulars Original cost as at April 1, 2010 Computer Software Product design and development TOTAL 62.37 39.99 102.36

Gross Block Additions for the year Deductions for the year Original cost as at March 31, 2011 83.68 44.78 128.46 As at April 1, 2010 54.65 34.84 89.49 For the year

Depreciation Deductions for the year As at March 31, 2011 67.66 36.44 104.10

Written down value As at March 31, 2011 16.02 8.34 24.36 As at March 31, 2010 7.72 5.15 12.87

21.31 4.79 26.10

13.01 1.60 14.61

Intangible assets are amortised over a period of three years.

SHRIRAM PISTONS & RINGS LIMITED

31

Notes to financial statements for the year ended March 31, 2012
15. Non current investments As at March 31, 2012 Rs. million Trade investments (valued at cost unless stated otherwise) Unquoted equity instruments Investment in subsidiary As at March 31, 2011 Rs. million

50,000 Equity shares (previous year 50,000) of Rs. 10 each fully paid up of SPR International Auto Exports Limited

0.50 0.50

0.50 0.50

16. Loan and advances March 31, 2012 Current Non current Rs. million Rs. million Capital advances (Unsecured, considered good) Security deposits (Unsecured, considered good) 280.66 63.13 343.79 March 31, 2011 Current Non current Rs. million Rs. million 53.01 56.26 109.27

Advances recoverable in cash or in kind or for value to be received Unsecured, considered good Doubtful Less: Doubtful Other loans and advances Advance tax (net) Prepaid expenses Housing loans to employees (secured) Cenvat recoverable Balance with excise authorities

104.72 10.61 115.33 (10.61) 104.72 51.75 30.76 0.64 81.70 47.83 212.68 317.40

0.89 0.89 344.68

63.44 6.32 69.76 (6.32) 63.44 12.33 9.10 0.74 66.82 29.60 118.59 182.03

1.53 1.53 110.80

Housing loans are secured by the documents of the properties financed. Advance recoverable in cash or in kind includes Rs. 0.97 million (previous year: Rs. 1.90 million) due from related parties (refer note 33)

SHRIRAM PISTONS & RINGS LIMITED

32

Notes to financial statements for the year ended March 31, 2012
17. Other assets (Unsecured, considered good unless otherwise stated) March 31, 2012 Current Non current Rs. million Rs. million 65.35 7.33 34.62 26.44 5.70 99.12 40.32 March 31, 2011 Current Non current Rs. million Rs. million 53.26 8.82 51.82 25.48 87.56 51.82

Export incentive receivable Interest accrued on fixed deposits Margin money (Refer Note 20) Other assets*

*Non current other assets represents amount pertaining to foreign currency monetary item 18. Inventories (valued at lower of cost and net realisable value) (As certified by the management) As at March 31, 2012 Rs. million Raw material and components (refer note 34) (includes in transit Rs. 5.94 million (previous year: Rs. 22.64 million) Work-in-progress (refer note 35) (includes in transit Rs. 3.48 million (previous year: Rs. nil) Finished goods (refer note 36) (includes in transit Rs. 200.59 million (previous year: Rs. 146.39 million) Stores and spares (includes in transit Rs. Nil (previous year: Rs. 59.14 million) Loose tools 408.82 531.43 748.10 124.65 29.18 1,842.18 As at March 31, 2011 Rs. million 255.10 368.90 538.20 118.45 26.35 1,307.00

19. Trade receivables (Unsecured, considered good unless otherwise stated) As at March 31, 2012 Rs. million Outstanding for a period exceeding six months* Unsecured, considered good Doubtful Other receivables Unsecured, considered good Doubtful 3.68 8.05 As at March 31, 2011 Rs. million 3.50 7.98

1,439.37 1.65 1,452.75 Doubtful (9.70) 1,443.05 *The ageing of receivables is from the date the receivables are due for collection as per the terms with customers.

1,148.77 2.15 1,162.40 (10.13) 1,152.27

SHRIRAM PISTONS & RINGS LIMITED

33

Notes to financial statements for the year ended March 31, 2012
20. Cash and bank balances As at March 31, 2012 Current Rs. million Cash and cash equivalents Cash in hand Cheques, drafts in hand Balances with banks - current accounts - deposits with original maturity of less than three months Other bank balances Dividend account Matured deposits account Deposits with maturity more than 3 months but less than 12 months Deposits with bank held as margin money Less : Amounts disclosed as Other non-current assets (Refer note 17) 0.40 9.30 79.95 79.95 34.62 34.62 34.62 0.34 5.37 351.00 363.42 363.42 51.82 51.82 51.82 8.48 60.00 6.41 0.86 0.91 0.30 Non-current Rs. million As at March 31, 2011 Current Non-current Rs. million Rs. million

21. Revenue from operations Year ended March 31, 2012 Rs. Million Sale of products (refer note 37) Other operating revenues - export benefits - others Less: Excise duty (868.93) 9,910.17 (733.05) 8,330.24 57.26 121.02 10,779.10 53.71 85.83 9,063.29 10,600.82 Year ended March 31, 2011 Rs. Million 8,923.75

SHRIRAM PISTONS & RINGS LIMITED

34

Notes to financial statements for the year ended March 31, 2012
22. Other income Year ended March 31, 2012 Rs. million Interest income - Bank deposits - Others Income from mutual funds Other non-operating income Year ended March 31, 2011 Rs. million

9.80 10.36 78.22 98.38

17.25 5.61 1.38 45.16 69.40

23. Cost of material consumed Year ended March 31, 2012 Rs. million Cost of raw material and components consumed (refer note 38) Cost of packing material consumed 3,168.23 Year ended March 31, 2011 Rs. million 2,522.01

204.78 3,373.01

167.03 2,689.04

24. (Increase) in inventories Year ended March 31, 2012 Rs. million Inventories at the end of the year Work-in-progress Finished goods Year ended March 31, 2011 Rs. million

531.43 748.10 1,279.53

368.90 538.20 907.10

Inventories at the beginning of the year Work-in-progress Finished goods

368.90 538.20 907.10 52.64 (319.79)

317.65 310.07 627.72 34.95 (244.43)

Excise duty on increase of finished goods

SHRIRAM PISTONS & RINGS LIMITED

35

Notes to financial statements for the year ended March 31, 2012
25. Employee benefit expense Year ended March 31, 2012 Rs. million Salaries and wages Contribution to provident and other funds Staff welfare expenses 1,422.95 118.29 141.56 1,682.80 Year ended March 31, 2011 Rs. million 1,056.68 160.99 94.48 1,312.15

26. Finance costs Year ended March 31, 2012 Rs. million Interest expense Other borrowing costs Applicable exchange rate variation 196.74 6.27 1.58 204.59 Year ended March 31, 2011 Rs. million 174.56 3.23 2.18 179.97

27. Depreciation Year ended March 31, 2012 Rs. million For the year - tangible (refer note 13) - intangible (refer note 14) Less: transferred from revaluation reserve 700.49 21.14 14.04 707.59 593.53 14.61 20.72 587.42 Year ended March 31, 2011 Rs. million

SHRIRAM PISTONS & RINGS LIMITED

36

Notes to financial statements for the year ended March 31, 2012
28. Other expenses Year ended March 31, 2012 Rs. million Stores and spares consumed Power and fuel Job work charges Selling, distribution and promotion expenses Royalty Rent Rates and taxes Insurance Repair and maintenance - Plant and machinery - Buildings - Others Auditor's remuneration (refer note 29) Director's fees Provision for doubtful debts and advances (net) Loss on sale/write off of assets (net) Bad debts and advances written off Exchange rate variation (net) Miscellaneous expenses 1,023.94 659.68 390.00 260.40 179.10 31.59 78.39 11.72 60.53 42.78 22.55 1.23 1.00 3.87 2.56 2.53 17.22 419.83 3,208.92 Year ended March 31, 2011 Rs. million 883.56 617.07 305.70 233.38 149.30 28.30 12.23 10.36 53.05 39.51 18.39 1.09 1.37 7.43 0.70 28.80 314.67 2,704.91

29. Payment to auditor (excluding service tax)

Year ended March 31, 2012 Rs. million 0.58 0.10 0.20

Year ended March 31, 2011 Rs. million 0.55 0.04* 0.20

As auditor: Audit fee Tax audit fee Limited review In other capacity: Certification fees Reimbursement of expenses

0.28 0.01

0.03 0.07*

* includes Rs. 0.04 million and Rs. 0.02 million towards payment to previous auditors for tax audit fee and reimbursement of expenses.
SHRIRAM PISTONS & RINGS LIMITED 37

Notes to financial statements for the year ended March 31, 2012
30. Earnings per share (EPS) As at March 31, 2012 Net profit attributable to equity shareholders (Rs. million) Weighted average number of equity shares (Nos. million) Earning per share (basic/diluted) (Rs.) 31. Research and development expenditure In house R&D facility of the Company is recognised by Ministry of Science & Technology, Department of Scientific & Industrial Research (DSIR). The details of research and development expenditure incurred by the Company and included in the respective account heads are as under:Year ended Year ended March 31, 2012 March 31, 2011 Rs. million Rs. million Capital expenditure Tangible assets 41.02 15.24 Intangible assets 18.86 9.71 59.88 24.95 Revenue expenditure Salary and wages 35.28 28.09 Materials, consumables and spares 55.10 40.04 Other expenditure 8.11 6.03 98.49 74.16 Sale of R&D products (7.45) Net revenue expenditure 91.04 74.16 839.12 22.37 37.50 As at March 31, 2011 826.88 22.37 36.96

32. Employee benefits Gratuity and leave liability has been recognised as defined benefit plan in accordance with accounting standard -15 "Employee benefits" as under:Gratuity March 31, 2012 March 31, 2011 Rs. million Rs. million Change in projected benefit obligation Projected benefit obligation at the beginning of the year Current service cost Interest cost Actuarial (gain) / loss Benefits paid Projected benefit obligation at the end of the year
SHRIRAM PISTONS & RINGS LIMITED

Leave encashment March 31, 2012 March 31, 2011 Rs. million Rs. million

427.09 36.86 46.18 (11.33) (25.90) 472.90

334.86 39.36 27.90 38.15 (13.18) 427.09

106.10 85.02 7.46 (17.94) (12.34) 168.30

84.44 55.15 5.96 (32.72) (6.73) 106.10


38

Notes to financial statements for the year ended March 31, 2012
Gratuity March 31, 2012 March 31, 2011 Rs. million Rs. million Change in plan assets Fair value of plan assets at the beginning of the year Expected return on plan assets Actuarial gain / (loss) Employer contributions Benefits paid Fair value of plan assets at the end of the year Reconciliation of obligation and fair value of plan assets Projected benefit obligation at the end of the year Funded status of the plans Liability recognised in the balance sheet Expenses recognised during the year Current service cost Interest cost Expected return on plan assets Recognized net actuarial (gain)/ loss Leave encashment March 31, 2012 March 31, 2011 Rs. million Rs. million

262.76 25.99 2.44 34.30 (0.80) 324.69

205.48 20.71 (0.38) 38.57 (1.62) 262.76

(12.34) (12.34)

(6.73) -

472.90 324.69 148.21

427.09 262.76 164.33

168.30 168.30

106.10 106.10

46.18 36.86 (25.99) (28.34) 28.71

39.36 27.90 (20.71) 38.53 85.08

85.02 7.46 (17.94) 74.54

55.15 5.96 (32.72) 28.39

Significant assumptions used Discount rate (% per annum) Expected salary rise (% per annum) Estimated rate of return on plan assets (% per annum)

8.75 11.00 9.30

8.50 12.00 9.25

8.75 11.00 N.A.

8.50 12.00 N.A.

Amount for the current year and previous four years are as follows: Year ended Year ended March 31, 2012 March 31, 2011 Rs. million Rs. million Gratuity Defined benefit obligation Plan assets Deficit (472.90) 324.69 (148.21) (427.09) 262.76 (164.33)

Year ended March 31, 2010 Rs. million (334.86) 205.48 (129.38)

Year ended March 31, 2009 Rs. million (260.58) 172.66 (87.92)

Year ended March 31, 2008 Rs. million (202.23) 146.13 (56.10)

The Company's gratuity fund is managed by independent Board of Trustees through Life Insurance Corporation of India (LIC) and SBI Life Insurance. Under this policy, the eligible employees are entitled to receive gratuity payments upon their resignation or death in lumpsum after deduction of necessary taxes. The Company has a long service reward scheme for selective group of employees. The total expense recognised in the current year is Rs. 36.99 million (previous year: Nil)
SHRIRAM PISTONS & RINGS LIMITED 39

Notes to financial statements for the year ended March 31, 2012
Estimate of the future salary increase is based on factors such as inflation, seniority, promotions, demand and supply in employment market. Expenditure recognized in respect of defined contribution plan is as under: Year ended March 31, 2012 Rs. million Provident fund Superannuation fund State insurance fund 72.79 10.91 32.49 116.19 Year ended March 31, 2011 Rs. million 59.85 11.26 24.87 95.98

33. Related party disclosure As per AS 18, issued by the Institute of Chartered Accountants of India, the Companys related parties and transactions with them during the year are disclosed below : A. List of related parties Subsidiary company Key management personnel SPR International Auto Exports Limited Shri A.K Taneja, Managing Director Shri R. Srinivasan, Jt. Managing Director Smt. Meenakshi Dass, Whole Time Director

Relatives of key management personnel of Shri A.K Taneja, Managing Director Shri R. Srinivasan, Jt. Managing Director Smt. Meenakshi Dass, Whole Time Director

Smt. Anita Taneja Smt. Usha Srinivasan Shri Deepak C. Shriram Shri Arjun D. Shriram Shri Luv D. Shriram Shri Kush D. Shriram Ms. Nandishi Shriram Shriram Automotive Products Ltd. Shriram Alpine Sales Pvt. Ltd. Shriram Veritech Solutions Pvt. Ltd. Sera Com Pvt. Ltd. Manisha Commercial Pvt. Ltd Sarva Commercial Pvt. Ltd. Charat Ram Shriram Pvt. Ltd. Pearey Lall & Sons (E.P) Ltd.
40

Enterprises over which there is significant influence of Smt. Meenakshi Dass and her relatives above

SHRIRAM PISTONS & RINGS LIMITED

Notes to financial statements for the year ended March 31, 2012
B. Related party transactions Particulars Key management personnel (KMP) March 31, 2012 A) Transactions during the year Remuneration Mr. A.K.Taneja Mr. R Srinivasan Mrs. Meenakshi Dass 28.53 21.35 23.58 28.19 21.16 22.98 28.53 21.35 23.58 28.19 21.16 22.98 Relatives of KMP Enterprises over which KMP has significant influence or control Rs. Million Total

March 31, March 31, 2011 2012

March 31, March 31, 2011 2012

March 31, March 31, 2011 2012

March 31, 2011

Rent paid Mrs. Meenakshi Dass Mrs. Usha Srinivasan Sera Com Pvt. Ltd. Manisha Commercial Pvt. Ltd. Mrs. Anita Taneja 0.24 0.24 0.24 0.20 0.14 1.58 0.33 1.53 0.33 0.24 0.24 1.58 0.33 0.20 0.24 0.14 1.53 0.33 -

Interest on fixed deposits Mr. R Srinivasan Mrs. Meenakshi Dass Mr. Luv D Shriram Mrs. Usha Srinivasan Mr. Deepak C Shriram Mr. Kush D Shriram Mr. Arjun D Shriram Ms. Nandishi Shriram Pearey Lall & Sons (E.P.) Ltd. Charat Ram Shriram Pvt. Ltd. 1.39 0.25 1.45 0.83 0.10 0.73 0.01 0.40 0.42 0.90 0.17 0.62 0.20 0.84 0.58 0.91 2.10 0.40 3.47 0.27 1.39 0.25 0.10 0.73 0.01 0.40 0.42 0.90 2.10 0.40 1.45 0.83 0.17 0.62 0.20 0.84 0.58 0.91 3.47 0.27

Directors sitting fees Mr. Luv D Shriram 0.12 0.15 0.12 0.15

Dividend Paid Mr. A.K.Taneja Mrs. Meenakshi Dass Mrs. Usha Srinivasan Mr. Deepak C Shriram Mr. Luv D Shriram 0.0002 16.01 0.0001 13.72 0.01 0.003 11.67 0.01 0.003 10.00 0.0002 16.01 0.01 0.003 11.67 0.0001 13.72 0.01 0.003 10.00

SHRIRAM PISTONS & RINGS LIMITED

41

Notes to financial statements for the year ended March 31, 2012
Rs. Million Particulars Key management personnel (KMP) March 31, 2012 Sarva Commercial Pvt. Ltd. Charat Ram Shriram Pvt. Ltd. Manisha Commercial Pvt. Ltd. Sera Com Pvt. Ltd. Relatives of KMP Enterprises over which KMP has significant influence or control Total

March 31, March 31, 2011 2012 -

March 31, March 31, 2011 2012 3.72 0.01 2.33 3.31

March 31, March 31, 2011 2012 3.19 0.01 3.72 0.01 2.33 3.31

March 31, 2011 3.19 0.01 -

Public Deposit taken during the year Mr. R Srinivasan Mrs. Meenakshi Dass Mrs. Usha Srinivasan Mr. Luv D Shriram Mr. Arjun C Shriram Ms. Nandishi Shriram Pearey Lall & Sons (E.P.) Ltd. Charat Ram Shriram Pvt. Ltd. 6.51 4.50 7.65 10.00 2.05 5.50 11.50 0.46 4.50 21.00 39.60 4.20 6.51 4.50 2.05 5.50 11.50 21.00 7.65 10.00 0.46 4.50 39.60 4.20

Licence Fee earned Shriram Automotive Products Ltd. 0.03 0.08 0.03 0.08

Purchase of material / stores Shriram Veritech Solutions Pvt. Ltd. Pearey Lall & Sons (E.P.) Ltd. 5.62 4.32 0.002 5.62 4.32 0.002

Purchase of components Shriram Automotive Products Ltd. Shriram Alpine Sales Pvt. Ltd. 213.76 20.29 154.64 21.67 213.76 20.29 154.64 21.67

Common share of activity Shriram Automotive Products Ltd. Shriram Alpine Sales Pvt. Ltd. 0.62 0.32 1.04 0.31 0.62 0.32 1.04 0.31

B)

Balances due from/ to the related parties Fixed deposit Mr. R Srinivasan 12.42 12.69 12.42 12.69

SHRIRAM PISTONS & RINGS LIMITED

42

Notes to financial statements for the year ended March 31, 2012
Rs. Million Particulars Key management personnel (KMP) March 31, 2012 Mrs. Meenakshi Dass Mr. Luv D Shriram Mrs. Usha Srinivasan Mr. Deepak C Shriram Mr. Kush D Shriram Mr. Arjun D Shriram Ms. Nandishi Shriram Pearey Lall & Sons (E.P.) Ltd. Charat Ram Shriram Pvt. Ltd. Interest accrued but not due Mr. R Srinivasan Mrs. Meenakshi Dass Mr. Luv D Shriram Mrs. Usha Srinivasan Mr. Deepak C Shriram Mr. Kush D Shriram Pearey Lall & Sons (E.P.) Ltd. 1.96 1.76 0.57 0.14 1.50 0.01 0.79 0.04 0.91 0.15 0.47 1.41 1.96 0.14 1.50 0.01 0.79 1.41 1.76 0.57 0.04 0.91 0.15 0.47 3.50 Relatives of KMP Enterprises over which KMP has significant influence or control Total

March 31, March 31, 2011 2012 9.00 1.00 6.34 3.50 5.50 11.00 -

March 31, March 31, 2011 2012 1.00 4.85 0.50 7.50 5.50 8.50 21.00 4.20

March 31, March 31, 2011 2012 23.00 4.20 3.50 1.00 6.34 3.50 5.50 11.00 21.00 4.20

March 31, 2011 9.00 1.00 4.85 0.50 7.50 5.50 8.50 23.00 4.20

Amount payable Mr. A.K.Taneja Mr. R Srinivasan Mrs. Meenakshi Dass Sera Com Pvt. Ltd. Manisha Commercial Pvt. Ltd. Shriram Veritech Solutions Pvt. Ltd. Shriram Alpine Sales Pvt. Ltd. Shriram Automotive Products Ltd. 18.61 13.96 15.82 17.61 13.20 14.96 0.14 0.08 1.02 16.01 0.11 0.02 0.10 3.18 0.51 18.61 13.96 15.82 0.14 0.08 1.02 16.01 17.61 13.20 14.96 0.11 0.02 0.10 3.18 0.51

Amount recoverable Shriram Automotive Products Ltd. Shriram Alpine Sales Pvt. Ltd. Pearey Lall & Sons (E.P.) Ltd. 0.65 0.32 1.26 0.64 0.003 0.65 0.32 1.26 0.64 0.003

SHRIRAM PISTONS & RINGS LIMITED

43

Notes to financial statements for the year ended March 31, 2012
34. Raw material and components inventory Year ended March 31, 2012 Rs. million Aluminium /Alloy Pig Iron Steel Bars/tubes Steel Wire Valve Steel Others 8.69 5.33 50.18 140.17 132.41 72.04 408.82 Year ended March 31, 2011 Rs. million 14.40 7.59 44.30 40.52 92.65 55.64 255.10

35. Work-in-progress inventory Year ended March 31, 2012 Rs. million Pistons Pins Piston rings Engine valves 192.47 50.73 205.12 83.11 531.43 Year ended March 31, 2011 Rs. million 128.18 39.34 148.11 53.27 368.90

36. Finished goods inventory Year ended March 31, 2012 Rs. million Pistons Pins Piston Rings Engine Valves Others 273.64 56.27 242.29 171.53 4.37 748.10 Year ended March 31, 2011 Rs. million 172.45 43.76 207.95 105.96 8.08 538.20

37. Sale of products Year ended March 31, 2012 Rs. million Pistons/Pins/Piston rings/ Others Engine Valves 8,633.60 1,967.22 10,600.82 Year ended March 31, 2011 Rs. million 7,298.83 1,624.92 8,923.75

Pistons/Pins/Rings/ Cylinder liners/Conrod are sold as individual components as well as composite units. Hence, combined value has been shown.
SHRIRAM PISTONS & RINGS LIMITED 44

Notes to financial statements for the year ended March 31, 2012
38. Consumption of raw material and components Year ended March 31, 2012 Rs. million Aluminium /Alloy Pig Iron Steel Bars/tubes Steel Wire Valve Steel Others 823.18 80.46 381.93 194.28 562.59 1,125.79 3,168.23 Year ended March 31, 2011 Rs. million 611.75 71.17 321.07 148.05 435.92 934.05 2,522.01

39. Value of Imports (CIF basis) (excluding the value of goods in transit and those required through canalised agencies) Year ended March 31, 2012 Rs. million Raw Materials Components Stores & Spares Capital Goods 875.02 110.69 151.13 594.08 1,730.92 Year ended March 31, 2011 Rs. million 665.22 70.19 178.33 385.72 1,299.46

40. Consumption of raw materials, components, packing material and stores spares March 31, 2012 Rs. million % Raw Materials - Imported 771.70 24.36 - Indigenous 1,883.37 59.45 Components - Imported - Indigenous - Total : Packing material - Imported - Indigenous - Total : Stores & Spares - Imported - Indigenous - Total :
SHRIRAM PISTONS & RINGS LIMITED

March 31, 2011 Rs. million % 722.04 28.63 1,361.99 54.00 65.81 372.17 2,522.01 0.31 166.72 167.03 177.87 705.69 883.56 2.61 14.76 100.00 0.19 99.81 100.00 20.13 79.87 100.00
45

106.45 406.71 3,168.23 0.45 204.33 204.78 171.31 852.63 1,023.94

3.35 12.84 100.00 0.22 99.78 100.00 16.73 83.27 100.00

Notes to financial statements for the year ended March 31, 2012
41. Foreign currency exposure Details of outstanding foreign exchange exposure as on March 31, 2012 are as under:USD/INR Hedged exposure Receivables (1.16) 0.21 (-) 38.54 (20.47) JPY/USD 141.35 (-) 365.75 (538.11) EURO/USD (0.80) 0.06 (-) Figures in million GBP/USD SGD/USD 8.34 (9.82)

Payables

Loans

Unhedged exposure Receivables

6.04 (3.60) 5.59 (6.68) 1.47 (3.07)

28.99 (25.54) 256.73 (514.36) 122.10 (254.77)

2.69 (1.27) 0.50 (0.08) -

0.08 (0.22) 0.09 (0.003) -

Payables

Loans

42. Operating Lease The Company has entered into lease agreement for a property on lease. This lease is non-cancellable for a period of six years. The total of future minimum lease payments under leases for the following periods are as under: Year ended Year ended March 31, 2012 March 31, 2011 Rs. million Rs. million Not later than one year Later than one year but not later than five years Later than five years 3.27 14.20 3.72 21.19 -

43. Expenditure in foreign currency (net of taxes and including provisions) Year ended March 31, 2012 Rs. million 153.51 124.79 93.84 372.14 Year ended March 31, 2011 Rs. million 128.26 77.40 86.26 291.92
46

Royalty Interest Others

SHRIRAM PISTONS & RINGS LIMITED

Notes to financial statements for the year ended March 31, 2012
44. Equity dividend remittances in foreign currency (excluding dividend distribution tax) Year ended March 31, 2012 Rs. million Year of which dividend paid Number of non-resident shareholders Number of equity shares held (million/no.) Dividend (million/Rs.) Year of which dividend paid Number of non-resident shareholders Number of equity shares held (million/no.) Interim dividend (million/Rs.) 2010-11 (Final) 2 9.17 18.33 2011-12 (Interim) 2 9.17 13.75 Year ended March 31, 2011 Rs. million 2009-10 (Final) 2 9.17 13.75 2010-11 (Interim) 2 9.17 13.75

45. Earnings in foreign currency Year ended March 31, 2012 Rs. million Exports (FOB) Development cost recovery Claim received from customer 1,846.17 15.76 Year ended March 31, 2011 Rs. million 1,491.99 2.71 -

46. Segment reporting As the companys business activity falls within a single business segment viz automotive components and a single geographical segment, disclosure requirements of accounting standard (AS 17), specified in the companies (accounting standard) rules, 2006 are not applicable

SHRIRAM PISTONS & RINGS LIMITED

47

Notes to financial statements for the year ended March 31, 2012
47. Micro, Small and Medium enterprises as defined under the MSMED Act Trade payables of Rs. 718.44 million (previous year: Rs. 400.08 million) includes amounts due to MSMED of Rs. 0.28 million (previous year: 0.12 million) The status of vendors under Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is based on certificate submitted by vendors about their coverage under the provisions of MSMED Act, 2006. The Company has not received any claim for interest from any party covered under the said Act. Year ended March 31, 2012 Rs. million The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of accounting year The amount of interest paid by the buyer along with the amounts of the payment made beyond the appointed day during each accounting year The amount of interest due and payable for the period The amount of interest accrued and remaining unpaid at the end of accounting year 0.33 Year ended March 31, 2011 Rs. million 0.15

0.05 0.05

0.03 0.03

48. Contingent liabilities As at March 31, 2012 Rs. million Disputed - Excise duty - Income tax - Wealth tax - VAT/Sales tax - Service tax Bank guarantees Bills discounted from banks Claims not acknowledged as debts 78.22 39.79 0.41 19.53 36.18 34.01 14.06 14.25 As at March 31, 2011 Rs. million 73.26 11.69 0.41 7.19 258.97 72.18 13.78 16.32

Company has given guarantee for repayment of loan liabilities for vehicles purchased by its employees/vendors/customers from entity other than a bank or financial institution. Outstanding loan amount payable by employees/vendors/customers at the year end is Rs. 7.36 million (Rs. 12.34 million) and there is no default till date.

SHRIRAM PISTONS & RINGS LIMITED

48

Notes to financial statements for the year ended March 31, 2012
49. Commitments As at March 31, 2012 Rs. million Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Estimated amount of contracts remaining to be executed on revenue account (net of advances) and not provided for Outstanding export obligation to be fulfilled over a period of next 7 years under the EPCG scheme against import of some machines. Custom duty saved against outstanding export obligations is Rs. 378.11 million (previous year: Rs. 283.55 million) 1,296.66 As at March 31, 2011 Rs. million 769.91

180.86

118.98

6,185.99

5,097.58

50. SPR International Auto Exports Ltd. is 100% subsidiary of the company. The annual accounts and related detailed information of the subsidiary company are available for inspection by the share holders in head office of the Company and subsidiary company. Hard copy of the annual accounts will be made available to the shareholders of holding and subsidiary company on demand.

51. Previous year figures have been re-grouped / reclassified, wherever necessary to confirm to current years classification. Figures in brackets denote previous year figures.

For and on behalf of the Board of Directors Pradeep Dinodia Chairman DIN 00027995 O.P. Khaitan Director DIN 00027798 A.K. Taneja Managing Director & CEO DIN 00124814 R. Srinivasan Jt. Managing Director & Company Secretary DIN 00124760 P.S. Ladiwala Dy. Executive Director & CFO Meenakshi Dass Whole - Time Director DIN 00524865
49

Place : New Delhi Date : April 30, 2012


SHRIRAM PISTONS & RINGS LIMITED

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES
NAME OF THE SUBSIDIARY SPR INTERNATIONAL AUTO EXPORTS LTD. : March 31, 2012

1. 2.

Financial year of the subsidiary Extent of holding company's interest in the subsidiary Number of shares % holding (equity) % holding (preference) Net aggregate amount of subsidiary's Profit / (losses) so far as they concern members of the holding company and not dealt with in the holding company's accounts. i) For subsidiary's financial year ii) For subsidiary's previous financial years since it became subsidiary Net aggregate amount of subsidiary's profits/losses so far as they concern members of the holding company and dealt with in the holding company's accounts i) For subsidiary's financial year ii) For subsidiary's previous financial years since it became subsidiary Change in the interest of holding company between the end of subsidiary's financial year and the end of holding company's financial year. Material changes between the end of subsidiary's financial year and the end of holding company's financial year. i) Fixed assets ii) Investments disposed off iii) Monies lent by the subsidiary iv) Monies borrowed by the subsidiary other than for meeting current liabilities.

: : :

50000 100% -

3.

: :

Rs. 0.01 Million Rs.( 0.11) Million

4.

5.

6.

On behalf of the Board PRADEEP DINODIA Chairman DIN 00027995 O. P. Khaitan Director DIN 00027798 A. K. TANEJA Managing Director & CEO DIN 00124814 R. SRINIVASAN Jt. Managing Director & Company Secretary DIN 00124760 Place : New Delhi Date : April 30, 2012
SHRIRAM PISTONS & RINGS LIMITED

P.S. LADIWALA Dy. Executive Director & CFO

MEENAKSHI DASS Whole - Time Director DIN 00524865


50

SUBSIDIARY COMPANY SPR INTERNATIONAL AUTO EXPORT LTD. DIRECTORS' REPORT


The Directors have pleasure in presenting 7th Annual Report of the company for the year ended on March 31, 2012. Profit in the year is Rs. 14 Th. against Rs. 11 Th. last year. No Dividend is being recommended. Further, no amount is being transferred to General Reserve Account. Business transactions could not commence during the year. The Directors confirm that:1. 2. in the preparation of the annual accounts, the applicable accounting standards have been followed. appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012. 3. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. 4. the annual accounts have been prepared on a going concern basis.

There is nothing to report with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo as required by Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 as the company has not undertaken any manufacturing or trading activity during the year. There are no particulars to be given under Section 217(2A) of the Companies Act, 1956. Shri Pradeep Dinodia, Director, retires by rotation and being eligible offers himself for re-election. The brief resume and other details, in relation to, aforesaid Director are given in the Notice of the Annual General Meeting.

On behalf of the Board

New Delhi 05th May, 2012

(PRADEEP DINODIA) CHAIRMAN

SHRIRAM PISTONS & AUTO EXPORTS LIMITED SPR INTERNATIONAL RINGS LIMITED

43 51

CONSOLIDATED FINANCIAL STATEMENTS SHRIRAM PISTONS & RINGS LTD.

AUDITORS REPORT
To, The Board of Directors of Shriram Pistons & Rings Limited 1. We have audited the attached consolidated balance sheet of Shriram Pistons & Rings Limited (the Company) and its subsidiary collectively referred to as the SPRL Group as at March 31, 2012, the consolidated statement of profit and loss and also the consolidated cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the management of the SPRL Group 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 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 consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We did not audit the financial statements of the subsidiary, whose financial statements reflect total assets of Rs 0.41 million as at March 31, 2012, the total revenue of Rs 0.031 million and cash in flows amounting to Rs 0.017 million for the year then ended. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the reports of other auditors. We report that the consolidated financial statements have been prepared by SPRL Groups management in accordance with the requirements of Accounting Standard 21, Consolidated Financial Statements, prescribed by the Companies (Accounting Standard) Rules, 2006. Based on our audit and on consideration of reports of other auditors on separate financial statements and on the other financial information of the subsidiary, and to the best of our information and according to the explanations given to us, we are of the opinion that the attached consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India; in case of: (a) (b) (c) the Consolidated Balance Sheet, of the state of affairs of the SPRL Group as at March31, 2012; the Consolidated Statement of Profit and Loss, of the profit for the year ended on that date; and the Consolidated Cash Flow Statement, of the cash flows for the year ended on that date.

2.

3.

4.

5.

For Walker, Chandiok & Co Chartered Accountants Firm Registration No: 001076N per B.P. Singh Partner Membership No.70116 Place : New Delhi Date : April 30, 2012
SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED) 52

Consolidated Balance Sheet as at March 31, 2012


(Rupees in million)
Notes As at March 31, 2012 As at March 31, 2011

Equity and liabilities Shareholders' funds Share capital Reserves and surplus Non-current liabilities Long term borrowings Deferred tax liabilities (net) Other long term liabilities Long term provisions Current liabilities Short term borrowings Trade payables Other current liabilities Short term provisions 5 6 223.75 4,409.74 4,633.49 1,936.94 289.92 41.02 277.31 2,545.19 717.10 718.44 1,711.52 122.28 3,269.34 10,448.02 223.75 3,676.66 3,900.41 1,416.89 249.26 37.56 219.68 1,923.39 261.59 400.08 1,581.65 102.76 2,346.08 8,169.88

7 8 9 10

11 42 12 10

Assets Non-current assets Fixed assets Tangible assets Intangible assets Capital work-in-progress Long term loans and advances Other non current assets Current assets Inventories Trade receivables Cash and Bank balance Short-term loans and advances Other current assets

13 14 15 16

5,516.12 28.98 735.81 344.68 40.32 6,665.91 1,842.18 1,443.05 80.35 317.40 99.13 3,782.11 10,448.02

4,541.42 24.36 348.80 110.80 51.82 5,077.20 1,307.00 1,152.27 363.80 182.03 87.58 3,092.68 8,169.88

17 18 19 15 16

Summary of significant accounting policies This is the balance sheet referred to in our report of even date
For Walker, Chandiok & Co Chartered Accountants

The accompanying notes are an integral part of the financial statements

For and on behalf of the Board of Directors Pradeep Dinodia Chairman DIN 00027995 O.P. Khaitan Director DIN 00027798 A.K. Taneja Managing Director & CEO DIN 00124814 R. Srinivasan Jt. Managing Director & Company Secretary DIN 00124760

per B.P. Singh Partner

Place : New Delhi Date : April 30, 2012

P.S. Ladiwala Dy. Executive Director & CFO

Meenakshi Dass Whole - Time Director DIN 00524865

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

53

Consolidated Statement of Profit and Loss for the year ended March 31, 2012
(Rupees in million)
Notes Year ended March 31, 2012 Year ended March 31, 2011

Revenue Revenue from operations Less : Excise duty Revenue from operations Other income Total revenue Expenses Cost of material consumed (Increase) in inventories of finished goods and work-in-progress Employee benefit expenses Finance costs Depreciation and amortisation expense Other expenses Total expenses Profit before tax Tax expense: - Current tax - Deferred tax Profit after tax

20

10,779.10 (868.93) 9,910.17 98.41 10,008.58

9,063.29 (733.05) 8,330.24 69.43 8,399.67

21

22 23 24 25 26 27

3,373.01 (319.79) 1,682.80 204.59 707.59 3,208.93 8,857.13 1,151.45

2,689.04 (244.43) 1,312.15 179.97 587.42 2,704.93 7,229.08 1,170.59

271.65 40.66 839.14

361.67 (17.97) 826.89

Profit for the year Earning per share Basic/Diluted 29

839.14 37.50

826.89 36.96

Summary of significant accounting policies 4 The accompanying notes are an integral part of the financial statements This is the Statement of Profit and Loss referred to in our report of even date
For Walker, Chandiok & Co Chartered Accountants For and on behalf of the Board of Directors Pradeep Dinodia Chairman DIN 00027995 O.P. Khaitan Director DIN 00027798 A.K. Taneja Managing Director & CEO DIN 00124814 R. Srinivasan Jt. Managing Director & Company Secretary DIN 00124760 Place : New Delhi Date : April 30, 2012 P.S. Ladiwala Dy. Executive Director & CFO Meenakshi Dass Whole - Time Director DIN 00524865

per B.P. Singh Partner

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

54

Consolidated Cash flow statement for the year ended March 31, 2012
As at March 31, 2012
Rs. million
A. Cash flow from Operating Activities Net profit before tax Adjustments for : Depreciation/amortisation Finance costs Bad debts/advances written off Provision for doubtful debts (net) Income from mutual funds Interest income Unrealised exchange rate variation (net) Loss on sale/write off of fixed asset Operating profit before working capital changes Adjustments for: Inventories Trade receivables Loans and advances (short and long term) Other assets (current and non current) Trade and other payables Income tax paid Net cash from in operating activities B. Cash Flow from Investing Activities Interest income Sale of mutual funds Purchase of mutual funds Sale of tangible assets Purchase of tangible assets Purchase of intangible assets Increase in restricted cash (Increase)/Decrease in capital advances Increase in capital work in progress Net cash (used) in investing activities C. Cash Flow from Financing Activities Finance costs Dividend paid Proceeds from long term borrowings Repayment of long term borrowings Short term loans from banks Proceeds from pubic deposits Payment of pubic deposits Net cash from/(used) in financing activities Net Increase/(Decrease) in cash and cash equivalents Cash and cash equivalents as on April 1, 2011 Cash and cash equivalents as on March 31, 2012 Components of cash and cash equivalents (refer note 19) Cash in hand Cheques, drafts in hand Balances with banks - current accounts - deposits with original maturity of less than three months Deposits with maturity more than 3 months but less than 12 months Other bank balances Dividend account Matured deposits account 1,151.45 707.59 204.59 2.53 3.87 (20.19) (4.25) 2.56 2,048.15 (535.18) (286.37) (120.91) (0.04) 442.10 (294.90) 1,252.85 20.19 10.48 (1,683.33) (31.66) (3.99) (227.65) (387.00) (2,302.96) (204.59) (91.01) 1,261.52 (656.64) 484.88 159.81 (191.30) 762.67 (287.44) 358.09 70.65 0.86 0.91 8.50 60.00 0.38 70.65 0.40 9.30 80.35

As at March 31, 2011


Rs. million
1,170.59 587.42 177.79 0.70 (2.82) (1.38) (22.88) 3.13 7.43 1,919.98 (377.43) (22.59) (93.00) (13.12) 386.41 (361.67) 1,438.58 22.88 221.43 (220.05) 8.67 (1,185.51) (26.10) (6.72) 43.95 (185.86) (1,327.31) (177.79) (91.15) 779.42 (574.38) 99.91 179.14 (283.90) (68.75) 42.52 315.57 358.09 0.30 6.42 351.37 358.09 0.34 5.37 363.80

Note: The Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard 3 on Cash Flow Statements of the Companies (Accounting Standard) Rules, 2006 This is the Cash Flow Statement refered to in our report of even date For Walker, Chandiok & Co Chartered Accountants For and on behalf of the Board of Directors Pradeep Dinodia Chairman DIN 00027995 O.P. Khaitan Director DIN 00027798 A.K. Taneja Managing Director & CEO DIN 00124814 R. Srinivasan Jt. Managing Director & Company Secretary DIN 00124760 Meenakshi Dass Whole - Time Director DIN 00524865

per B.P. Singh Partner

Place Date

: New Delhi : April 30, 2012

P.S. Ladiwala Dy. Executive Director & CFO

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

55

Notes to consolidated financial statements for the year ended March 31, 2012
1. Principles of consolidation The consolidated financial statements includes the financial statements of Shriram Pistons & Rings Ltd. ("Parent Company"), the parent company and its subsidiary, SPR International Auto Exports Ltd., incorporated in India, in which the Parent Company holds 100% of its share capital (collectively referred to as the group). The consolidated financial statements have been prepared in accordance with the Accounting Standard (AS 21), Consolidated Financial Statements referred to in the Companies Accounting Standards Rules, 2006 issued by the Central Government. 2. Basis of preparation The financial statements are prepared on accrual basis under the historical cost convention as supplemented by the revaluation of certain assets, in accordance with the generally accepted accounting principles in India and to comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 including the Rules framed there under. During the year ended March 31, 2012, the revised schedule VI notified under the Companies Act, 1956, has become applicable to the Group for preparation and presentation of its financial statements. The adoption of revised schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year. 3. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and the disclosure relating to contingent liabilities as at the date of financial statements and reported amount of income and expenses during the period. Difference between the actual results and estimates are recognised in the year in which the results are known or materialized. 4. Significant accounting policies a. Revenue recognition Revenue from sale of goods is recognised when significant risks and rewards in respect of ownership of the goods are transferred to the customer and is stated inclusive of excise duty and net of trade discounts, sales return and sales tax / VAT, wherever applicable. Other revenues are recognised on accrual basis, except where there are uncertainties in the determination / realisation of income, the same is not accounted for. b. Fixed assets Fixed Assets are stated at their original cost (net of cenvat availed) including taxes and other incidental expenses related to acquisition, installation and borrowing cost on loan taken for the acquisition of qualifying assets upto the date of commissioning of assets. Wherever assets are revalued, cost is adjusted by the amount added on revaluation based on Govt. approved valuers report and disclosed separately as required under the Companies Act, 1956. Capital work-in-progress represents expenditure incurred in respect of capital projects under development and are carried at cost. Cost includes related acquisition expenses, development/ construction costs, borrowing costs and other direct expenditure. c. Depreciation and amortisation Depreciation is provided on Fixed Assets over their estimated useful lives or lives based on the rates specified in Schedule XIV to the Companies Act, 1956, whichever is lower, on the following basis : Furniture, fixtures and office equipments - W.D.V method Other assets - Straight line method Lease money paid for leasehold land is amortised over the lease period. Where assets are revalued, depreciation is charged on the revalued amount based on remaining useful life of the asset specified by the valuer provided depreciation on such block of assets is not lower than depreciation chargeable on historical cost as per the Companies Act, 1956. Where there is a revision of the estimated useful life of asset, the unamortised depreciable amount is charged over the revised remaining useful life.

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

56

Notes to consolidated financial statements for the year ended March 31, 2012
Depreciation on assets acquired/sold/discarded during the year is charged on pro-rata basis except for Furniture, Fixtures and Equipments where full years depreciation is computed in the year of acquisition and no depreciation is provided in the year of sale. Assets costing upto Rs. 5,000 is fully depreciated in the year of acquisition. Intangible assets are amortised on straight-line basis. d. Investments Long term investments are stated at cost. Any diminution in the value of Long term Investments, other than temporary, is provided for in the books of account. Current investments are stated at lower of the cost or fair value. e. Inventories Inventories are valued on the following basis : I) Raw materials and components - at lower of cost determined on weighted average basis or net realisable value. ii) Stock in process at lower of cost or net realisable value. iii) Finished goods stock - at lower of cost including excise duty or net realisable value. Cost of finished goods and stock-in-process includes cost of material, labour and related overheads. f. Foreign currency transactions Transactions in foreign currency are recorded on initial recognition at the exchange rate prevailing on or closely approximating to the date of transaction. Monetary items denominated in foreign currency and covered by forward exchange contracts are translated at the rate ruling on the date of transaction as increased or decreased by the proportionate difference between the forward rate and exchange rate on the date of transaction, such difference is recognized in the Statement of Profit and Loss over the life of the contract. Other monetary items are translated at the year end rates and exchange rate difference on such translation is recognised in the Statement of Profit and Loss. The Group uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates which are entered into on the basis of firm commitments and highly probable forecast transactions. The premium or discount arising at the inception of such forward exchange contracts are amortised as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the statement of profit and loss in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense in the period in which same is cancelled or rolled over. g. Employee benefits Contribution towards Provident Fund and Superannuation fund is paid as per the statutory provisions/group scheme. These benefits are considered as defined contribution plan and contributions are charged to the Statement of Profit and Loss of the year when it becomes due. Retirement benefit in the form of gratuity is considered as defined benefit plan. The liability is determined using projected unit credit method, with actuarial valuation being carried out at each balance sheet date. Actuarial gains and losses are recognised in the statement of profit and loss in the period in which they arise. Leave encashment benefit is provided as per Group's scheme. Employees are entitled to accumulate leaves subject to certain limits as per Group's scheme. The liability for unutilised leave at the year end is determined through an actuarial valuation using projected unit credit method. h. Research and development Revenue expenditure on research and development, inclusive of dies for model development, is charged as expense in the year in which incurred. Capital expenditure is included in fixed assets.

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

57

Notes to consolidated financial statements for the year ended March 31, 2012
I. Leases Lease rentals in respect of assets taken on operating lease are charged to the Statement of Profit and Loss on a straight-line basis over the term of lease. Assets acquired on finance lease which transfer risk and rewards of ownership to the Group are capitalised as assets by the Group at the lower of fair value of the leased property or the present value of the related lease payments or where applicable, estimated fair value of such assets. Amortisation of capitalised leased assets is computed on the straight line method over the useful life of the assets. Lease rental payable is apportioned between principal and finance charge using the internal rate of return method. The finance charge is allocated over the lease term so as to produce a constant periodic rate of interest on the remaining balance of liability. j. Taxes on income Tax expense comprises current income tax and deferred income tax. Current tax is determined as the amount of tax payable in respect of taxable income for the year, in accordance with the Income Tax Act, 1961. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable/virtual certainty, depending on the nature of the timing differences, that sufficient future taxable income will be available against which such deferred tax assets can be realised. k. Borrowing costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets are considered as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Statement of Profit and Loss as and when incurred. l. Earnings per share Basic earnings per share is calculated by dividing net profit or loss for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue, share split and any new equity issue. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. m. Impairment of assets The Group assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost. n. Contingent liabilities and provisions The Group recognizes a provision when there is a present obligation as a result of past events and it is probable that an outflow of resources would be required to settle the obligation and a reliable estimate can be made. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood on outflow of resources is remote, no provision or disclosure is made.

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

58

Notes to consolidated financial statements for the year ended March 31, 2012
5. Share capital As at March 31, 2012 Rs. million Authorised Shares 50,000,000 (previous year 50,000,000) equity shares of Rs. 10 each 3,000,000 (previous year 3,000,000) preference shares of Rs. 100 each 500.00 300.00 800.00 Issued, subscribed and fully paid up shares 22,374,912 (previous year 22,374,912) equity shares of Rs. 10 each 223.75 223.75 a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting year March 31, 2012 No. in million At the beginning of the year Balance at the end of the year b. Terms/rights attached to equity shares 22.37 22.37 Rs. million 223.75 223.75 March 31, 2011 No. in million 22.37 22.37 Rs. million 223.75 223.75 223.75 223.75 500.00 300.00 800.00 As at March 31, 2011 Rs. million

The Parent Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share. c. Details of shareholders holding more than 5% shares in the Company March 31, 2012 No. in million Equity shares of Rs. 10 each fully paid Riken Corporation KS Kolbenschmidt GmbH Luv D. Shriram and Meenakshi Dass* Meenakshi Dass and Luv D. Shriram * National Insurance Company Limited Meenakshi Dass 4.69 4.47 3.33 3.33 1.43 1.24 20.97 20.00 14.90 14.90 6.38 5.54 4.69 4.47 3.33 3.33 1.43 1.24 20.97 20.00 14.90 14.90 6.38 5.54 % shareholding March 31, 2011 No. in million % shareholding

* Shares held on behalf of Deepak Shriram Family Benefit Trust. The above information is furnished as per shareholder register as at the year end.

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

59

Notes to consolidated financial statements for the year ended March 31, 2012
6. Reserves and Surplus As at March 31, 2012 Rs. million Preference share redemption reserve Revaluation reserve Balance at the beginning of the year Less : amount transferred to the statement of profit and loss as reduction from depreciation (refer note 26) Less: amount transferred to respective fixed assets on account of sale/write off of revalued assets Balance at the end of the year General reserve Balance at the beginning of the year Add: amount transferred from surplus in the statement of profit and loss Balance at the end of the year Surplus in statement of profit and loss Balance as per last financial statements Profit for the year Less: Appropriations Dividend on equity shares for the year - Interim - Final (proposed) Dividend distribution tax Transfer to general reserves Total appropriations Balance at the end of the year 100.00 As at March 31, 2011 Rs. million 100.00

151.11 14.04

173.74 20.70

1.01 136.06

1.93 151.11

3,125.55 748.13 3,873.68

2,439.81 685.74 3,125.55

300.00 839.14

250.00 826.89

33.56 44.75 12.70 748.13 839.14 300.00 4,409.74

33.56 44.75 12.84 685.74 776.89 300.00 3,676.66

During the year ended March 31, 2012, the dividend (including interim) of Rs. 3.50 per share (previous year: Rs. 3.50 per share) recognised as distribution to equity shareholders of Parent Company amounting to Rs. 91.01 million including dividend distribution tax (Previous year Rs. 91.15 million). The final dividend for the year ended March 31, 2012, of Rs. 52.01 million including dividend distribution tax proposed by the Board of Directors is subject to the approval by the shareholders in the ensuing Annual General Meeting.

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

60

Notes to consolidated financial statements for the year ended March 31, 2012
7. Long-Term borrowings As at March 31, 2012 Long term Current maturities Rs. million Rs. million Secured Term Loans - from banks - from others Interest free trade tax loan Unsecured Other loan and advances Deposits from public Deposits from related parties (refer note 32) Less : Amounts disclosed as other current liabilities (Refer note 12) As at March 31, 2011 Long term Current maturities Rs. million Rs. million

1,782.28 -

454.96 9.04

1,181.71 9.04

439.75 1.24 9.66

110.70 43.96 1,936.94 1,936.94

138.63 24.50 627.13 627.13 -

181.40 44.74 1,416.89 1,416.89

65.27 32.00 547.92 547.92 -

(i) Term loans from banks of Rs. 1,268.60 million (previous year: Rs. 1,293.65 million) are secured by way of first pari passu charge and mortgage on all present and future immovable assets and hypothecation of all movable assets of the Parent Company, present and future subject to prior charge created and/or to be created in favour of the companys working capital bankers on the companys stocks and book debts. Amount outstanding As at As at March 31, 2012 March 31, 2011 Rs. million Rs. million 33.33 55.26 163.60 27.15 102.50 315.25 571.51 1,268.60 88.09 86.84 240.69 67.15 142.50 297.50 370.88 1,293.65 Repayment period from origination (years) 5.5 6 6 6 5 6 5.5 6 Installments outstanding as on 31.03.2012 No. Periodicity 4 7 4 3 11 Nil 17 20 Quarterly Quarterly Half Yearly Quarterly Quarterly Repaid fully Quarterly Quarterly

(ii) Term loans from banks of Rs. 968.64 million (previous year: Rs. 327.81 million) is secured by way of first pari passu charge and mortgage on all present and future immovable assets and hypothecation of all movable fixed assets of the Parent Company, present and future. Amount outstanding As at As at March 31, 2012 March 31, 2011 Rs. million Rs. million 278.64 445.00 245.00 968.64 327.81 327.81
61

Repayment period from origination (years) 6 6 7

Installments outstanding as on 31.03.2012 No. Periodicity 17 23 20 Quarterly Quarterly Quarterly

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

Notes to consolidated financial statements for the year ended March 31, 2012
(iii) Term loan from others of Rs. Nil (previous year: Rs. 1.24 million) is secured against hypothecation of vehicles purchased out of this loan. (iv) Interest free trade tax loan of Rs. 9.04 million (previous year: 18.70 million) is secured by way of pari passu second charge on all assets of the Parent Company, subject to prior charge of banks for working capital loans. (v) The long term deposits have been raised under section 58A of the Companies Act, 1956 for maturity period of 2 and 3 years. Amount outstanding As at As at March 31, 2012 March 31, 2011 Rs. million Rs. million 17.75 44.89 300.04 278.52 317.79 323.41 Repayment period from origination (years) 2 3

8.

Deferred tax liability (net) As at March 31, 2012 Rs. million As at March 31, 2011 Rs. million 352.56

Deferred tax liability Impact of difference between tax depreciation and depreciation/ amortisation charged in books Deferred tax assets Liabilities on payment basis under section 43B of the Income Tax Act, 1961 Provision for doubtful debts/advances Net deferred tax liability

401.56

105.05 6.59 111.64 289.92

97.96 5.34 103.30 249.26

9.

Other long term liabilities As at March 31, 2012 Rs. million 41.02 41.02 As at March 31, 2011 Rs. million 37.56 37.56

Security deposits

The security deposits have been received by the Company from customers/vendors in the normal course of business.

10. Provisions As at March 31, 2012 Long term Short term Rs. million Rs. million Provision for employee benefits Proposed dividend Tax on dividend 277.31 277.31 70.27 44.75 7.26 122.28 As at March 31, 2011 Long term Short term Rs. million Rs. million 219.68 219.68 50.75 44.75 7.26 102.76
62

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

Notes to consolidated financial statements for the year ended March 31, 2012
11. Short term borrowings As at March 31, 2012 Rs. million Secured Working capital loans repayable on demand from banks Unsecured Loans - from banks Public deposits 300.00 37.20 717.10 66.57 261.59 379.90 195.02 As at March 31, 2011 Rs. million

Working capital loans are secured by way of first pari passu charge on stocks and book debts of the Company and second pari passu charge on all fixed assets of the Company, present and future.

12. Other current liabilities As at March 31, 2012 Rs. million Current maturities of long term debt (refer note 7) Interest accrued but not due on borrowings Investor education and protection fund* - Unclaimed dividends - Unclaimed matured deposits and interest accrued thereon Other payables Advances from customers 0.40 9.30 999.33 40.47 1,711.52 * not due for deposit 0.34 5.37 963.81 32.37 1,581.65 34.89 31.84 627.13 As at March 31, 2011 Rs. million 547.92

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

63

Notes to consolidated financial statements for the year ended March 31, 2012
13. Tangible assets Rs. million Particulars Original cost as at April 1, 2011 Land - Leasehold Buildings Plant and equipment Furniture & Fixtures Vehicles Office Equipment Dies TOTAL 360.42 739.34 6,673.61 56.98 103.22 190.46 119.01 8,243.04 Additions for the year Gross Block Adjustments for the year for borrowing costs 9.38 10.19 19.57 Deductions for the year Original cost as at March 31, 2012 337.05 1,066.47 7,884.51 73.09 131.57 225.84 137.20 9,855.73 As at April 1, 2011 Depreciation For the year Deductions for the year As at March 31, 2012 Written down value As at March 31, 2012 As at March 31, 2011

317.75 1,238.11 17.47 42.95 43.84 28.50 1,688.62

23.37 37.40 1.36 14.60 8.46 10.31 95.50

18.13 139.71 3,203.91 46.38 53.01 158.70 81.78 3,701.62

3.61 25.14 585.66 13.26 18.99 32.74 21.09 700.49

33.52 1.17 11.19 8.25 8.37 62.50

21.74 164.85 3,756.05 58.47 60.81 183.19 94.50 4,339.61

315.31 901.62 4,128.46 14.62 70.76 42.65 42.70 5,516.12

342.29 599.63 3,469.70 10.60 50.21 31.76 37.23 4,541.42

Particulars Original cost as at April 1, 2010 Land - Leasehold Buildings Plant and equipment Furniture & Fixtures Vehicles Office Equipment Dies TOTAL (i) 360.42 537.05 5,833.51 42.13 98.47 170.32 105.98 7,147.88 Additions for the year

Gross Block Adjustments for the year for borrowing costs 4.11 7.81 11.92 Deductions for the year Original cost as at March 31, 2011 360.42 739.34 6,673.61 56.98 103.22 190.46 119.01 8,243.04 As at April 1, 2010

Depreciation For the year Deductions for the year As at March 31, 2011

Written down value As at March 31, 2011 As at March 31, 2010

198.18 879.06 16.66 21.15 32.23 21.80 1,169.08

46.77 1.81 16.40 12.09 8.77 85.84

14.44 122.21 2,745.34 35.90 49.59 144.54 69.73 3,181.75

3.69 17.50 499.52 12.05 16.21 24.81 19.75 593.53

40.95 1.57 12.79 10.65 7.70 73.66

18.13 139.71 3,203.91 46.38 53.01 158.70 81.78 3,701.62

342.29 599.63 3,469.70 10.60 50.21 31.76 37.23 4,541.42

345.98 414.84 3,088.17 6.23 48.88 25.78 36.25 3,966.13

Management estimates the useful life of three year for dies and five years for furniture, fixture, office equipment and vehicles. For all other assets, useful life is based on rates specified in Schedule XIV of the Companies Act, 1956. As a result, depreciation charged in books is higher than depreciation chargeable u/s 350 of the Companies Act, 1956. (ii) Certain items of plant and machinery having WDV of Rs. 10.50 million (previous year: Rs. 7.86 million) are not in active use. Provision of Rs. 9.92 million (previous year: 7.59 million) has been made towards diminution in value. (iii) Furniture, fixtures and office equipments include Rs. 56.05 million (previous year: Rs. 44.67 million) provided to employees as perquisites. Confirmations have been obtained from respective employees.

14. Intangible assets Rs. million Particulars Original cost as at April 1, 2011 Computer Software Product design and development TOTAL 83.68 44.78 128.46 Gross Block Additions for the year Deductions for the year Original cost as at March 31, 2012 104.42 49.16 153.58 As at April 1, 2011 67.66 36.44 104.10 For the year Depreciation Deductions for the year As at March 31, 2012 86.70 37.90 124.60 Written down value As at March 31, 2012 17.72 11.26 28.98 As at March 31, 2011 16.02 8.34 24.36

27.28 4.38 31.66

6.54 6.54

19.68 1.46 21.14

0.64 0.64

Particulars Original cost as at April 1, 2010 Computer Software Product design and development TOTAL 62.37 39.99 102.36

Gross Block Additions for the year Deductions for the year Original cost as at March 31, 2011 83.68 44.78 128.46 As at April 1, 2010 54.65 34.84 89.49 For the year

Depreciation Deductions for the year As at March 31, 2011 67.66 36.44 104.10

Written down value As at March 31, 2011 16.02 8.34 24.36 As at March 31, 2010 7.72 5.15 12.87

21.31 4.79 26.10

13.01 1.60 14.61

Intangible assets are amortised over a period of three years.

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

64

Notes to consolidated financial statements for the year ended March 31, 2012
15. Loan and advances March 31, 2012 Current Non current Rs. million Rs. million Capital advances (Unsecured, considered good) Security deposits (Unsecured, considered good) 280.66 63.13 343.79 March 31, 2011 Current Non current Rs. million Rs. million 53.01 56.26 109.27

Advances recoverable in cash or in kind or for value to be received Unsecured, considered good Doubtful Less: Doubtful Other loans and advances Advance tax (net) Prepaid expenses Housing loans to employees (secured) Cenvat recoverable Balance with excise authorities

104.72 10.61 115.33 (10.61) 104.72 51.75 30.76 0.64 81.70 47.83 212.68 317.40

0.89 0.89 344.68

63.44 6.32 69.76 (6.32) 63.44 12.33 9.10 0.74 66.82 29.60 118.59 182.03

1.53 1.53 110.80

Housing loans are secured by the documents of the properties financed. Advance recoverable in cash or in kind includes Rs. 0.97 million (previous year: Rs. 1.90 million) due from related parties (refer note 32)

16. Other assets (Unsecured, considered good unless otherwise stated) March 31, 2012 Current Non current Rs. million Rs. million 65.35 7.34 34.62 26.44 5.70 99.13 40.32 March 31, 2011 Current Non current Rs. million Rs. million 53.26 8.82 51.82 25.50 87.58 51.82

Export incentive receivable Interest accrued on fixed deposits Margin money (Refer Note 19) Other assets*

*Non current other assets represents amount pertaining to foreign currency monetary items translation difference.

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

65

Notes to consolidated financial statements for the year ended March 31, 2012
17. Inventories (valued at lower of cost and net realisable value) (As certified by the management) As at March 31, 2012 Rs. million Raw material and components (refer note 33) (includes in transit Rs. 5.94 million (previous year: Rs. 22.64 million) Work-in-progress (refer note 34) (includes in transit Rs. 3.48 million (previous year: Rs. nil) Finished goods (refer note 35) (includes in transit Rs. 200.59 million (previous year: Rs. 146.39 million) Stores and spares (includes in transit Rs. Nil (previous year: Rs. 59.14 million) Loose tools 408.82 531.43 748.10 124.65 29.18 1,842.18 As at March 31, 2011 Rs. million 255.10 368.90 538.20 118.45 26.35 1,307.00

18. Trade receivables (Unsecured, considered good unless otherwise stated) As at March 31, 2012 Rs. million Outstanding for a period exceeding six months* Unsecured, considered good Doubtful Other receivables Unsecured, considered good Doubtful 3.68 8.05 As at March 31, 2011 Rs. million 3.50 7.98

1,439.37 1.65 1,452.75 Doubtful (9.70) 1,443.05 *The ageing of receivables is from the date the receivables are due for collection as per the terms with customers. 19. Cash and bank balances As at March 31, 2012 Current Non-current Rs. million Rs. million Cash and cash equivalents Cash in hand Cheques, drafts in hand Balances with banks - current accounts - deposits with original maturity of less than three months Other bank balances Dividend account Matured deposits account Deposits with maturity more than 3 months but less than 12 months Deposits with bank held as margin money Less : Amounts disclosed as Other non-current assets (Refer note 16) 0.86 0.91 8.50 60.00 0.40 9.30 0.38 80.35 80.35 34.62 34.62 34.62 -

1,148.77 2.15 1,162.40 (10.13) 1,152.27

As at March 31, 2011 Current Non-current Rs. million Rs. million 0.30 6.42 0.34 5.37 351.37 363.80 363.80 51.82 51.82 51.82 66

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

Notes to consolidated financial statements for the year ended March 31, 2012
20. Revenue from operations Year ended March 31, 2012 Rs. Million Sale of products (refer note 36) Other operating revenues - export benefits - others Less: Excise duty 10,600.82 Year ended March 31, 2011 Rs. Million 8,923.75

57.26 121.02 10,779.10 (868.93) 9,910.17

53.71 85.83 9,063.29 (733.05) 8,330.24

21. Other income Year ended March 31, 2012 Rs. million Interest income - Bank deposits - Others Income from mutual funds Other non-operating income 9.83 10.36 78.22 98.41 Year ended March 31, 2011 Rs. million 17.28 5.61 1.38 45.16 69.43

22. Cost of material consumed Year ended March 31, 2012 Rs. million Cost of raw material and components consumed (refer note 37) Cost of packing material consumed 3,168.23 Year ended March 31, 2011 Rs. million 2,522.01

204.78 3,373.01

167.03 2,689.04

23. (Increase) in inventories Year ended March 31, 2012 Rs. million Inventories at the end of the year Work-in-progress Finished goods Inventories at the beginning of the year Work-in-progress Finished goods 531.43 748.10 1,279.53 368.90 538.20 907.10 52.64 (319.79) Year ended March 31, 2011 Rs. million 368.90 538.20 907.10 317.65 310.07 627.72 34.95 (244.43)
67

Excise duty on increase of finished goods

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

Notes to consolidated financial statements for the year ended March 31, 2012
24. Employee benefit expense Year ended March 31, 2012 Rs. million Salaries and wages Contribution to provident and other funds Staff welfare expenses 1,422.95 118.29 141.56 1,682.80 Year ended March 31, 2011 Rs. million 1,056.68 160.99 94.48 1,312.15

25. Finance costs Year ended March 31, 2012 Rs. million Interest expense Other borrowing costs Applicable exchange rate variation 196.74 6.27 1.58 204.59 Year ended March 31, 2011 Rs. million 174.56 3.23 2.18 179.97

26. Depreciation and amortisation expense Year ended March 31, 2012 Rs. million For the year - tangible (refer note 13) - intangible (refer note 14) Less: transferred from revaluation reserve 700.49 21.14 14.04 707.59 Year ended March 31, 2011 Rs. million 593.53 14.61 20.72 587.42

27. Other expenses Year ended March 31, 2012 Rs. million Stores and spares consumed Power and fuel Job work charges Selling, distribution and promotion expenses Royalty Rent Rates and taxes Insurance Repair and maintenance - Plant and machinery - Buildings - Others Auditor's remuneration (refer note 28) Director's fees Provision for doubtful debts and advances (net) Loss on sale/write off of assets (Net) Bad debts and advances written off Exchange rate variation (net) Miscellaneous expenses 1,023.94 659.68 390.00 260.40 179.10 31.59 78.39 11.72 60.53 42.78 22.55 1.24 1.00 3.87 2.56 2.53 17.22 419.83 3,208.93 Year ended March 31, 2011 Rs. million 883.56 617.07 305.70 233.38 149.30 28.30 12.23 10.36 53.05 39.51 18.39 1.09 1.37 7.43 0.70 28.80 314.69 2,704.93
68

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

Notes to consolidated financial statements for the year ended March 31, 2012
28. Payment to auditor (excluding service tax) Year ended March 31, 2012 Rs. million 0.58 0.10 0.20 Year ended March 31, 2011 Rs. million 0.55 0.04* 0.20

As auditor: Audit fee Tax audit fee Limited review In other capacity: Certification fees Reimbursement of expenses

0.28 0.01

0.03 0.07*

* includes Rs. 0.04 million and Rs. 0.02 million towards payment to previous auditors for tax audit fee and reimbursement of expenses. 29. Earnings per share (EPS) As at March 31, 2012 Net profit attributable to equity shareholders (Rs. million) Weighted average number of equity shares (Nos. million) Earning per share (basic/diluted) (Rs.) 839.14 22.37 37.50 As at March 31, 2011 826.89 22.37 36.96

30. Research and development expenditure In house R&D facility of the Parent Company is recognised by Ministry of Science & Technology, Department of Scientific & Industrial Research (DSIR). The details of research and development expenditure incurred by the Company and included in the respective account heads are as under:Year ended March 31, 2012 Rs. million Capital expenditure Tangible assets Intangible assets 41.02 18.86 59.88 Year ended March 31, 2011 Rs. million 15.24 9.71 24.95

Revenue expenditure Salary and wages Materials, consumables and spares Other expenditure Sale of R&D products Net revenue expenditure

35.28 55.10 8.11 98.49 (7.45) 91.04

28.09 40.04 6.03 74.16 74.16

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

69

Notes to consolidated financial statements for the year ended March 31, 2012
31. Employee benefits Gratuity and leave liability has been recognised as defined benefit plan in accordance with accounting standard -15 "Employee benefits" as under:Gratuity March 31, 2012 March 31, 2011 Rs. million Rs. million Change in projected benefit obligation Projected benefit obligation at the beginning of the year Current service cost Interest cost Actuarial (gain) / loss Benefits paid Projected benefit obligation at the end of the year Change in plan assets Fair value of plan assets at the beginning of the year Expected return on plan assets Actuarial gain / (loss) Employer contributions Benefits paid Fair value of plan assets at the end of the year Reconciliation of obligation and fair value of plan assets Projected benefit obligation at the end of the year Funded status of the plans Liability recognised in the balance sheet Expenses recognised during the year Current service cost Interest cost Expected return on plan assets Recognized net actuarial (gain)/ loss Leave encashment March 31, 2012 March 31, 2011 Rs. million Rs. million

427.09 36.86 46.18 (11.33) (25.90) 472.90

334.86 39.36 27.90 38.15 (13.18) 427.09

106.10 85.02 7.46 (17.94) (12.34) 168.30

84.44 55.15 5.96 (32.72) (6.73) 106.10

262.76 25.99 2.44 34.30 (0.80) 324.69

205.48 20.71 (0.38) 38.57 (1.62) 262.76

(12.34) (12.34)

(6.73) -

472.90 324.69 148.21

427.09 262.76 164.33

168.30 168.30

106.10 106.10

46.18 36.86 (25.99) (28.34) 28.71

39.36 27.90 (20.71) 38.53 85.08

85.02 7.46 (17.94) 74.54

55.15 5.96 (32.72) 28.39

Significant assumptions used Discount rate (% per annum) Expected salary rise (% per annum) Estimated rate of return on plan assets (% per annum)

8.75 11.00 9.30

8.50 12.00 9.25

8.75 11.00 N.A.

8.50 12.00 N.A.

Amount for the current year and previous four years are as follows: Year ended Year ended March 31, 2012 March 31, 2011 Rs. million Rs. million Gratuity Defined benefit obligation (472.90) (427.09) Plan assets 324.69 262.76 Deficit (148.21) (164.33)

Year ended March 31, 2010 Rs. million (334.86) 205.48 (129.38)

Year ended March 31, 2009 Rs. million (260.58) 172.66 (87.92)

Year ended March 31, 2008 Rs. million (202.23) 146.13 (56.10)

The Parent Company's gratuity fund is managed by independent Board of Trustees through Life Insurance Corporation of India (LIC) and SBI Life Insurance. Under this policy, the eligible employees are entitled to receive gratuity payments upon their resignation or death in lumpsum after deduction of necessary taxes. Estimate of the future salary increase is based on factors such as inflation, seniority, promotions, demand and supply in employment market.
SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED) 70

Notes to consolidated financial statements for the year ended March 31, 2012
The Parent Company has a long service reward scheme for selective group of employees. The total expense recognised in the current year is Rs. 36.99 million (previous year: Nil) Expenditure recognized in respect of defined contribution plan is as under: Year ended March 31, 2012 Rs. million Provident fund Superannuation fund State insurance fund 72.79 10.91 32.49 116.19 Year ended March 31, 2011 Rs. million 59.85 11.26 24.87 95.98

32. Related party disclosure As per AS 18, issued by the Institute of Chartered Accountants of India, the Groups related parties and transactions with them during the year are disclosed below : A. List of related parties Key management personnel Shri A.K Taneja, Managing Director Shri R. Srinivasan, Jt. Managing Director Smt. Meenakshi Dass, Whole Time Director Relatives of key management personnel of Shri A.K Taneja, Managing Director Shri R. Srinivasan, Jt. Managing Director Smt. Meenakshi Dass, Whole Time Director Smt. Anita Taneja Smt. Usha Srinivasan Shri Deepak C. Shriram Shri Arjun D. Shriram Shri Luv D. Shriram Shri Kush D. Shriram Ms. Nandishi Shriram Enterprises over which there is significant influence of Smt. Meenakshi Dass and her relatives above Shriram Automotive Products Ltd. Shriram Alpine Sales Pvt. Ltd. Shriram Veritech Solutions Pvt. Ltd. Sera Com Pvt. Ltd. Manisha Commercial Pvt. Ltd Sarva Commercial Pvt. Ltd. Charat Ram Shriram Pvt. Ltd. Pearey Lall & Sons (E.P) Ltd.
SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED) 71

Notes to consolidated financial statements for the year ended March 31, 2012
B. Related party transactions Particulars Key management personnel (KMP) March 31, 2012 A) Transactions during the year Remuneration Mr. A.K.Taneja Mr. R Srinivasan Mrs. Meenakshi Dass 28.53 21.35 23.58 28.19 21.16 22.98 28.53 21.35 23.58 28.19 21.16 22.98 Relatives of KMP Enterprises over which KMP has significant influence or control Rs. million Total

March 31, March 31, 2011 2012

March 31, March 31, 2011 2012

March 31, March 31, March 31, 2011 2012 2011

Rent paid Mrs. Meenakshi Dass Mrs. Usha Srinivasan Sera Com Pvt. Ltd. Manisha Commercial Pvt. Ltd. Mrs. Anita Taneja 0.24 0.24 0.24 0.20 0.14 1.58 0.33 1.53 0.33 0.24 0.24 1.58 0.33 0.20 0.24 0.14 1.53 0.33 -

Interest on fixed deposits Mr. R Srinivasan Mrs. Meenakshi Dass Mr. Luv D Shriram Mrs. Usha Srinivasan Mr. Deepak C Shriram Mr. Kush D Shriram Mr. Arjun D Shriram Ms. Nandishi Shriram Pearey Lall & Sons (E.P.) Ltd. Charat Ram Shriram Pvt. Ltd. 1.39 0.25 1.45 0.83 0.10 0.73 0.01 0.40 0.42 0.90 0.17 0.62 0.20 0.84 0.58 0.91 2.10 0.40 3.47 0.27 1.39 0.25 0.10 0.73 0.01 0.40 0.42 0.90 2.10 0.40 1.45 0.83 0.17 0.62 0.20 0.84 0.58 0.91 3.47 0.27

Directors sitting fees Mr. Luv D Shriram 0.12 0.15 0.12 0.15

Dividend Paid Mr. A.K.Taneja Mrs. Meenakshi Dass Mrs. Usha Srinivasan Mr. Deepak C Shriram Mr. Luv D Shriram 0.0002 16.01 0.0001 13.72 0.01 0.003 11.67 0.01 0.003 10.00 0.0002 16.01 0.01 0.003 11.67 0.0001 13.72 0.01 0.003 10.00

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

72

Notes to consolidated financial statements for the year ended March 31, 2012
Rs. million Particulars Key management personnel (KMP) March 31, 2012 Sarva Commercial Pvt. Ltd. Charat Ram Shriram Pvt. Ltd. Manisha Commercial Pvt. Ltd. Sera Com Pvt. Ltd. Relatives of KMP Enterprises over which KMP has significant influence or control Total

March 31, March 31, 2011 2012 -

March 31, March 31, 2011 2012 3.72 0.01 2.33 3.31

March 31, March 31, March 31, 2011 2012 2011 3.19 0.01 3.72 0.01 2.33 3.31 3.19 0.01 -

Public Deposit taken during the year Mr. R Srinivasan Mrs. Meenakshi Dass Mrs. Usha Srinivasan Mr. Luv D Shriram Mr. Arjun C Shriram Ms. Nandishi Shriram Pearey Lall & Sons (E.P.) Ltd. Charat Ram Shriram Pvt. Ltd. 6.51 4.50 7.65 10.00 2.05 5.50 11.50 0.46 4.50 21.00 39.60 4.20 6.51 4.50 2.05 5.50 11.50 21.00 7.65 10.00 0.46 4.50 39.60 4.20

Licence Fee earned Shriram Automotive Products Ltd. 0.03 0.08 0.03 0.08

Purchase of material / stores Shriram Veritech Solutions Pvt. Ltd. Pearey Lall & Sons (E.P.) Ltd. 5.62 4.32 0.002 5.62 4.32 0.002

Purchase of components Shriram Automotive Products Ltd. Shriram Alpine Sales Pvt. Ltd. 213.76 20.29 154.64 21.67 213.76 20.29 154.64 21.67

Common share of activity Shriram Automotive Products Ltd. Shriram Alpine Sales Pvt. Ltd. 0.62 0.32 1.04 0.31 0.62 0.32 1.04 0.31

B)

Balances due from/ to the related parties Fixed deposit Mr. R Srinivasan 12.42 12.69 12.42 12.69

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

73

Notes to consolidated financial statements for the year ended March 31, 2012
Rs. million Particulars Key management personnel (KMP) March 31, 2012 Mrs. Meenakshi Dass Mr. Luv D Shriram Mrs. Usha Srinivasan Mr. Deepak C Shriram Mr. Kush D Shriram Mr. Arjun D Shriram Ms. Nandishi Shriram Pearey Lall & Sons (E.P.) Ltd. Charat Ram Shriram Pvt. Ltd. 3.50 Relatives of KMP Enterprises over which KMP has significant influence or control Total

March 31, March 31, 2011 2012 9.00 1.00 6.34 3.50 5.50 11.00 -

March 31, March 31, 2011 2012 1.00 4.85 0.50 7.50 5.50 8.50 21.00 4.20

March 31, March 31, March 31, 2011 2012 2011 23.00 4.20 3.50 1.00 6.34 3.50 5.50 11.00 21.00 4.20 9.00 1.00 4.85 0.50 7.50 5.50 8.50 23.00 4.20

Interest accrued but not due Mr. R Srinivasan Mrs. Meenakshi Dass Mr. Luv D Shriram Mrs. Usha Srinivasan Mr. Deepak C Shriram Mr. Kush D Shriram Pearey Lall & Sons (E.P.) Ltd. 1.96 1.76 0.57 0.14 1.50 0.01 0.79 0.04 0.91 0.15 0.47 1.41 1.96 0.14 1.50 0.01 0.79 1.41 1.76 0.57 0.04 0.91 0.15 0.47 -

Amount payable Mr. A.K.Taneja Mr. R Srinivasan Mrs. Meenakshi Dass Sera Com Pvt. Ltd. Manisha Commercial Pvt. Ltd. Shriram Veritech Solutions Pvt. Ltd. Shriram Alpine Sales Pvt. Ltd. Shriram Automotive Products Ltd. 18.61 13.96 15.82 17.61 13.20 14.96 0.14 0.08 1.02 16.01 0.11 0.02 0.10 3.18 0.51 18.61 13.96 15.82 0.14 0.08 1.02 16.01 17.61 13.20 14.96 0.11 0.02 0.10 3.18 0.51

Amount recoverable Shriram Automotive Products Ltd. Shriram Alpine Sales Pvt. Ltd. Pearey Lall & Sons (E.P.) Ltd. 0.65 0.32 1.26 0.64 0.003 0.65 0.32 1.26 0.64 0.003

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

74

Notes to consolidated financial statements for the year ended March 31, 2012
33. Raw material and components inventory Year ended March 31, 2012 Rs. million Year ended March 31, 2011 Rs. million

Aluminium /Alloy Pig Iron Steel Bars/tubes Steel Wire Valve Steel Others

8.69 5.33 50.18 140.17 132.41 72.04 408.82

14.40 7.59 44.30 40.52 92.65 55.64 255.10

34. Work-in-progress inventory Year ended March 31, 2012 Rs. million Year ended March 31, 2011 Rs. million

Pistons Pins Piston rings Engine valves

192.47 50.73 205.12 83.11 531.43

128.18 39.34 148.11 53.27 368.90

35. Finished goods inventory Year ended March 31, 2012 Rs. million Year ended March 31, 2011 Rs. million

Pistons Pins Piston Rings Engine Valves Others

273.64 56.27 242.29 171.53 4.37 748.10

172.45 43.76 207.95 105.96 8.08 538.20

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

75

Notes to consolidated financial statements for the year ended March 31, 2012
36. Sale of products Year ended March 31, 2012 Rs. million Year ended March 31, 2011 Rs. million

Pistons/Pins/Piston rings/ Others Engine Valves

8,633.60 1,967.22 10,600.82

7,298.83 1,624.92 8,923.75

Pistons/Pins/Rings/ Cylinder liners/Conrod are sold as individual components as well as composite units. Hence, combined value has been shown.

37. Consumption of raw material and components Year ended March 31, 2012 Rs. million Year ended March 31, 2011 Rs. million

Aluminium /Alloy Pig Iron Steel Bars/tubes Steel Wire Valve Steel Others

823.18 80.46 381.93 194.28 562.59 1,125.79 3,168.23

611.75 71.17 321.07 148.05 435.92 934.05 2,522.01

38. Consumption of raw materials, components, Packing material and stores spares March 31, 2012 Rs. million % March 31, 2011 Rs. million %

Raw Materials

- Imported - Indigenous

771.70 1,883.37

24.36 59.45

722.04 1,361.99

28.63 54.00

Components

- Imported - Indigenous

106.45 406.71

3.35 12.84

65.81 372.17

2.61 14.76

- Total :
SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

3,168.23

100.00

2,522.01

100.00
76

Notes to consolidated financial statements for the year ended March 31, 2012
March 31, 2012 Rs. million % March 31, 2011 Rs. million %

Packing material

- Imported - Indigenous

0.45 204.33

0.22 99.78

0.31 166.72

0.19 99.81

- Total :

204.78

100.00

167.03

100.00

Stores & Spares

- Imported - Indigenous

171.31 852.63

16.73 83.27

177.87 705.69

20.13 79.87

- Total :

1,023.94

100.00

883.56

100.00

39. Foreign currency exposure Details of outstanding foreign exchange exposure as on March 31, 2012 are as under:Figures in million USD/INR Hedged exposure Receivables (1.16) Payables 0.21 (-) Loans 38.54 (20.47) Unhedged exposure Receivables 6.04 (3.60) Payables 5.59 (6.68) Loans 1.47 (3.07) 28.99 (25.54) 256.73 (514.36) 122.10 (254.77) 2.69 (1.27) 0.50 (0.08) 0.08 (0.22) 0.09 (0.00) 141.35 (-) 365.75 (538.11) (0.80) 0.06 (-) 8.34 (9.82) JPY/USD EURO/USD GBP/USD SGD/USD

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

77

Notes to consolidated financial statements for the year ended March 31, 2012
40. Operating Lease The Parent Company has entered into lease agreement for a property on lease. This lease is non-cancellable for a period of six years. The total of future minimum lease payments under leases for the following periods are as under: Year ended Year ended March 31, 2012 March 31, 2011 Rs. million Rs. million Not later than one year Later than one year but not later than five years Later than five years 3.27 14.20 3.72 21.19 -

41. Segment reporting As the Group's business activity falls within a single business segment viz automotive components and a single geographical segment, disclosure requirements of accounting standard (AS 17), specified in the companies (accounting standard) rules, 2006 are not applicable

42. Micro, Small and Medium enterprises as defined under the MSMED Act Trade payables of Rs. 718.44 million (previous year: Rs. 400.08 million) includes amounts due to MSMED of Rs. 0.28 million (previous year: 0.12 million) The status of vendors under Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is based on certificate submitted by vendors about their coverage under the provisions of MSMED Act, 2006. The Group has not received any claim for interest from any party covered under the said Act. Year ended March 31, 2012 Rs. million The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of accounting year The amount of interest paid by the buyer along with the amounts of the payment made beyond the appointed day during each accounting year The amount of interest due and payable for the period The amount of interest accrued and remaining unpaid at the end of accounting year 0.33 Year ended March 31, 2011 Rs. million 0.15

0.05 0.05

0.03 0.03

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

78

Notes to consolidated financial statements for the year ended March 31, 2012
43. Contingent liabilities As at March 31, 2012 Rs. million Disputed - Excise duty - Income tax - Wealth tax - VAT/Sales tax - Service tax Bank guarantees Bills discounted from banks Claims not acknowledged as debts 78.22 39.79 0.41 19.53 36.18 34.01 14.06 14.25 As at March 31, 2011 Rs. million 73.26 11.69 0.41 7.19 258.97 72.18 13.78 16.32

The Parent Company has given guarantee for repayment of loan liabilities for vehicles purchased by its employees/vendors/ customers from entity other than a bank or financial institution. Outstanding loan amount payable by employees/vendors/customers at the year end is Rs. 7.36 million (Rs. 12.34 million) and there is no default till date. 44. Commitments As at March 31, 2012 Rs. million 1,296.66 180.86 6,185.99 As at March 31, 2011 Rs. million 769.91 118.98 5,097.58

Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Estimated amount of contracts remaining to be executed on revenue account (net of advances) and not provided for Outstanding export obligation to be fulfilled over a period of next 7 years under the EPCG scheme against import of some machines. Custom duty saved against outstanding export obligations is Rs. 378.11 million (previous year: Rs. 283.55 million)

45. The summary financial data of SPR International Auto Exports Ltd., subsidiary company is given below :As at As at March 31, 2012 March 31, 2011 Rs. million Rs. million Share capital 0.50 0.50 Reserves & surplus (0.10) (0.11) Total assets 0.41 0.40 Total liabilities 0.41 0.40 Investments Turnover 0.03 0.03 Profit before tax 0.02 0.01 Provision for tax 0.002 0.003 Profit after tax 0.01 0.01 Proposed dividend SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED) 79

Notes to consolidated financial statements for the year ended March 31, 2012
46. Previous year figures have been re-grouped / reclassified, wherever necessary to confirm to current years classification. Figures in brackets denote previous year figures.

For and on behalf of the Board of Directors

Pradeep Dinodia Chairman DIN 00027995

O.P. Khaitan Director DIN 00027798

A.K. Taneja Managing Director & CEO DIN 00124814

R. Srinivasan Jt. Managing Director & Company Secretary DIN 00124760

P.S. Ladiwala Place : New Delhi Date : April 30, 2012 Dy. Executive Director & CFO

Meenakshi Dass Whole - Time Director DIN 00524865

SHRIRAM PISTONS & RINGS LIMITED (CONSOLIDATED)

80

WORLD-CLASS COMPONENTS ARE MADE OF WHOLE NEW INGREDIENTS. PASSION AND COMMITMENT, FOR INSTANCE.
At SPR, we are passionate about quality and innovation. And that is reflected in every component that leaves our factories. No wonder, we are the first choice of Indias biggest automobile manufacturers. And the leaders in our segment.

Regd. Office : 23, Kasturba Gandhi Marg, New Delhi 110 001 (India) Tel: +91 11 2331 5941 Fax: +91 11 2331 1203 Website: www.shrirampistons.com