BAJAJ HIND Notes to Accounts

1. Corporate information

Bajaj Hindusthan Limited (''the Company'') is a public limited company
incorporated in India under the provisions of the Companies Act, 1956.
Its Shares are listed on BSE Limited and The National Stock Exchange of
India Limited. The Company is engaged in the manufacture of sugar,
alcohol and generation of power.

(i) Detail of shares allotted without payment being received in cash
during five years immediately preceding the Balance Sheet date are
given below:

3,70,00,000 (3,70,00,000) Equity Shares have been issued, for
consideration other than cash to the members of erstwhile Bajaj
Hindusthan Sugar and Industries Limited pursuant to Scheme of
Amalgamation.

(ii) The reconciliation of the number of shares outstanding at the
beginning and at the end of the reporting period:

(iii) Terms / Rights of equity shares:

The Company has one class of equity shares having par value of Rs. 1/-
per share. All equity shares are ranking pari passu in all respects
including dividend. In the event of liquidation of the Company, the
holders of the equity shares will be entitled to receive the realised
value of the assets of the Company, remaining after payment of all
preferential dues. The distribution will be in proportion to the number
of equity shares held by the shareholders.

(v) Option on unissued capital:

FCCB''s of US$ 1.50 crore amounting to Rs.79.04 crore (P.Y. Rs.73.39 crore)
(shown under long-term borrowings (refer note 5)) issued in the month
of June 2007 and can be converted at the option of the bond holder into
one equity share at Rs. 250 per equity share, at a pre determined
exchange rate of US$ 1= Rs.42.42 at any time up to 26.04.2014.

(i) Term Loans from Banks (except IDBI Bank term loan of Rs.130 crore)
are Secured, on first pari passu charge basis, by hypothecation of
certain present and future movable fixed assets and properties
including plant and machinery, tools and accessories of the Company and
also secured/to be secured, on first pari passu charge basis, by
mortgage (by deposit of title deeds) on certain immovable fixed assets
and properties and certain term loans are further secured, on second
pari passu charge basis, by hypothecation of certain present and future
current assets of the Company including inventories, book debts and
other receivables. Documentation for mortgage in respect of certain
term loans/certain properties is under finalisation.

(ii) Term Loan of Rs.130 crore from IDBI Bank is Secured/to be secured on
first pari passu charge basis, by mortgage (by deposit of title deeds)
on certain immovable fixed assets and properties of the Company.
Documentation for mortgage in respect of certain properties is under
finalisation.

(iii) Term loans (ECB) in foreign currency from IFC of Rs.315.42 crore is
secured on exclusive first charge basis, by hypothecation of Company''s
movable and immovable assets (present and future) together with
buildings and structures thereon and plant and machinery attached
thereto at its factories at Pratappur, Rudauli, Kundarkhi and Utraula
in Uttar Pradesh. Also further secured, on a second pari passu charge
basis, by hypothecation of current assets (present and future) related
to the factories at aforesaid four locations.

(iv) The Sugar Development Fund loan (SDF) from Government of India is
secured/to be secured, on exclusive second charge basis, by
hypothecation of the whole of movable fixed assets and properties and
by mortgage on the whole of immovable fixed assets and properties of
the concerned sugar unit of the Company. The Company has also created
security in favour of Government of India for certain other SDF loans
aggregating to Rs.24.10 crore, that are yet to be disbursed to the
Company, on exclusive second charge basis, by hypothecation of the
entire movable fixed assets and properties and by mortgage on the whole
of immovable fixed assets and properties of the respective sugar units
for which the said SDF loans have been sanctioned.

(v) Term loans from Punjab National Bank of Rs.4.33 crore related with
amalgamating company Bajaj Eco-Tec Products Ltd. (BEPL) are secured on
first pari passu charge basis by hypothecation of the whole of the
present and future movable fixed assets and properties including plant
and machinery, machinery spares, tools and accessories and other
movables of the Company and also secured / to be secured on first pari
passu charge basis by mortgage (by deposit of title deeds) on whole of
the present and future immovable fixed assets and properties of the
amalgamating company.

(i) Loan from banks (Working capital / Short term loans facilities)
except Working Capital / Short term loans of Rs. 1,350.00 crore and
Rs.63.99 crore (refer note (ii) to (v) below) are secured, on first pari
passu charge basis, by hypothecation of inventories, book debts, other
receivables and current assets and further secured / to be secured, on
a third pari passu charge basis, by hypothecation of certain movable
fixed assets and properties and by mortgage on certain immovable fixed
assets and properties of the Company. Documentation for mortgage in
respect of certain loans is under finalisation.

(ii) Cash credit limit of Rs. 50 crore from UCO Bank is secured by way of
subservient charge on fixed assets (excluding land and building) and
current assets of the Company.

(iii) Short term loans of Rs.400 crore is secured by subservient pari
passu charge on the entire asset both present and future, short term
loan of Rs.450 crore is secured by subservient pari passu charge on the
entire fixed assets both present and future and Short term loan of Rs.
200 crore is secured by subservient pari passu charge on the entire
asset (excluding Land & Building) both present and future.

(iv) Short term loan of Rs.250 crore from Bank of Maharashtra is secured
by way of residual charge on the assets of the Company by way of
hypothecation.

(v) Working capital loans of Rs.63.99 crore from banks in respect of
amalgamating company i.e. (BEPL) are secured on first pari passu charge
basis by hypothecation of present and future Inventories, book debts
and other receivables and further secured on a second pari passu charge
basis by hypothecation of the whole of present and future movable fixed
assets and properties and also secured on a second pari passu charge
basis by mortgage on whole of present and future immoveable fixed
assets and properties of the amalgamating company.

* These figures do not include any amount due and outstanding to be
credited to Investor Education and Protection Fund.

* Includes statutory dues, security deposits, advances from customer
and other liabilities.

* The Company had recognised liability based on substantial degree of
estimation for excise duty payable on clearance of goods lying in stock
as on 30th September, 2012 of Rs.16.30 crore (P.Y.Rs. 20.00 crore) as per
the estimated pattern of dispatches. During the year, Rs.20.05 crore was
utilised for clearance of goods. Provision recognised under this class
for the year is Rs. 17.41 crore which is outstanding as on 30th
September, 2012. Actual outflow is expected in the next financial year.
Other class of provisions where recognition is based on substantial
degree of estimation relates to supplier/ service provider/ customer/
third party claims, rebates or demand against the Company.

Notes:

(i) Loans and Advances shown above, to subsidiaries fall under the
category of "Short Term Loans and Advances" in the nature of Loans
where there is no repayment schedule and are repayable on demand.

(ii) The above loans and advances (outstanding) are interest bearing
except advance against share application money.

(iii) Loans to employees as per Company''s policy are not considered
above.

a. Provident Fund

The Company has an obligation to fund any shortfall on the yield of the
trust''s investments over the administered interest rates on an annual
basis. These administered rates are notified by the Government
annually. The Actuarial Society of India has issued the final guidance
for measurement of provident fund liabilities during the year ended
September 30, 2012. The actuary has accordingly provided a valuation
based on the below provided assumptions and there is no shortfall as at
September 30, 2012.

Notes:

1. Related Party relationship is as identified by the Company based on
the available information and relied upon by the Auditors.

2. No amount has been written off or written back during the year in
respect of debts due from or to related parties.

3. Purchase of Capital Goods includes Rs. NIL (P.Y. Rs. 28.83 crore) from
Bajaj Infrastructure Development Company Ltd.

4. Sale of Goods Includes Rs. 21.00 crore (PY. Rs. 280.75 crore) to Bajaj
Hindusthan (Singapore) Pvt. Ltd., Singapore and Rs. 23.84 crore (P.Y. Rs.
48.84 crore) to Bajaj Eco-Tec Products Ltd.

5. Interest received includes Rs. 11.72 crore (P.Y. Rs. 12.47 crore) from
Bajaj Eco-Tec Products Ltd. And Rs. 45.46 crore (PY. Nil) from Bajaj
Power Generation Private Limited on loan given to them.

6. Remuneration includes Rs. 1.91 crore (PY. Rs. 2.18 crore) to Mr.
Shishir Bajaj, Rs. 1.38 crore (PY. Rs. 1.44 crore) to Mr. Kushagra Bajaj
and Rs. 2.00 crore (P.Y. Rs. 1.22 crore) to Dr. Sanjeev Kumar.

7. Advance Given (Project) includes Rs. NIL (P.Y. Rs. 50.00 crore) to
Bajaj Infrastructure Development Company Ltd.

8. Advance Given (Project) repaid includes Rs. NIL (P.Y. Rs. 50.00 crore)
from Bajaj Infrastructure Development Company Ltd.

9. Advance given (Against allotment of Shares) includes Rs. 250.00 crore
(P.Y. NIL) to Lalitpur Power Generation Company Ltd. and Rs. 234.00 crore
(P.Y. Rs. 26.00 crore) to Bajaj Energy Pvt. Ltd.

10. Advance given (Against allotment of Shares) refunded of Rs. 122.00
crore (P.Y. Nil) from Bajaj Energy Private Ltd.

11. Rent received includes Rs. 0.63 crore (PY. Rs. 0.63 crore) from Bajaj
Energy Pvt. Ltd.

12. Rent paid includes Rs. 0.72 crores (P.Y. Rs. 0.72 crores) to Bajaj
Capital Ventures Pvt. Ltd.

13. Investment made includes Rs. 66.00 crore (P.Y. NIL) in Bajaj Energy
Pvt. Ltd. and Rs. NIL (P.Y. Rs. 234.98 crore) in Lalitpur Power Generation
Company Ltd.

14. Investment brought back of Rs. NIL (PY. Rs. 4.55 crore) of Bajaj
International Participacoes Ltda., Brazil.

15. Loans given includes Rs. 93.75 crore (P.Y. Rs. 243.28 crore) to Bajaj
Eco-Tec Products Limited and Rs. 1,413.25 crore (P.Y. Nil) to Bajaj Power
Generation Pvt. Ltd.

16. Loans given repaid includes Rs. 50.00 crore (P.Y. Rs. 109.36 crore )
from Bajaj Eco-Tec Products Ltd and Rs. 720.00 crore (P.Y. Nil) from
Bajaj Power Generation Pvt. Ltd.

17. Guarantees Given includes Rs. 2,483.93 (PY. 1,824.00 crore) to
Lalitpur Power Generation Company Ltd.

18. Dividend received includes Rs. Nil (PY. 0.60 crore) from Bajaj
International Participacoes Ltds., Brazil.

2. Contingent Liabilities and Commitments

2011-2012 2010-2011
Rs. Crore Rs. Crore

(I) Contingent liabilities

(a) In respect of disputed demands/claims
against the Company not acknowledged as debts:

(i) Central excise matters 33.28 32.04

(ii) Trade tax matters 29.49 8.50

(iii) Other claims 33.21 46.24

95.98 86.78

(b) Guarantees

The Company has furnished guarantees /
securities on behalf of subsidiary /
associate company 3,040.04 2,409.33

(II) Commitments

Estimated amount of contracts remaining
to be executed on capital account and not
provided for (net of advances) 15.44 4.09

(c) Erstwhile Bajaj Eco-Tec Products Ltd.
has procured imported as well as Indigenous
Capital Goods under Export Promotion and
Capital Goods Scheme (EPCG). The Export
obligation pending against such EPCG licenses 22.24 -

(d) The Income tax assessment of the Company has been completed upto
Assessment Year 2009-10. However, the Company as well as the Income Tax
Department are in appeal before the Appellate authorities against the
assessment of the earlier years. These appeals have not resulted into
any demand on account of carry forward losses.

3. Pursuant to the Scheme of Amalgamation (the Scheme) under Sections
391 to 394 of the Companies Act, 1956, the Hon''ble High Court of Bombay
pronounced an order on September 14, 2012, sanctioning the Scheme of
Amalgamation of Bajaj Eco-Tec Products Limited (BEPL or Amalgamating
Company) a wholly owned subsidiary company with the Company with effect
from the appointed date April 01, 2012. Upon filing with the Registrar
of Companies Maharashtra, Mumbai on October 01, 2012, the Scheme has
become effective. BEPL is engaged in the business of manufacturing
Medium Density Fibre (MDF) Boards and Particle Boards.

a) In terms of the Scheme approved by the Hon''ble High Court, the
entire business and whole of the undertaking of BEPL, as a going
concern stands transferred to and vested in the Company with effect
from April 01, 2012 being the Appointed Date.

b) As BEPL was a wholly owned subsidiary of the Company, no
consideration was payable pursuant to amalgamation.

c) Accounting for Amalgamation: The amalgamation of BEPL with the
Company is accounted for on the basis of the Pooling of Interest Method
as envisaged in the Accounting Standards (AS)-14 on Accounting for
Amalgamation specified in the Companies (Accounting Standard) Rules
2006 and in terms of the Scheme, as below.

d) All assets and liabilities of BEPL were recorded at their respective
book values under the respective accounting heads of BHL. The
intercompany balances and transaction stood cancelled. As a result of
merger, there is no deficit or surplus arising between the aggregate
value of assets taken over by the Company and aggregate value of the
liabilities and reserves of BEPL. The cost or expenses related to
merger amounting to Rs. 0.68 crore have been adjusted with general
reserve of the Company, as per the Scheme.

e) From the effective date the authorised share capital of the Company
will be Rs. 271.00 crore divided into 2,71,00,00,000 equity shares of the
face value of Rs. 1 each.

f) BEPL stands dissolved without being wound up from the Effective Date
i.e. October 01, 2012.

4. The Company concluded a Rights Issue in October 2011 and raised an
aggregate of Rs. 1,479.75 crore with the principal object of
repaying/prepaying certain loan funds. Upon allotment of 41,10,42,800
equity shares of face value Rs.1/- at a price of Rs. 36/- per share
(including share premium of Rs.35/- per share) on October 31, 2011, the
paid up Equity Share Capital and Share Premium Account have increased
by Rs.41.10 crore and Rs. 1,438.65 crore respectively. These newly allotted
shares rank pari passu in all respect with the existing equity shares
of the Company. Out of the net Rights issue proceeds, an aggregate sum
of Rs. 1,453.73 crore have been utilised towards objects of the issue
upto September 30, 2012. Pending utilisation, the balance proceeds have
been temporarily used to reduce the exposure of working capital
borrowings from banks, which will be redrawn as and when necessary to
meet the obligations as per the object of the issue.

5. As required by paragraph 46 inserted vide notification dated March
31, 2009 to the Accounting Standard AS-11 "The Effect of Changes in
Foreign Exchange Rates", the Company had already opted to adjust the
exchange fluctuations on Long Term Monetary Items to the carrying cost
of fixed assets. Further as per paragraph 46A, inserted vide
notification dated December 29, 201 1 to AS-11, the Company has
adjusted Rs. 67.76 crore being the loss on exchange fluctuation on
long-term monetary items for the financial year September 30, 2012 to
carrying cost of fixed assets. The unamortised foreign exchange
fluctuation capitalised to fixed assets, amounts to Rs.323.19 crore as at
September 30, 2012.

6. Due to absence of profits during the year, the managerial
personnel have been paid the remuneration as approved by shareholders
and remuneration committee as minimum remuneration along with the
approval of Central Government, wherever applicable.

7. Pursuant to the General Circular no. 2/2011 dated 8th February,
2011 of Ministry of Corporate Affairs and consent of the Board of
Directors vide their resolution passed at the Board Meeting held on
November 26, 2012 for not attaching the Balance Sheets of subsidiaries,
the Company has not attached with its Balance Sheet as at September 30,
2012, the documents specified in Section 212(1) of the Act in respect
of its four subsidiaries, viz. (i) Bajaj Aviation Private Limited, (ii)
Lalitpur Power Generation Company Limited, (iii) Bajaj Power Generation
Private Limited, (iv) Bajaj Hindusthan (Singapore) Private Limited, and
has disclosed the requisite information in the Consolidated Balance
Sheet as at September 30, 2012 in Annexure A.

8. For the year ended September 30, 2012, the revised Schedule VI
notified under the Companies Act, 1956, has become applicable to the
Company for preparation 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,

9. As per Accounting Standard (AS)-17 on "Segment Reporting", segment
information has been provided under the notes to Consolidated Financial
Statements.

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