:: WELCOME TO ADINATH ::

CONTENTS

Board of Directors

Directors Report

Annexure to Directors Report

Auditors Report

Annexure to Auditors Report

Financials

Financials of the Subsidiary

BOARD OF DIRECTORS

Mr. Yatin S. Shah, Chairman & Managing Director

Mr. Jayant V. Aradhye, Director

Mr. Ravindra R Joshi, Director

Dr. Suhasini Y Shah, Director

Mr. Sarvesh N Joshi, Independent Director

AUDITORS

M/s. S R B C & Co. LLP

Chartered Accountants, Pune

COMPANY SECRETARIAL CONSULTANT

Mr. Atul Kulkarni, Solapur

BANKERS

Bank of India,

Mid Corporate Finance Branch, Pune

Bank of Baroda

Solapur Main Branch, Chati Galli, Branch, Solapur

REGISTERED OFFICE

E - 102/103, M. I. D. C.,

Akkalkot Road, Solapur 413006.

Tel: 3295433, 34, 35, Fax: (0217) 2653398

E-mail: info@pclindia.in

Website:www.pclindia.in

CIN: U24231PN1992PLC067126

FACTORIES

1) E 90, M. I. D. C., Akkalkot Road, Solapur: 413 006

2) E 102/103, M. I. D. C., Akkalkot Road, Solapur: 413 006

3) D 5, MIDC Chincholi, Solapur 413255 (EOU Division)

4) D 6, D 7, D 7-1 MIDC, Chincholi, Solapur 413255 (EOU Division)

DIRECTORS REPORT

To,

The Members,

PRECISION CAMSHAFTS LIMITED

Your Directors are pleased to present their TWENTY SECOND ANNUAL REPORT and the audited Accounts for the year ended 31st March 2014.

FINANCIAL RESULTS: (Rs. In Lacs)

Particulars	2013-2014	2012-2013
Turnover	47182.90	36559.46
Net Profit before Tax	5131.18	3754.12
Provision for Tax	1808.36	780.29
Minimum Alternative Tax Credit	0.0	0.0
Deferred Tax (charge) / reversal	334.79	487.37


Net Profit after Tax and before prior period items	2988.03	2486.46

Net Profit	2988.03	2486.46
Balance in Profit & Loss Account (Opening)	7469.54	5019.25
Available for Appropriation	10457.58	7505.71
Appropriations
Less: Proposed Dividend on Equity shares	31.82	30.92
Less: Dividend Tax	5.41	5.25
Balance to be Carried Forward	10420.34	7469.54

The turnover of the company grew by 29.06% over the last financial year and the profitability before tax as percentage of turnover increased from 10.26 % for the last financial year to 10.87 % for the current year.

This increased profitability was mainly due to better utilization of capacity in the new foundry and machine shop, improved operational controls, strict control on raw material cost and also because of the depreciating Rupee.

Purchase of raw material saw upward trend in some materials including electricity while downward in some. There was an overall saving due to proper inventory management.

DIVIDEND:

Your Board recommends a dividend of 10% on equity shares (Rs. 10 per equity share) as final dividend.

OPERATIONS:

PCL EOU Division

The productivity was increased in the foundry division due to improved operationalcontrols. Better utilization of plant capacity in the newly started Foundry No. 4 resulted in higher production of camshafts, from about 54000 castings per month in 2012-13 to 180000 castings per monthin the year 2013-14.

Foundry No. 2 is being modified and will be used for manufacturing Ductile Iron induction hardened camshafts. The trial production of this variety of camshafts has been approved by Toyota and Ford. The serial production of camshafts using the said technology will start in 2016.

Total sales from EOU division increased by 23 % from Rs. 305.01 Crores in 2012-13 to Rs. 394.15 Crores in the year2013-14. Export sales increased by 26% while domestic sales increased by 8 %.

Total Camshafts sold in 2012-13 were 70,88,803in numbers while that in 2013-14 were 78,31,699 in numbers.

About 13new varieties of Camshafts were developed during the year 2013-2014 for Mahindra, Ford India, Ford VEP, VM Motori, Maruti Suzuki and Toyota. These would translate into sizeable addition to the annual sales from next financial year onwards.

Machine shop at the EOU

The production capacity at the machine shop was further increased from 125000 per month to 137500 per month by adding a machining line for GM Korea.The total number of camshafts sold during the year from EOU machine shop decreased by about 1% due to reduced demand of some products. However the sale value increased due to more value added parts under export and as an effect of piece price compensation. Sales from Machine shop increased by about 19 % from Rs. 78.75 Crores in 2012-13 to Rs. 94.24 Crores in the year 2013-14. This sale forms part of the sales from the EOU division.

PCL Unit I and Unit II at MIDC Akkalkot Road, Solapur

There was a marginal decrease in the sales in the foundry division (PCL Unit II) as compared to the last financial year. Sales to Machine shop decreased due to shifting of production of certain parts to the EOU division. Total sale from PCL unit I and II amounted to Rs. 58.71 crores in the year under consideration.

PCL unit 1 Machine shop won a Performance Award from Escorts and Ford New Holland. Quality Certifications

All units of PCL are certified with ISO / TS 16949:2002, ISO:14001:2004 and BS OHSAS 18001:2007.

ISO/ TS 16949:2002 is a quality system, which certifies consistent manufacturing practices and defect free products.

ISO:14001 is related to EMS (Environmental Management System) and shows the steps taken towards protecting the Environment.

BS OHSAS: 18001 is related to Occupational Health & Safety Management System. (Based on British Standard, OHSAS - Occupational Health, Safety Assessment Series) and clearly shows the intent of your company in this area. The new Machine Shop at the EOU division received the QSB Compliant status from General Motors.

HRD UPDATE:

A) Orbit

PCL in its endeavor to be known equally for its people practices and not just for quality camshafts, started the initiative Orbit in 2010. Various initiatives under this umbrella continue to be carried out diligently. We at PCL, are working towards aligning personal vision and aspirations of our employees to the organization's vision. We are committed to invest in the skill development and eventually the growth of our employees.

B) i-manage

In an endeavor to make its people s operations more process driven, PCL invested in i-Manage a people operations tool that covers the entire life cycle of an employee from joining to exit on a system.

The process of appraisal for the staff continues to be carried out successfully on iManage in the most unbiased and system driven way.

Other processes such as requisitions, policies and leave management were also driven by this system.

C) Manpower: The total workforce at PCL is as follows:

Sr No	Unit	Apr-13	Apr-14	Variance
1	PCL-I	236	191	-45
2	PCL-II	376	259	-117
3	EOU	1513	1289	-224
4	Contract - EOU	800	865	65
	Total	2925	2604	-321

About 50% of the above workforce is contractual.

d)Awards / Recognition

Third Surveillance Audit of Environmental, Health and Safety related ISO 14001:2004 and OHSAS 18001:2007 Audit is successfully completed during 13 to 15th Feb 2014 and recommended certification valid up to 25/02/2016 by TUV.

Seventh Surveillance Audit of Quality Management System related ISO/TS 16949: 2009 is successfully completed during 9 to 10th Jun 2014 and recommended certification valid up to 15/07/2016 by TUV.

SPECIAL ACHIEVEMENTS:

PCL developed Ductile Iron Induction Hardened Camshafts for a very discerning customer TOYOTA and for Ford. Serial production of ductile iron camshafts will start in 2016.

Research and Development:

During the year under report the Company has received recognition from Department of Scientific and Industrial Research (DSIR), New Delhi, for its In-House Research and Development Unit.

Development of indigenous technology has always been Companys focus. The solid engineering strength derived from its strong and focused R & D efforts through the In House R & D Unit has enabled company to maintain its leadership in the area it works.

The in-house R&D team of the company is headed by independent full time R&D Head. He is supported by a team comprising of 26 employees, which include persons with Graduate and Post Graduate engineering qualifications. The R & D units are equipped with the necessary infrastructure including the Computer hardware & related IT infrastructure, software and other necessary equipment.

1) Objectives of R & D Program

To develop quality products based on needs of customers and to develop stable, marketable technology havingbusiness potential

To conduct application oriented research for development of technology in the field of Industrial AutomationSystems & Camshafts and conduct research programs to address technical needs in India

To constantly pursue development of new products or processes for improvement of performance of economy for prevailing applications

To develop new technologies & capabilities for enabling conceptualizing new solutions or applications and tosubstitution of raw material to reduce the cost of manufacturing

To actively enable commercialization of developed technology and to provide environment management systemsand to create sustainable technology solutions

2) R&D achievements made during past3years:

(a) NewProductsdeveloped:Upgraded Camshafts are developed as and when required bythe automotivecompanies

(b) NewProcessdeveloped:1. Internal Shot Blasting Process 2. End Facing Process 3. De- Coring Processfor Glass Core 4. Reaming & Plugging Process 5. Boroscope Inspection

(c) Improvementinexistingproductionprocess(s):1. Core Painting added 2. Usha Machine Modification3. Furnace Former Modified 4. Yield Improvement 5. 24 Impression Chill Pattern instead of 12 Impressions 6. 4Cavity Pattern designed

3) Future plan of action

Presently the R & D unit is engaged in the Research and Development of Fuel Lobe technology.

4) Expenses on R &D: 2013-14 2012-13

Capital : Rs. 440.16 Lacs Rs. 99.17 Lacs

Recurring : Rs.103.03 Lacs Rs. 134.75 Lacs

_____________ _____________

Total : Rs. 543.19.Lacs Rs. 233.92.Lacs

_____________ ___________

Total R& D expenditure as a percentage

of total turnover : 1.21% 0.66%

CORPORATE SOCIAL RESPONSIBILITY:

Though statutorily the provisions of Corporate Social responsibility were not enforced, your company, as a matter of duty, has been carrying out the CSR activity since long.

Various social, educational and environmental activities were conducted through Precision Foundation. During the year 2013-2014, monetary incentive to the tune of Rs. 1,35,000/- was extended to 45 employees towards family planning and help for funeral of immediate family members.

Educational scholarships were given to 516 wards of employees securing more than 75% marks in their school / college final examinations, amounting to Rs. 2,17,000/-

Health monetary help in cases of critical illnesses was extended to 9 employees amounting to Rs. 1,36,244/-

Employee welfare Medical claims in 323 cases of employees and their families amounting to Rs. 32,26,294/- were sanctioned.

"Precision Guppa" the yearly social event was organized on 25th , 26th and 27th October, 2013 which helped in bringing together on one forum the achievers from different walks of life.

On 25th Oct 2013 veteran actor Mr. Sadashiv Amrapurkar was interview by social activist Dr. Anil Awchat in Guppa Dilkhulas.

In a musical program Hirvya Anand Vaata great Marathi poet Mr. Na. Dho. Mahanor and music director Mr. Anand Modak were interviewed on 26th Oct 2013 by Ms. Dhanashree Lele. Mahanors poems composed by Mr. Modak were presented by well-known singer Mr. Ravindra Sathe and a new singing star Ms. Urmila Dhangar.

On 27th Oct 2013 Dr. Ravindra & Dr. Smita Kolhe, activists from Melghat presented the Precision Social Award to Pakhar Sankul Solapur an orphanage run by Ms. Shubhangi Bua. The Late Subhash Raoji Shah Memorial Award was presented to Dr. Ravindra & Dr. Smita Kolhe at the hands of Mr. Yatin Shah & Dr. Suhasini Shah.

We also felicitated dignitaries who contributed to the growth of Solapur Mr. Chandrakant Gudewar (Commissioner SMC), Dr Basavraj Kolur (Yashodhara Multispecialty Hospital), Mr. Ram Reddy (Balaji Sarovar Premium hotel) and Dr. Ranjit Gandhi ( Walchand Institute of Technology)

Mr. Yatin Shah interviewed the newly elected body of the Solapur Chamber of Commerce on their views on development of Solapur.

Sonamata Shikshan Sanstha :

Precision Foundation has adopted a school in the settlement area of Solapur, which imparts education to children from the lowest strata of the society and also those with criminal background. We started implementation of brain based constructive education at this school with the help of Gram-mangal a renowned institute working in the field of education.

Now your Company has constituted the CSR Committee and has also adopted a CSR Policy. Through this policy the Company will continue its contribution towards better tomorrow.

DEPOSITS:

The Company has accepted deposits from public and shareholders in compliance of the section 58A of the Companies Act, 1956 and rules thereof. At the end of the year, there are no outstanding undisputed deposits that are matured and unpaid.

DIRECTORS

Mr. Ravindra Joshi, Director(DIN 03338134) (DIN:--------), who retires by rotation at the ensuing Annual General Meeting, being eligible, offers himself for re-appointment. Members are requested to re-appoint him as a Director at the ensuing Annual General Meeting.

Under the provisions of the Companies Act, 2013 now the term of an Independent Director need to be defined. Board proposes to appoint CA Mr. Sarvesh Joshi (DIN: 03264981)as an Independent Director with 1 year term.

Subsidiaries:

PCL Shanghai Co. Ltd.

PCL Shanghai Co. Ltd., a wholly owned subsidiary of the company was incorporated in China in March 2011. The authorized share capital of PCL Shanghai is USD 300,000 while the paid up capital is USD 230,000. The nature of business of the subsidiary is Trading. This company was formed in order to be able to invoice the Chinese customers in RMB (Chinese currency) as per the laws and regulations of China.

PCL Shanghai purchases Camshaft castings from PCL India, takes care of custom clearance, warehousing and sells these to the end customer in China as per their requirements.

The audited financials of the subsidiary dated 31 Dec 2013 are annexed to the directors report.

Ningbo Shenglong PCL Camshafts Co. Ltd.

This company was incorporated in April 2012 as a joint venture between CPL and Shenglong Automotive Co Ltd to start a facility for machining of camshafts in Ningbo, China. PCL contributed $ 375,000 to the equity capital and holds 10 % equity of the JV Company.

The plant Installation & commissioning was completed in Feb, 2013. Sample Submission & approvals by customer have been completed during Feb. & Mar. 2013. The plant has an installed capacity for machining 600000 camshafts per year.

This plant has produced & supplied about 500000 shafts to customer during the year 2013-14. Plant capacity has been utilized to about 83%. The plant has met 100% compliance to customers schedule / requirements. SLPCL is gradually enhancing its capacity from 600000 camshafts per year to 815000 camshafts per year by January 2015. This will meet the increased schedules / volumes of CAF.

Audited financials of the company dated 31 Dec 2013 are annexed to the directors report.

Huzhou PCL Shenglong Specialized Castings Co. Ltd.

PCL signed another JV with Shenglong Powertrain Automotive Co. Ltd. in March 2013 to put up a foundry facility at Huzhou in China.

PCL contributed $ 1,760,000 to the equity capital of PCLSL and holds 40% of the equity capital of the JV Company.

All necessary agreements & contracts have been signed in the month of Sept 2013 and Business License was obtained in Oct 2013.

Construction of the plant Started in June 2014 & will be completed by Feb 2015.

Equipment Installation & Commissioning will be completed during Apr 2015.

Trials/ sample submission & approvals from customer will be completed by July 2015.

Serial production will start from Aug 2015 with the installed capacity of 100000 camshaft castings per year

PCLSL will have the total Installed capacity of 300000 camshafts per year by end of the year 2016.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to energy conservation, technology absorption and foreign exchange earnings and outgo required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, for the year ended 31st March, 2012, is given in annexure I and forms part of this report.

Committees

CSR Committee:

The Company has constituted Corporate Social Responsibility Committee with Mr. Yatin Shah as its Chairman and Mr. R. R. Joshi and Mr. Sarvesh Joshi as members. Mr. Sarvesh Joshi is an Independent Director.

Nomination and Remuneration Committee:

The Company has reconstituted the remuneration committee during the year report with Mr. Sarvesh Joshi as its Chairman and Mr. Yatin Shah and Mr. R. R. Joshi as members.

The Company is in process of appointment of Independent Directorsand constituting the Nomination & Remuneration Committee in terms of the Companies Act, 2013.

Internal Complaints Committee (Anti-Sexual Harassment Policy):

During the period under report, the Company has constituted Internal Complaints Committee toaddress Sexual Harassment of women under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made there under. The Company has requested Ms. Shubhangi Buva of Pakhar Sankul, Solapur to join the committee as a NGO representative.

Audit Committee

The Company is in process of appointment of Independent Directors and constituting the Audit Committee in terms of the Companies Act, 2013.

AUDITORS:

The auditors M/s S R B C & Co LLP, Chartered Accountants, Pune, hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment to hold office up to the Annual general Meeting to be held in the calendaryear 2017 which is subject to ratification of members in the Annual General Meeting.

DIRECTOR'S RESPONSIBILITY STATEMENT:In preparation of the annual accounts, the applicable accounting standards have been followed.The Directors have selected such accounting policies and applied them consistently and 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 at the end of this financial year and the profit made by the Company for that period, subject to the explanation given above.The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safe guarding the assets of the Company and for preventing and detecting any fraud and other irregularities.The Directors have prepared the annual accounts on a going concern basis.

Employees information under section 217 (2A) of the Companies Act, 1956:

Information as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent excluding the statement containing the particulars to be provided under Section 217(2A) of the Act. Any Member interested in obtaining such particulars may inspect the same at the Companys Registered Office for a copy thereof.

ACKNOWLEDGMENTS:

Your Directors wish to place on record their appreciation and sincere thanks to all the Customers, Suppliers, Sub-contractors, Shareholders, Depositors, bankers for their co-operation and support.

For and on behalf of the Board of Directors of

Precision Camshafts Limited

Sd/-

YATIN S SHAH

(Chairman & Managing Director)

Place: Solapur

Date: September 5th 2014

ANNEXURE I TO THE DIRECTORS' REPORT

Disclosure under the Companies (Disclosure of Particulars in report of Board of Directors) Rules, 1988.

A) CONSERVATION OF ENERGY:

1. Persistent efforts have been taken to save energy, which include

Installation & commissioning of Auto Power Factor unit which resulted in achieving unity in power factor throughout the year.

Use of motors, blowers , Pumps etc of the right capacity on all equipments

2. Maximum demand was monitored continuously to avoid demand penalty.

3. LPG - Safety equipment has been fitted in LPG Yard which helps avoid entry of Liquid into the heating equipment. This has ensured increased safety of the operators & the machinery, increased productivity & reduced wastage.

4. Various Fume extraction systems, spot cooling systems, natural air ventilation system have been installed in all manufacturing facilities to increase human working comfort.

B) TECHNOLOGY ABSORPTION:

Efforts made in technology absorption as per Form B is given below:

Research and Development (R&D) and benefits derived thereon

(1) Specific areas in which R&D carried out by the Company.

1. The company has undertaken a project to development and manufacture assembled fuel lobe on cast iron camshaft jointly with Ford, North America. There is a great amount of research involved in this technology.

2. The company is also working on development of a new material Ductile Iron for a premium customer and has succeeded in developing these camshafts for Toyota, India.

(2) Benefits derived as result of the above R&D

1. Various new products developed as and when required by the Automotive companies

2. There is a continuous improvement in the existing production process

3. Some new processes are also developed with the help of R & D

(3) Future Plan of Action

1. Presently[Amrita 1] [Amrita 1]the R & D unit is engagedin the Research and Development of Fuel Lobe technology.

(4)Expenditure on R&D

(Rs. in Lacs.)

2013-14 2012-13

Capital Rs. 440.16 Rs. 99.17

Recurring Rs. 103.03 Rs. 134.75

------------- --------------

Total R&D Expenditure Rs. 543.19 Rs. 233.92

------------- --------------

R&D Expenditure as a percentage 1.21% 0.66%

of Turnover

C) FOREIGN EXCHANGE EARNINGS AND OUTGO:

1. Activities relating to exports, initiatives taken to increase exports, development of new export markets for products, services and export plans.

The company is planning to enter new markets through its associates in Europe, North America and South East Asia.

2. Total Foreign Exchange Used and earned:

(Rs. Lacs)

Used 2356.19

Earned 33349.96

For and on behalf of the Board of Directors of

Precision Camshafts Limited

Sd/-

YATIN S SHAH

(CHAIRMAN & MANAGING DIRECTOR)

Place: Solapur

Date: September 5th 2014

PRECISION CAMSHAFTS LIMITED

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014

(All amounts in rupees unless otherwise stated)

NOTE 26: GRATUITY

The disclosures as per AS 15, Employee benefits notified under the Rules are as follows:-

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India in the form of a qualifying insurance policy.

Changes in the present value of the defined benefit obligation are as follows:

Particulars	31-Mar-14	31-Mar-13


Defined benefit obligation at the beginning of the year	42,789,943	25,849,106
Current service cost	7,220,648	8,119,276
Interest cost	3,339,420	2,073,071
Actuarial (gain)/loss on obligation	-11,504,739	7,698,324
Past service cost	-	-
Benefits paid	-2,715,855	-949,834
Defined benefit obligation at the end of the year	39,129,417	42,789,943


Changes in the fair value of plan assets are as follows:

Particulars	31-Mar-14	31-Mar-13

Fair value of plan assets at the beginning of the year	32,714,466	25,951,389
Expected return on plan assets	3,029,088	2,587,621
Contribution by employer	6,523,226	4,995,616
Benefits paid	-2,715,855	-949,834
Actuarial gain/(loss) on plan assets	196,611	129,674
Fair value of plan assets at the end of the year	39,747,536	32,714,466

* The Company expects to contribute Rs. 8,878,168 (Rs.6,834,874) to its defined benefit gratuity plan in 2014-15.

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

Particulars	31-Mar-14	31-Mar-13

Investment with Insurer (Life Insurance Corporation of India)	100%	100%

Balance Sheet
Benefit asset/liability

Particulars	31-Mar-14	31-Mar-13

Defined Benefit Obligation	39,129,417	42,789,943
Fair Value of Plan Assets	39,747,536	32,714,466
Plan Asset / (Liability)	618,119	-10,075,477


Net employee benefit expense recognised in the statement of profit and loss:

Particulars	31-Mar-14	31-Mar-13

Current Service cost	7,220,648	8,119,276
Interest cost on benefit obligation	3,339,420	2,073,071
Net actuarial (gain) / loss recognised in the year	-11,701,350	7,568,650
Expected return on plan assets	-3,029,088	-2,587,621
Contribution by employer	-	-
Net benefit expense	-4,170,370	15,173,376

Amounts for the current and previous four periods are as follows:

Particulars	31-Mar-14	31-Mar-13	31 March 2012	EQUITY AND LIABILITIES	31 March 2010

Defined benefit obligation	39,129,417	42,789,943	29,026,609	18,728,872	18,728,872
Plan assets	39,747,536	32,714,466	29,152,924	15,802,743	15,802,743
Surplus / (deficit)	618,119	-10,075,477	126,315	-2,926,129	-2,926,129
Experience adjustments on plan liabilities	-5,414,017	2,237,571	-1,186,258	-286,831	-140,434
Experience adjustments on plan assets	196,611	129,674	177,805	200,876	178,237

The principal assumptions used in determining defined benefit obligation are shown below:

Particulars	31-Mar-14	31-Mar-13

Discount rate	9.19%	8.06%
Expected rate of return on plan asset	9.25%	9.25%
Increase in compensation cost	7.00%	7.00%
Employee turnover	3.00%	3.00%

The estimated increase in compensation cost, considered in actuarial valuation, takes into account the effect of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. The overall expected rate of return on plan assets is determined based on the market prices prevailing as on balance sheet date, applicable to the period over which the obligation is to be settled.

NOTE 27: CAPITALISATION OF EXPENDITURE

During the year, the Company has capitalised the following expenses to the cost of fixed asset/capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalised by the Company.

	31-Mar-14	31-Mar-13

Salaries, wages and bonus	-	-
Consumption of stores and spares	-	-
Power and fuel	-	10,826,309
Interest (net)	2,787,027	16,384,029
Exchange differences	-	72,600,000
Other expenses	2,353,178	2,335,569

Total	5,140,205	102,145,907

NOTE 28: CAPITAL AND OTHER COMMITMENTS

Particulars	31-Mar-14	31-Mar-13
Estimated value of contracts remaining to be executed on capital account and not provided for (net of advances)	161,864,737	208,123,162

NOTE 29: CONTINGENT LIABILITIES

a. The Collector of Stamps, Solapur has demanded payment of stamp duty of Rs. 3,178,389 (Previous Year: Rs. 3,178,389) for cancellation and issue of equity shares after amalgamation of Precision Valvetrain Components Limited (PVPL) with the Company in year 2007-2008. The Company has filed an appeal against demand made by the Collector of Stamps, Solapur with Controlling Revenue Authority, Pune

b. The Company is in appeal and the application is pending with ?Hon?ble High Court of Judicature Appellate? against the claim made under Employees provident Funds and Miscellaneous Provision Act, 1952 for Rs. 24,23,488 (Previous Year 24,23,488). The Company has deposited an amount of Rs. 1,211,744 (Previous Year 1,211,744) under protest which has been shown under Loans and Advances.

c. The Company has received an order from Commissioner of Central Excise Pune for the year 2002-03, 2003-04 and 2004-05 demanding excise duty amounting to Rs. 2,076,478 on sales tax retained under sales tax deferral scheme.

d. During the year the Company has received an order from Commissioner, Central Excise Nagpur disallowing cenvat credit amounting to Rs. 69,938 on account of duty not charged on goods cleared by its dealer.

e. The Company has received an order from the Joint Commissioner Income Tax (Transfer Pricing Officer II) for assessment years 2003-04 and 2005-06 making additions of Rs. 28,800,000 on account of transfer pricing adjustments.The Company has filed its objections with Dispute Resolution Panel-II (DRP), Mumbai against the said adjustments. The total tax liability that may arise on account of this and other matters is Rs. 6,013,212. The Assistant Commissioner of Income Tax, Solapur has raised demand against the Company for the same (Previous Year Rs. Nil) vide order dated December 28, 2011 for the AY 2006-07. The Company had made an appeal with the Commissioner of Income Tax (Appeals) Pune. Out of the total demand, the Company has deposited Rs. 3,007,000 (Previous Year Rs. Nil) with the Income tax authorities.

NOTE 30: DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE

(a) Derivatives outstanding as at the balance sheet date

Year ended	Currency Type	Foreign Currency	INR Amount	Purpose


31-Mar-14	USD	400,000	23,720,000	Hedge of trade receivables
	EUR	1,100,000	89,210,000	Hedge of trade receivables
	GBP	700,000	68,915,000	Hedge of trade receivables

31-Mar-13	USD	900,000	50,486,000	Hedge of trade receivables
	EUR	1,000,000	73,336,000	Hedge of trade receivables
	GBP	300,000	26,985,000	Hedge of trade receivables

(b) Particulars of unhedged foreign currency exposure as at balance sheet date

		31-Mar-14	31-Mar-13
Category	Currency Type	Foreign Currency	INR Amount	Foreign Currency	INR Amount


Borrowings	USD	26,337,708	1,586,846,903	23,528,103	1,285,810,825
	EUR	5,270,312	437,435,857	2,277,993	159,459,506

Import payables	USD	172,303	10,381,274	208,165	11,376,223
	EUR	284,741	23,633,532	520,147	36,410,312
	GBP	19,779	1,985,819	19,883	1,648,298
	JPY	35,812,400	21,093,504	71,787,500	41,816,219

Other current liabilities	USD	180,804	10,893,423	483,503	26,423,413
	EUR	737,964	61,250,976	177,263	12,408,416
	GBP	22,289	2,237,831	1,623	134,575

Trade receivables	USD	5,717,145	344,457,984	3,788,948	204,413,745
	EUR	3,869,804	321,193,705	2,659,998	182,741,863
	GBP	835,194	83,853,495	1,545,311	126,020,112

Cash and bank balances	USD	1,244,422	74,976,441	244,990	13,388,725
	GBP	155,196	15,581,631	1,247	103,383
	EUR	28,760	2,387,042	107,248	7,507,380

Advances to subsidiary	USD	-	-	30,192	1,628,859

NOTE 31: DETAIL OF DUES TO MICRO AND SMALL ENTERPRISES AS DEFINED UNDER MSMED ACT, 2006

Particulars	31st March 2014	31st March 2013
(i) The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of each accounting year Principal amount due to micro and small enterprises	74347021	63121288
Interest due on above	1029122	789565
(ii) The amount of interest paid by the buyer in terms of section 16, of the MSMED Act, 2006. The amounts of the payment made to the supplier beyond the appointed day during each accounting year.	Nil	Nil
(iii) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under MSMED Act, 2006.	Nil	Nil
(iv) The amount of interest accrued and remaining unpaid at the end of each accounting year.	8142377	6306973
(v) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of the MSMED Act, 2006	8142377	6306973

Interest payable as per section 16 of the Micro, Small and Medium Enterprises Act, 2006 is Rs. 8,142,377 (31 March 2013: Rs. 6,306,973) and same is not accrued in the books of accounts.

NOTE 32: VALUE OF IMPORTS CALCULATED ON CIF BASIS

Particulars	31-Mar-14	31-Mar-13

Raw Materials	17,502,611	9,218,990
Components and spare parts	33,109,765	29,014,502
Capital goods	22,704,238	328,104,739
	73,316,614	366,338,231

NOTE 33: EXPENDITURE IN FOREIGN CURRENCY (ACCRUAL BASIS)

Particulars	31-Mar-14	31-Mar-13

Travelling and conveyance	2,026,293	884,550
Interest expense	86,533,868	31,768,251
Bank charges	5,555,284	3,034,954
Fee paid for availing foreign currency term loans	-	-
Sales commission	32,668,632	72,340,404
Legal and professional fees	6,225,953	2,715,000
Rework and shot blasting charges	14,684,632	10,396,387
Freight outward charges	9,739,537	8,369,843
Repairs and maintenance	4,394,113	399,998
Others	474,568	38,329
	162,302,880	129,947,716

NOTE 34: IMPORTED AND INDIGENOUS RAW MATERIALS, COMPONENTS AND SPARE PARTS CONSUMED

Year ended 31 March 2013	% of total consumption	Value	% of total consumption	Value
	31-Mar-14	31-Mar-14	31-Mar-13	31-Mar-13
Raw Material
Imported	1.07%	16,246,778	0.70%	10,348,740
Indigenously obtained	98.93%	1,503,776,676	99.30%	1,477,492,619
	100.00%	1,520,023,454	100.00%	1,487,841,359

Components and Spare Parts
Imported	10.05%	27,071,082	8.20%	20,645,524
Indigenously obtained	89.95%	242,289,679	91.80%	231,146,187
	100.00%	269,360,761	100.00%	251,791,711

NOTE 35: EARNING IN FOREIGN CURRENCY (ACCRUAL BASIS)

Particulars	31-Mar-14	31-Mar-13

F.O.B. value of exports	3,334,996,114	2,442,212,887
Technical support fee	10,171,721	20,010,894
PRECISION CAMSHAFTS LIMITED
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 March 2014

NOTE 37: SEGMENT REPORTING

The Company's operations predominantly comprise of only one segment. i.e. Camshafts. In view of the same, separate segmental information is not required to be disclosed as per the requirement of Accounting Standard 17.

Secondary Segment: Geographical Segment

The Company's secondary segments are based on the geographic distribution of activities. Revenue and receivables are specified by location of customers while the other geographic information is specified by location of the assets.

a) Details of segment revenue

Particulars	31-Mar-14	31-Mar-13

Sales within India	1,058,389,392	1,049,755,383
Sales outside India	3,536,305,025	2,517,196,493

	4,594,694,417	3,566,951,876

b) Details of carrying amount of segment assets by geographical locations

Particulars	31-Mar-14	31-Mar-13
Within India	3,046,048,311	2,962,927,970
Outside India	916,937,640	654,895,719
	3,962,985,951	3,617,823,690

c) Total cost incurred during the year to acquire segment assets (fixed assets including intangible assets) that are expected to be used for more than one year

Particulars	31-Mar-14	31-Mar-13

Within India	260,604,244	791,545,589
Outside India	-	-

	260,604,244	791,545,589

NOTE 38: RESEARCH AND DEVELOPMENT EXPENDITUIRE

Particulars	31-Mar-14	31-Mar-13
Capital
- Plants and machinery	44016235	9917368
Revenue
- Raw material	3127507	0
- Salary	5585209	12432059
- Others	1590960	1043330

	54319911	23392757

NOTE 39: PREVIOUS YEAR FIGURES

Previous year figures have been regrouped/ reclassified wherever necessary to confirm to this year's classification

As per our report of even date

For S R B C & CO LLP	For and on behalf of the board of directors of
Firm Registration Number: 324982E	Precision Camshafts Limited
Chartered Accountants



per Paul Alvares	Yatin S Shah	Dr. Suhasini Y Shah
Partner	Managing Director	Director
Membership Number: 105754
Place: Pune	Place: Solapur	Place: Solapur
Date: September 5, 2014	Date: September 5, 2014	Date: September 5, 2014
NOTE 1. CORPORATE INFORMATION Precision Camshafts Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The company is primarily engaged in the manufacture and sale of camshaft castings and machined camshafts to the Auto industry and the Railways. NOTE 2. BASIS OF PREPARATION The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under Companies Act, 1956 read with General Circular 08/2014 dated 4 April 2014 issued by the Ministry of Corporate Affairs.The financial statements have been prepared on an accrual basis and under the historical cost convention, except in case of assets which have been impaired and derivative financial instruments which have been measured at fair value. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year. NOTE 2.1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Use of estimates The preparation of financial statements in conformity with the Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Difference between the actual result and estimates are recognised in the year in which the results are known / materialised. Although these estimates are based on the managements best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. (b) Tangible fixed assets Fixed assets, are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred. From 1 April 2011, the company adjusts exchange differences arising on translation/settlement of long-term foreign currency monetary items pertaining to the acquisition of a depreciable asset to the cost of the asset and depreciates the same over the remaining life of the asset. In accordance with MCA circular dated 9 August 2012, exchange differences adjusted to the cost of fixed assets are total differences, arising on long-term foreign currency monetary items pertaining to the acquisition of a depreciable asset, for the period. In other words, the company does not differentiate between exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange difference. Expenditure directly relating to construction activity is capitalised. Indirect expenditure incurred during construction period is capitalised as part of the construction costs to the extent the expenditure can be attributable to construction activity or is incidental there to. Income earned during the construction period is deducted from the total of the indirect expenditure. Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised. PRECISION CAMSHAFTS LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014 (c) Depreciation on tangible fixed assets Depreciation on tangible fixed assets is provided on straight line method, unless otherwise stated, pro-rata to the period of use of the assets and is based on managements estimate of useful lives of the fixed assets or at rates specified in Schedule XIV to the Act, whichever is higher. The company has used the following rates to provide depreciation on its fixed assets Rates (SLM) Building 1.63%-3.34% Plant and Machinery 10.34% Jigs, Fixture and patterns (included in Plant and Machinery)* 33.33% Office Equipments 4.75% Computer (Office Equipments) 16.21% Furniture and Fixtures 6.33% Vehicles 9.50% Cost of leasehold land is amortised over the period of lease. Assets costing up to Rs. 5,000 per unit are depreciated at the rate of 100% in the year of addition. (d) Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Intangible asset - Computer Softwares are amortized over a period of two years from the date the asset is available to the Company for its use. Intangible assets not yet available for use are tested for impairment annually, either individually or at the cash-generating unit level. All other intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised. (e) Leases Where the company is lessee Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term. (f) Borrowing costs Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. PRECISION CAMSHAFTS LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014 (g) Impairment of tangible and intangible assets The company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the company estimates the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating units (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. Impairment losses are recognised in the statement of profit and loss. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the company estimates the assets or cash-generating units recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assets recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, norexceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss. (h) Investments Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss. (i) Inventories Raw materials, components, stores and spares and packing materials are valued at lower of cost and net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components, stores and spares and packing material is determined on a weighted average basis Semi-finished goods and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods is determined on a weighted average basis and includes excise duty .Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. PRECISION CAMSHAFTS LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014 (j) Revenue recognition Revenue is recognised to the extent it is probable that the economic benefits will flow to the company and that the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Sale of goods Revenue from sale of goods is recognised when all the significant risks and rewards of ownership of the goods have been passed to the buyer. The company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the company. Hence, they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year. Income from services Revenue from services is recognised as and when services are rendered. The company collects service tax on behalf of the government and, therefore, it is not an economic benefit flowing to the company. Hence, it is excluded from revenue. Tooling Income Tooling income is recognized when the tool has been developed and necessary completion approvals have been received from customers. Interest Interest income is recognised on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Dividends Dividend income is recognised when the companys right to receive dividend is established by the reporting date. Export Benefits Export incentive benefits, by way of Duty Entitlement Pass Book Scheme (DEPB) and Focus Product Scheme (FPS) are recognized as income on the basis of receipt of proof of export (k) Foreign currency translation Foreign currency transactions and balance (i) Initial recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. (ii) Conversion Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. PRECISION CAMSHAFTS LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014 (iii) Exchange differences From April 1, 2011, the company accounts for exchange differences arising on translation/settlement of foreign currency monetary items as below: 1.Exchange differences arising on long-term foreign currency monetary items related to acquisition of a fixed asset are capitalised and depreciated over the remaining useful life of the asset. 2.Exchange differences arising on other long-term foreign currency monetary items are accumulated in the Foreign Currency Monetary Item Translation Difference Account and amortised over the remaining life of the concerned monetary item. 3.All other exchange differences are recognised as income or as expenses in the period in which they arise. For the purpose of 1 and 2 above, the company treats a foreign currency monetary item as long-term foreign currency monetary item, if it has a term of 12 months or more at the date of its origination. In accordance with MCA circular dated 09 August 2012, exchange differences for this purpose, are total differences arising on long-term foreign currency monetary items for the period. In other words, the company does not differentiate between exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange difference. (iv) Forward exchange contracts entered into to hedge foreign currency risk of an existing asset/liability The premium or discount arising at the inception of forward exchange contract is amortised and recognised as an expense/ income over the life of the contract. Exchange differences on such contracts, are recognised in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognised as income or as expense for the period. Any gain/ loss arising on forward contracts which are long-term foreign currency monetary items is recognized in accordance with paragraph (iii)(1) and (iii)(2). Translation of integral and non-integral foreign operation The company classifies all its foreign operations as either integral foreign operations or non-integral foreign operations. The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation have been those of the company itself. The assets and liabilities of a non-integral foreign operation are translated into the reporting currency at the exchange rate prevailing at the reporting date. Their statement of profit and loss are translated at exchange rates prevailing at the dates of transactions or weighted average monthly rates, where such rates approximate the exchange rate at the date of transaction. The exchange differences arising on translation are accumulated in the foreign currency translation reserve. On disposal of a non-integral foreign operation, the accumulated foreign currency translation reserve relating to that foreign operation is recognised in the statement of profit and loss. When there is a change in the classification of a foreign operation, the translation procedures applicable to the revised classification are applied from the date of the change in the classification. (l) Retirement and other employee benefits Retirement benefit in the form of provident fund and superannuation fund are defined contribution schemes. The contributions to the provident fund and superannuation fund are charged to the statement of profit and loss for the year when the employee renders the related service. The company has no obligation, other than the contribution payable to the provident fund and superannuation fund. The company operates a defined benefit plan in the form of gratuity for its employees. The cost of providing benefits under the plan is determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out using the projected unit credit method. Actuarial gains and losses for the defined benefit plan are recognised in full in the period in which they occur in the statement of profit and loss. Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term employee benefit. The company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method as at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The company presents the leave as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. PRECISION CAMSHAFTS LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014 (m) Income Tax Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax liabilities are recognised for all taxable timing differences. Deferred tax assets are recognised for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.In the situations where the company is entitled to a tax holiday, no deferred tax (asset or liability) is recognised in respect of timing differences which reverse during the tax holiday period, to the extent the companys gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognised in the year in which the timing differences originate. However, the company restricts ecognition of deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first. At each reporting date, the company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of deferred tax assets are reviewed at each reporting date. The company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority. Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of MAT under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as MAT Credit Entitlement. The company reviews the MAT credit entitlement asset at each reporting date and writes down the asset to the extent the company does not have convincing evidence that itwill pay normal tax during the specified period. (n) Earning Per Share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. PRECISION CAMSHAFTS LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014 (o) Provisions A provision is recognised when the company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Where the company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit and loss, net of any reimbursement. (p) Contingent liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements. (q) Employee stock compensation cost Measurement and disclosure of the employee share-based payment plans is done in accordance with the Guidance Note on Accounting for Employee Share-based Payments, issued by the Institute of Chartered Accountants of India (ICAI). The company measures compensation cost relating to employee stock options using the intrinsic value method. Compensation expense is amortised over the vesting period of the option on a straight line basis. (r) Cash and cash equivalents Cash and cash equivalents for the purposes of cash flow statement comprise of cash at bank and in hand and short-term investments with an original maturity of three months or less. (s) Measurement of EBITDA As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the company has elected to present earnings before interest, tax, depreciation and amortisation (EBITDA) as a separate line item on the face of the statement of profit and loss. The company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the company does not include depreciation and amortisation expense, finance costs and tax expense.

DIVIDEND: Your Board recommends a dividend of 10% on equity shares (Rs. 10 per equity share) as final dividend.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information relating to energy conservation, technology absorption and foreign exchange earnings and outgo required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, for the year ended 31st March, 2012, is given in annexure I and forms part of this report.

Research and Development: During the year under report the Company has received recognition from Department of Scientific and Industrial Research (DSIR), New Delhi, for its In-House Research and Development Unit. Development of indigenous technology has always been Company’s focus. The solid engineering strength derived from its strong and focused R & D efforts through the In House R & D Unit has enabled company to maintain its leadership in the area it works. The in-house R&D team of the company is headed by independent full time R&D Head. He is supported by a team comprising of 26 employees, which include persons with Graduate and Post Graduate engineering qualifications. The R & D units are equipped with the necessary infrastructure including the Computer hardware & related IT infrastructure, software and other necessary equipment. 1) Objectives of R & D Program · To develop quality products based on needs of customers and to develop stable, marketable technology having business potential · To conduct application oriented research for development of technology in the field of Industrial Automation Systems & Camshafts and conduct research programs to address technical needs in India · To constantly pursue development of new products or processes for improvement of performance of economy for prevailing applications · To develop new technologies & capabilities for enabling conceptualizing new solutions or applications and to substitution of raw material to reduce the cost of manufacturing · To actively enable commercialization of developed technology and to provide environment management systems and to create sustainable technology solutions 2) R&D achievements made during past 3 years: (a) New Products developed: Upgraded Camshafts are developed as and when required by the automotive companies (b) New Process developed : 1. Internal Shot Blasting Process 2. End Facing Process 3. De- Coring Process for Glass Core 4. Reaming & Plugging Process 5. Boroscope Inspection (c) Improvement in existing production process(s):1. Core Painting added 2. Usha Machine Modification 3. Furnace Former Modified 4. Yield Improvement 5. 24 Impression Chill Pattern instead of 12 Impressions 6. 4 Cavity Pattern designed 3) Future plan of action Presently the R & D unit is engaged in the Research and Development of Fuel Lobe technology. 4) Expenses on R &D: 2013-14 2012-13 Capital : Rs. 440.16 Lacs Rs. 99.17 Lacs Recurring : Rs.103.03 Lacs Rs. 134.75 Lacs _____________ _____________ Total : Rs. 543.19.Lacs Rs. 233.92.Lacs _____________ ___________ Total R& D expenditure as a percentage of total turnover : 1.21% 0.66%

Employees’ information under section 217 (2A) of the Companies Act, 1956: Information as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent excluding the statement containing the particulars to be provided under Section 217(2A) of the Act. Any Member interested in obtaining such particulars may inspect the same at the Company’s Registered Office for a copy thereof.

DIRECTOR'S RESPONSIBILITY STATEMENT: In preparation of the annual accounts, the applicable accounting standards have been followed. The Directors have selected such accounting policies and applied them consistently and 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 at the end of this financial year and the profit made by the Company for that period, subject to the explanation given above. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safe guarding the assets of the Company and for preventing and detecting any fraud and other irregularities. The Directors have prepared the annual accounts on a going concern basis.

CORPORATE SOCIAL RESPONSIBILITY: Though statutorily the provisions of Corporate Social responsibility were not enforced, your company, as a matter of duty, has been carrying out the CSR activity since long. Various social, educational and environmental activities were conducted through “Precision Foundation”. During the year 2013-2014, monetary incentive to the tune of Rs. 1,35,000/- was extended to 45 employees towards family planning and help for funeral of immediate family members. Educational scholarships were given to 516 wards of employees securing more than 75% marks in their school / college final examinations, amounting to Rs. 2,17,000/- Health – monetary help in cases of critical illnesses was extended to 9 employees amounting to Rs. 1,36,244/- Employee welfare – Medical claims in 323 cases of employees and their families amounting to Rs. 32,26,294/- were sanctioned. "Precision Guppa" the yearly social event was organized on 25th , 26th and 27th October, 2013 which helped in bringing together on one forum the achievers from different walks of life. On 25th Oct 2013 veteran actor Mr. Sadashiv Amrapurkar was interview by social activist Dr. Anil Awchat in Guppa Dilkhulas. In a musical program ‘Hirvya Anand Vaata’ great Marathi poet Mr. Na. Dho. Mahanor and music director Mr. Anand Modak were interviewed on 26th Oct 2013 by Ms. Dhanashree Lele. Mahanor’s poems composed by Mr. Modak were presented by well-known singer Mr. Ravindra Sathe and a new singing star Ms. Urmila Dhangar. On 27th Oct 2013 Dr. Ravindra & Dr. Smita Kolhe, activists from Melghat presented the Precision Social Award to “Pakhar Sankul” Solapur – an orphanage run by Ms. Shubhangi Bua. The ‘Late Subhash Raoji Shah Memorial Award’ was presented to Dr. Ravindra & Dr. Smita Kolhe at the hands of Mr. Yatin Shah & Dr. Suhasini Shah. We also felicitated dignitaries who contributed to the growth of Solapur – Mr. Chandrakant Gudewar (Commissioner SMC), Dr Basavraj Kolur (Yashodhara Multispecialty Hospital), Mr. Ram Reddy (Balaji Sarovar Premium hotel) and Dr. Ranjit Gandhi ( Walchand Institute of Technology) Mr. Yatin Shah interviewed the newly elected body of the Solapur Chamber of Commerce on their views on development of Solapur. Sonamata Shikshan Sanstha : Precision Foundation has adopted a school in the settlement area of Solapur, which imparts education to children from the lowest strata of the society and also those with criminal background. We started implementation of brain based ‘constructive’ education at this school with the help of ‘Gram-mangal’ a renowned institute working in the field of education. Now your Company has constituted the CSR Committee and has also adopted a CSR Policy. Through this policy the Company will continue its contribution towards better tomorrow.

OPERATIONS: PCL EOU Division The productivity was increased in the foundry division due to improved operational controls. Better utilization of plant capacity in the newly started Foundry No. 4 resulted in higher production of camshafts, from about 54000 castings per month in 2012-13 to 180000 castings per month in the year 2013-14. Foundry No. 2 will be modified and used for manufacturing Ductile Iron induction hardened camshafts. The trial production of this variety of camshafts has been approved by Toyota and Ford. The serial production of camshafts using the said technology will start in 2016. Total sales from EOU division increased by 23 % from Rs. 305.01 Crores in 2012-13 to Rs. 394.15 Crores in the year 2013-14. Export sales increased by 26% while domestic sales increased by 8 % Total Camshafts sold in 2012-13 were 70,88,803 in numbers while that in 2013-14 were 78,31,699 in numbers. About 13 new varieties of Camshafts were developed during the year 2013-2014 for Mahindra, Ford India, Ford VEP, VM Motori, Maruti Suzuki and Toyota. These would translate into sizeable addition to the annual sales from next financial year onwards. Machine shop at the EOU The production capacity at the machine shop was further increased from 125000 per month to 137500 per month by adding a machining line for GM Korea. The total number of camshafts sold during the year from EOU machine shop decreased by about 1% due to reduced demand of some products. However the sale value increased due to more value added parts under export and as an effect of piece price compensation. Sales from Machine shop increased by about 19 % from Rs. 78.75 Crores in 2012-13 to Rs. 94.24 Crores in the year 2013-14. This sale forms part of the sales from EOU division. PCL Unit I and Unit II at MIDC Akkalkot Road, Solapur There was a marginal decrease in the sales in the foundry division (PCL Unit II) as compared to the last financial year. Sales to Machine shop decreased due to shifting of production of certain parts to the EOU division. Total sale from PCL unit I and II amounted to Rs. 58.71 crores in the year under consideration. PCL unit 1 Machine shop won a Performance Award from Escorts and Ford New Holland. Quality Certifications All units of PCL are certified with ISO / TS 16949:2002, ISO:14001:2004 and BS OHSAS 18001:2007. ISO/ TS 16949:2002 is a quality system, which certifies consistent manufacturing practices and defect free products. ISO:14001 is related to EMS (Environmental Management System) and shows the steps taken towards protecting the Environment. BS OHSAS: 18001 is related to Occupational Health & Safety Management System. (Based on British Standard, OHSAS - Occupational Health, Safety Assessment Series) and clearly shows the intent of your company in this area. The new Machine Shop at the EOU division received the QSB Compliant status from General Motors. HRD UPDATE: A) Orbit · PCL in its endeavor to be known equally for its people practices and not just for quality camshafts, started the initiative ‘Orbit” in 2010. Various initiatives under this umbrella continue to be carried out diligently. We at PCL, are working towards aligning personal vision and aspirations of our employees to the organization's vision. We are committed to invest in the skill development and eventually the growth of our employees. B) i-manage In an endeavor to make its people’ s operations more process driven, PCL invested in “i-Manage” a people operations tool that covers the entire life cycle of an employee from joining to exit on a system. The process of appraisal for the staff continues to be carried out successfully on iManage in the most unbiased and system driven way. Other processes such as requisitions, policies and leave management were also driven by this system. C) Manpower: The total workforce at PCL is as follows: Sr NoUnitApr-13Apr-14Variance 1PCL-I236191-45 2PCL-II376259-117 3EOU15131289-224 4Contract - EOU80086565 Total29252604-321 About 50% of the above workforce is contractual. d) Awards / Recognition … Third Surveillance Audit of Environmental, Health and Safety related ISO 14001:2004 and OHSAS 18001:2007 Audit is successfully completed during 13 to 15th Feb 2014 and recommended certification valid up to 25/02/2016 by TUV. Seventh Surveillance Audit of Quality Management System related ISO/TS 16949: 2009 is successfully completed during 9 to 10th Jun 2014 and recommended certification valid up to 15/07/2016 by TUV. SPECIAL ACHIEVEMENTS: PCL developed ‘Ductile Iron Induction Hardened Camshafts’ for a very discerning customer TOYOTA and for Ford. Serial production of ductile iron camshafts will start in 2016. DEPOSITS: The Company has accepted deposits from public and shareholders in compliance of the section 58A of the Companies Act, 1956 and rules thereof. At the end of the year, there are no outstanding undisputed deposits that are matured and unpaid. DIRECTORS Mr. Ravindra Joshi, Director (DIN 03338134) (DIN:--------), who retires by rotation at the ensuing Annual General Meeting, being eligible, offers himself for re-appointment. Members are requested to re-appoint him as a Director at the ensuing Annual General Meeting. Under the provisions of the Companies Act, 2013 now the term of an Independent Director need to be defined. Board proposes to appoint CA Mr. Sarvesh Joshi (DIN: 03264981) as an Independent Director with 1 year term. Subsidiaries: PCL Shanghai Co. Ltd. PCL Shanghai Co. Ltd., a wholly owned subsidiary of the company was incorporated in China in March 2011. The authorized share capital of PCL Shanghai is USD 300,000 while the paid up capital is USD 230,000. The nature of business of the subsidiary is ‘Trading’. This company was formed in order to be able to invoice the Chinese customers in RMB (Chinese currency) as per the laws and regulations of China. PCL Shanghai purchases Camshaft castings from PCL India, takes care of custom clearance, warehousing and sells these to the end customer in China as per their requirements. The audited financials of the subsidiary dated 31 Dec 2013 are annexed to the director’s report. Ningbo Shenglong PCL Camshafts Co. Ltd. This company was incorporated in April 2012 as a joint venture between CPL and Shenglong Automotive Co Ltd to start a facility for machining of camshafts in Ningbo, China. PCL contributed $ 375,000 to the equity capital and holds 10 % equity of the JV Company. The plant Installation & commissioning was completed in Feb, 2013. Sample Submission & approvals by customer have been completed during Feb. & Mar. 2013. The plant has an installed capacity for machining 600000 camshafts per year. This plant has produced & supplied about 500000 shafts to customer during the year 2013-14. Plant capacity has been utilized to about 83%. The plant has met 100% compliance to customer’s schedule / requirements. SLPCL is gradually enhancing its capacity from 600000 camshafts per year to 815000 camshafts per year by January 2015. This will meet the increased schedules / volumes of CAF. Audited financials of the company dated 31 Dec 2013 are annexed to the director’s report. Huzhou PCL Shenglong Specialized Castings Co. Ltd. PCL signed another JV with Shenglong Powertrain Automotive Co. Ltd. in March 2013 to put up a foundry facility at Huzhou in China. PCL contributed $ 1,760,000 to the equity capital of PCLSL and holds 40% of the equity capital of the JV Company. All necessary agreements & contracts have been signed in the month of Sept 2013 and Business License was obtained in Oct 2013. Construction of the plant Started in June 2014 & will be completed by Feb 2015. Equipment Installation & Commissioning will be completed during Apr 2015. Trials/ sample submission & approvals from customer will be completed by July 2015. Serial production will start from Aug 2015 with the installed capacity of 100000 camshaft castings per year PCLSL will have the total Installed capacity of 300000 camshafts per year by end of the year 2016. Committees CSR Committee: The Company has constituted Corporate Social Responsibility Committee with Mr. Yatin Shah as its Chairman and Mr. R. R. Joshi and Mr. Sarvesh Joshi as members. Mr. Sarvesh Joshi is an Independent Director. Nomination and Remuneration Committee: The Company has reconstituted the remuneration committee during the year report with Mr. Sarvesh Joshi as its Chairman and Mr. Yatin Shah and Mr. R. R. Joshi as members. The Company is in process of appointment of Independent Directors and constituting the Nomination & Remuneration Committee in terms of the Companies Act, 2013. Internal Complaints Committee (Anti-Sexual Harassment Policy): During the period under report, the Company has constituted Internal Complaints Committee to address Sexual Harassment of women under ‘Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made there under. The Company has requested Ms. Shubhangi Buva of Pakhar Sankul, Solapur to join the committee as a NGO representative. Audit Committee The Company is in process of appointment of Independent Directors and constituting the Audit Committee in terms of the Companies Act, 2013. AUDITORS: The auditors M/s S R B C & Co LLP, Chartered Accountants, Pune, hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment to hold office up to the Annual general Meeting to be held in the calendar year 2017 which is subject to ratification of members in the Annual General Meeting. ACKNOWLEDGMENTS:

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