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. The paid-up equity shares of the Company rank pari-passu in all respects including dividend. The Company declares and pays dividend, if any, in Indian Rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of Shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Preference shares

Preference shares issued by the Company are non-convertible, non-cumulative, non participating and redeemable. Preference shareholders are not entitled to vote.

Preference shareholders are entitled to 0.0000001 % dividend.

Preference shareholders have preference over equity shareholders for the payment of dividend and repayment of capital, in the event of liquidation of the Company.

Company overview

Hella India Lighting Limited, ('the Company') is a public limited Company and Is incorporated under the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and Delhi Stock Exchange. The Company is primarily engaged in manufacturing of automotive lights, switches, blinkers etc.

2. Contingent liabilities

The Company has received assessment orders for the Assessment Year 2001-02 and 2004-05 from the Income-tax authorities as a result of which demands have been raised against the Company. The Company has filed appeals with High Court against these assessment orders, details of which are as under:

Name of the    Nature of dues               Amount      Period to which
Statute                                 involved (Rs.)    the amount  
                                                           relates #

Income-tax   Disallowance for foreign      3,119,228        2001-02 
Act, 1961    exchange fluctuation                                  

Income-tax   Disallowance for foreign      3,958,969        2004-05 
Act, 1961    exchange fluctuation                                

Name of the           Forum where
Statute               dispute is pending
                  

Income-tax            Hon'ble High Court
Act, 1961             of Delhi

Income-tax            Hon'ble High Court
Act, 1961             of Delhi

3. Employee benefits

Disclosure in respect of employee benefits under Accounting Standard (AS) - 15 "Employee Benefits" prescribed by the Companies (Accounting Standards) Rules, 2006:

a) Defined Contribution Plans:

An amount of Rs. 5,762,088 (previous year Rs. 4,344,939) pertaining to employers' contribution to Provident Fund and Employees' State Insurance is recognised as an expense and included in "Employee benefit expense" in note no. 2.22.

b) Gratuity Plan (defined benefit plan)

The following table sets forth the status of the Gratuity Plan of the Company, and the amounts recognised in the Balance Sheet and Statement of Profit and Loss.

Actuarial assumptions

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotions and other relevant factors. Medical cost trend rates have no impact on actuarial valuation of the above defined benefit plan. Discount rate is based on market yields prevailing on government securities as at 31 March 2014 for the estimated term of the obligations.

4. The Company has obtained relevant information from its suppliers about their coverage under the Mico, Small and Medium Enterprises Development Act, 2006 ('the Act') which came into force from 2 October 2006. Based on the information presently available with the management, following are the disclosures under the Micro, Small and Medium Enterprises Development Act, 2006 in respect of micro and small suppliers as defined in the Act:

5. Segment information

The Company is engaged in the business of manufacture and after sale support of auto components / accessories which is a primary segment for the Company which constitutes a single business segment and accordingly disclosure requirements of Accounting Standard 17, "Segment Reporting", prescribed by the Companies (Accounting Standard) Rules 2006 in relation to primary segment are not required to be given.

Segment accounting policies

The accounting principles consistently used in the preparation of the financial statements and consistently applied to record revenue and expenditure in individual segments are as set out in Note 1, Significant accounting policies. The description of segment assets and revenue and the accounting policies in relation to segment accounting are as under:

a) Segment revenue

Segment revenue excludes trade discounts, excise duty and exceptional item and includes other income. Segment revenue has been allocated to both the segments on the basis of specific identification.

b) Segment assets

Segment assets include all operating assets used by a segment and consist principally of fixed assets, capital work in progress, current assets and loans and advances.

6. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international and domestic transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international and domestic transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

7. The promoters of the Company hold 81.85% of the total issued and subscribed equity capital of the Company and balance 18.15% stake is held by public shareholders. In 2005-06, the Company had applied for delisting from Delhi Stock Exchange ('DSE') and Bombay Stock Exchange ('BSE'). While DSE allowed the Company to delist, BSE rejected the application vide letter dated 15 February 2006. On appeal, the Securities Appellant Tribunal ('SAT') passed a favorable order for delisting of the Company. However, the said order of SAT was challenged before the Honourable Supreme Court of India by certain individual shareholders. The Supreme Court vide order dated 24 October 2008 stayed the delisting of the Company and the matter is currently sub- judice.

The management of the Company believes that pending such decision from the Hon'ble Supreme Court, the requirement of increasing /maintaining at least 25% of its equity shares with public by 3 June 2013, as required by Clause-40 A of the Listing Agreement read with rule 19(2) (B) of Securities Contract Regulation Rules, 1957 ('SCRR') and related notifications in this regard, is not applicable to the Company. As a precautionary measure, vide letter dated 19 March 2013, the Company had written/ applied to SEBI seeking specific waiver to comply with the aforesaid conditions till the matter is sub-judice.

SEBI did not respond to the request of the Company and thereafter, issued notices to non-compliant companies vide order dated 4 June 2013. In a separate press release dated 4 June 2013, SEBI has also confirmed that notices were not issued to 3 companies as there matter are sub-judice.

Although the name of the Company have not been mentioned in the above referred list of non-compliant companies, the Company, as a matter of abundant caution, again sought a confirmation from CGM (Corporate Finance Department of SEBI) vide email dated 21 June, 2013 that they are one of those 3 companies where the matter is sub-judice, as mentioned in the Press Release. This understanding was confirmed by SEBI vide their email dated 16 July 2013.

Further to above, the case has appeared on 'list of curative' and 'review petitions' of Honourable Supreme Court.

In view of the above circumstances, the Company believes that there is no legal, regulatory and financial risk on the Company due to its inability to meet the requirements of Clause 40 A of the Listing agreement.

8.In view of continued losses incurred by the Company, during the year ended 31 March 2012, the management had done a detailed analysis to assess impairment of its fixed assets at the Derabassi factory, which is a separate cash generating unit. This analysis was based on future revenue growth and related expenditure and accordingly a provision of Rs. 424 lakhs had been created towards writing down the value of fixed assets to their recoverable amount in the year ended 31 March 2012. The recoverable amount was based on value in use which had been computed on the basis of discounted future cash flows projected by the management. This analysis had further been considered and taken on record by the Board of Directors in their meeting on 30 May 2012. Expense towards the impairment provision was included under the head Other expenses.

9. Previous period figures have been regrouped/ reclassified wherever necessary to confirm to current year's classification.

As per our report of even date attached.