MIRA INFORM REPORT

Report Date :

22.09.2014

IDENTIFICATION DETAILS

Name :	JCB INDIA LIMITED (w.e.f. January, 2003)
Formerly Known As :	ESCORTS JCB LIMITED
Registered Office :	B-1/ I-1, 2^nd Floor, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi – 110044
Country :	India
Financials (as on) :	31.03.2013
Date of Incorporation :	01.02.1979
Com. Reg. No.:	55-009431
Capital Investment / Paid-up Capital :	Rs. 88.500 Millions
CIN No.: [Subject Identification No.]	U74899DL1979PLC009431
TAN No.: [Tax Deduction & Collection Account No.]	DELJ05267D
PAN No.: [Permanent Account No.]	AAACE0078D
Legal Form :	A Closely Held Public Limited Liability Company
Line of Business :	Manufacturing and Trading of Excavators/Loaders and Construction Equipments, related spares and components.
No. of Employees :	Not Divulged

RATING & COMMENTS

MIRA’s Rating :

A (67)

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD
Status :	Good
Payment Behaviour :	Regular
Litigation :	Exist
Comments :	Subject is a subsidiary of J.C. Bamford Excavators Limited, U.K. It is a well-established and reputed having fine track record. Financial position of the company is strong. Fundamentals of the company’s are healthy. No borrowings are recorded by the company. Networth of the company is sound. Directors are reported to be well-experienced and respectable businessmen. Trade relations are reported as fair. Business is active. Payments are reported to be regular and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – June 1, 2014

Country Name	Previous Rating (31.03.2014)	Current Rating (01.06.2014)
India	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

INDIAN ECONOMIC OVERVIEW

N E W S

Verdict Implications : Apex court order may alter coal import dynamics. Traders go slow on talks over coal supply contracts, uncertainty over cancellation of blocks weigh on stocks.

Recent arrest of the Chennai head of the Registrar of Companies, the ministry of corporate affairs arm that ensures that companies file all the information required by the Companies Act is the latest manifestation of a messy fight between a father and his adopted son for the control of Rs 40000 mn business empire. The Central Bureau of Investigation arrested Manumeethi Cholan after he accepted Rs 10 lakhs as bribe from M A M Ramaswamy, a CBI official said.

Central Bureau of Investigation books Electrotherm for cheating Central Bank of Rs 4360 mn.

Infosys maintains revenue guidance. COO Rao says attrition still an area of concern and it would take a few more quarters to bring down levels to 13-15 %.

DHL  to invest Euro 100 mn in India over next 2 years. The firm has chosen India to pilot its e-commerce business model for the Asia-Pacific region.

Blackstone may buy stake in BlueRidge SEZ in line with the fund’s real estate strategy in India.

Kingfisher Airlines Ltd grounded in October 2012 under the weight of heavy debt and accumulated losses, recently approached the Delhi high court for relief in two separate cases. The airline challenged a notice by Punjab & National Bank alleging that It had wilfully defaulted on Rs 7700 mn of loans and sought more time to comply with the requirements under the listing agreements with the Stock Exchanges.

OnMobile likely to sack another 300 employees. The lay-offs follow a spate of senior-level exits over the past two years, starting with of its founder. The overall lay-offs could number around 600 and are driven by the need to cut costs, says a former employee.

RBI DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2014.

INFORMATION DECLINED

MANAGEMENT NON CO-OPERATIVE (Tel. No.: 91-129-4299000)

LOCATIONS

Registered Office :	B-1/ I-1, 2^nd Floor, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi – 110044, India
Tel. No.:	91-11-23310145/ 26959157/ 26941139/ 26959997/ 40539745
Fax No.:	91-11-23310271/ 74/ 26959351/ 26959039/ 40539744
E-Mail :	rnanda@del12.vsnl.net.in sanjeev.gemawat@jcbindia.com cs.legal@jcb.com bhakta@kangaSubject.com s.ramaswamy@jcb.com
Website :	www.jcbindia.com www.jcb.com
Head Office/ Factory 1/ Warehouse :	23/7, Mathura Road, Ballabhgarh - 121004, Haryana, India
Tel. No.:	91-129-2232308/ 2232874/ 2232875/ 2232805 / 4299000
Fax No.:	91-129-2233453/ 2232407/ 2230194/ 2309050
Email :	delhi.marketing@jcb.com
Factory 2 :	Talegaon Floriculture and Industrial Park, Village AMBI, Navlakh Umbhre, Taluka Maval, Talegaon Dabhade – 410507, Maharashtra, India
Branch Office :	Located at: · Pune · Chennai · Kolkata

DIRECTORS

As on 08.08.2013

Name :

Mr. Mansingh Laxmidas Bhakta

Designation :

Director

Address:

4, Sagar Villa, 38, B. Desai Road, Mumbai - 400026, Maharashtra, India

Date of Birth/Age

03.12.1931

Qualification :

B.A. (Hons) LLB

Date of Appointment :

21.01.2003

DIN No.:

00001963

Other Directorship :

S.No.	CIN/LLPIN	Name of the Company/ LLP	Current designation of the Director/ Designated Partner	Date of appointment at current designation	Original date of appointment	Date of cessation	Company/ LLP Status	Defaulting status
1	L17110MH1973PLC019786	RELIANCE INDUSTRIES LIMITED	Director	27-09-1977	27-09-1977	-	Active	NO
2	L26942GJ1981PLC004717	AMBUJA CEMENTS LIMITED	Director	07-09-1985	07-09-1985	05-04-2013	Active	NO
3	U24220GJ1991PTC016598	MICRO INKS PRIVATE LIMITED	Director	27-06-2000	27-06-2000	01-05-2013	Active	NO
4	U74899DL1979PLC009431	JCB INDIA LIMITED	Director	21-01-2003	21-01-2003	-	Active	NO
5	U29240PN2004FLC129486	JCB MANUFACTURING LIMITED	Director	21-06-2004	21-06-2004	-	Amalgamated	NO
6	L28939PN1987PLC043953	BILCARE LIMITED	Director	31-12-2005	31-12-2005	31-07-2007	Active	NO
7	U45200MH1995PTC093041	LODHA DEVELOPERS PRIVATE LIMITED	Director	22-09-2009	01-08-2009	10-02-2012	Active	NO
8	U40103WB2002PLC145294	ABHIJEET POWER LIMITED	Director	25-11-2010	03-11-2010	03-01-2013	Active	NO
9	U29221GJ1991PLC014914	JYOTI CNC AUTOMATION LIMITED	Director	30-09-2013	17-09-2012	06-02-2014	Active	NO

Name :

Mr. Vipin Sondhi

Designation :

Managing Director and Chief Executive Officer

Address:

N – 43, Panchshila Park, New Delhi – 110017, India

Date of Birth/Age

27.04.1960

Qualification :

B. Tech (Mech), PGDM

Date of Appointment :

01.01.2014

DIN No.:

00327400

Other Directorship :

S.No.	CIN/LLPIN	Name of the Company/ LLP	Current designation of the Director/ Designated Partner	Date of appointment at current designation	Original date of appointment	Company/ LLP Status	Defaulting status
1	U74899DL1979PLC009431	JCB INDIA LIMITED	Managing director	01-01-2014	01-02-2006	Active	NO
2	U29240PN2004FLC129486	JCB MANUFACTURING LIMITED	Managing director	23-09-2008	01-02-2008	Amalgamated	NO
3	U74999DL2004PLC125276	JCB CONSTRUCTION EQUIPMENT LIMITED	Director	25-09-2008	01-05-2008	Active	NO
4	U29199DL2005PTC132969	JCB WORLD BRANDS INDIA PRIVATE LIMITED	Director	25-09-2008	01-06-2008	Active	NO
5	U65923DL2007FTC162589	JCB FINANCIAL ADVISOR PRIVATE LIMITED	Alternate director	01-01-2014	03-09-2012	Active	NO

Name :

Sir Anthony Paul Bamford

Designation :

Director

Address:

Daylesford House, Moreton In Marsh, Gloucestershire, Gl560yh, United Kingdom

Date of Birth/Age

23.10.1945

Qualification :

Engineer

Date of Appointment :

27.09.1993

DIN No.:

00560644

Name :

Mr. David Frederick Peter Miller

Designation :

Director

Address:

Sunnyhouse 208 Grindley Lane, Blythe Bridge Stoke On Trent, Staffordshire, ST119JS, United Kingdom

Date of Birth/Age

13.07.1953

Qualification :

Chartered Accountant

Date of Appointment :

29.09.2003

DIN No.:

00560666

Name :

Mr. Michael Hargreaves

Designation :

Director

Address:

16, Northesk Street, Stone, Staffordshire, England (UK), ST158EP

Date of Birth/Age

01.03.1957

Qualification :

Solicitor

Date of Appointment :

30.09.2006

DIN No.:

00684725

Other Directorship :

S.No.	CIN/LLPIN	Name of the Company/ LLP	Current designation of the Director/ Designated Partner	Date of appointment at current designation	Original date of appointment	Company/ LLP Status	Defaulting status
1	U29240PN2004FLC129486	JCB MANUFACTURING LIMITED	Director	30-10-2007	03-08-2006	Amalgamated	NO
2	U74899DL1979PLC009431	JCB INDIA LIMITED	Director	30-09-2006	30-09-2006	Active	NO
3	U65923DL2007FTC162589	JCB FINANCIAL ADVISOR PRIVATE LIMITED	Director	25-04-2007	25-04-2007	Active	NO

Name :

Mr. Balaraman Pillaimani

Designation :

Alternate Director

Address:

H – 153, Sarita Vihar, New Delhi – 110076, India

Date of Birth/Age

21.06.1958

Qualification :

BE(Mechanical)

Date of Appointment :

16.06.2011

DIN No.:

03545572

Name :

Mr. Subirkumar Chawdhury

Designation :

Director

Address:

C – 12, Westend Heights, DLF City Phase, Gurgaon - 122004, Haryana, India

Date of Birth/Age

25.01.1959

Qualification :

BE (Mechanical)

Date of Appointment :

12.09.2012

DIN No.:

03633998

Other Directorship :

S.No.	CIN/LLPIN	Name of the Company/ LLP	Current designation of the Director/ Designated Partner	Date of appointment at current designation	Original date of appointment	Company/ LLP Status	Defaulting status
1	U74899DL1979PLC009431	JCB INDIA LIMITED	Director	12-09-2012	15-09-2011	Active	NO
2	U65923DL2007FTC162589	JCB FINANCIAL ADVISOR PRIVATE LIMITED	Director	10-09-2012	16-01-2012	Active	NO
3	U74999DL2004PLC125276	JCB CONSTRUCTION EQUIPMENT LIMITED	Director	12-09-2012	16-01-2012	Active	NO

KEY EXECUTIVES

Name :	Ms. Dolly Singh
Designation :	Company Secretary
Address:	Hose Bo.702, Sector 15A, Faridabad - 121007, Haryana, India
Date of Birth/Age	27.01.1986
Date of Appointment :	28.06.2013
PAN No.:	CNHPS0979L
Name :	Mr. Deepak Shetty
Designation :	Vice President Business Head
Name :	Dr. Timothy Barnett
Designation :	General Manager – Excavator Product Engineering
Name :	Mr. Steven Bosworth
Designation :	Manufacturing Engineering - Manager
Name :	Mr. Ajay Patil
Designation :	Dy. General Manager

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 08.08.2013

Names of Shareholders	No. of Shares
J.C. Bamford Excavators Limited, England	884994
J.C. Bamford Excavators Limited Jointly with Sir Anthony Bamford	1
J.C. Bamford Excavators Limited Jointly with Michael Hargreaves	1
J.C. Bamford Excavators Limited Jointly with David Miller	1
J.C. Bamford Excavators Limited Jointly with Alan Blake	1
J.C. Bamford Excavators Limited Jointly with Steve Ovens	1
J.C. Bamford Excavators Limited Jointly with Adrian Ross	1
Total	885000

As on 08.08.2013

Equity Share Break up (Percentage of Total Equity)

Category	Percentage of Holding
Foreign holdings( Foreign institutional investor(s), Foreign companie(s) Foreign financial institution(s), Non-resident Indian(s) or Overseas Corporate bodies or Others	100.00
Total	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing and Trading of Excavators/Loaders and Construction Equipments, related spares and components.

Products :

Item Code No. (ITC Code)	Product Description
84295900	Excavators and Loaders

· JS 200l- Tracked excavator

· JCB Robot- Skid Steer

· JCB 4CX- Backhoe Loader

· JCB 3D- Backhoe Loader

· Artivulated Loading Shovel

· Skid Steer Loaders

· Track Excavator

· JCB 430Z- Artivulated loading shovel

· Backhoe Loaders

· Wheeled Excavator

· Mini Excavator

· Wheeled Loaders

· Skid Steer Loaders

· Telescopic Handlers

· Artivulated Dump Trucks

· Rough Terrain Forklifts

· Teletruks

GENERAL INFORMATION

No. of Employees :	Not Divulged
Bankers :	Standard Chartered Bank, 17, Parliament Street, New Delhi, India

Banking Relations :	--
Auditors :
Name :	Price Waterhouse Chartered Accountants
Address :	Building No.8, Tower B, DLF Phase II, DLF Cyber City, Gurgaon, Haryana, India
Income-tax PAN of auditor or auditor's firm :	AAEFP1428R
Holding Company :	J C Bamford Excavators Limited, United Kingdom
Parent of Holding Company:	JCB Service, UK
Ultimate Holding Company:	Transmissions and Engineering Service Netherlands B V, Netherlands
Subsidiary:	JCB Construction Equipment Limited, India CIN No. : U74999DL2004PLC125276
Enterprises with ultimate beneficial ownership and with which the Company has transactions during the year:	· JCB Financial Advisor Private Limited, India CIN No. : U65923DL2007FTC162589 JCB Mauritius Limited
Trust:	Employees Superannuation Trust
Fellow Subsidiaries:	· JCB Heavy Products Limited, UK JCB Transmissions, UK JCB Sales Limited, UK JCB Earthmovers Limited, UK JCB Material Handling Limited UK JCB Landpower Limited, UK JCB Inc., USA JCB Compact Products Limited, UK JCB Cab Systems Limited, UK JCB Power Systems Limited, UK JCB Sales Asia Pacific PTE Ltd, Singapore J C Bamford Investments, UK JCB Defence Products Limited, UK JCB Vibromax GmBH, Germany JCB Construction Equipment (Shanghai) Co. Ltd. China JCB Do Brasila Limited, Brazil Associates of Holding Company JCB Research, UK Bholdings Limited, UK JCB World Brands India Private Limited, India Firm in which one director is a partner: Kanga and Company

CAPITAL STRUCTURE

As on 08.08.2013

Authorised Capital :

No. of Shares	Type	Value	Amount
4500000	Equity Shares	Rs.100/- each	Rs. 450.000 Millions
56500000	Preference Shares	Rs.100/- each	Rs. 5650.000 Millions
	Total		Rs. 6100.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
849000	Equity Shares	Rs.100/- each	Rs. 84.900 Millions

As on 31.03.2013

Authorised Capital :

No. of Shares	Type	Value	Amount
4500000	Equity Shares	Rs.100/- each	Rs. 450.000 Millions
56500000	Preference Shares	Rs.100/- each	Rs. 5650.000 Millions
	Total		Rs. 6100.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
885000	Equity Shares	Rs.100/- each	Rs. 88.500 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	31.03.2013	31.03.2012	31.03.2011
I. EQUITY AND LIABILITIES
(1)Shareholders' Funds
(a) Share Capital	88.500	88.500	90.767
(b) Reserves & Surplus	22137.628	17371.767	13869.537
(c) Money received against share warrants	0.000	0.000	0.000
(2) Share Application money pending allotment	0.000	0.000	0.000
Total Shareholders’ Funds (1) + (2)	22226.128	17460.267	13960.304
(3) Non-Current Liabilities
(a) long-term borrowings	0.000	0.000	0.000
(b) Deferred tax liabilities (Net)	5.115	37.414	59.212
(c) Other long term liabilities	133.695	104.087	72.874
(d) long-term provisions	111.121	108.658	101.611
Total Non-current Liabilities (3)	249.931	250.159	233.697
(4) Current Liabilities
(a) Short term borrowings	0.000	0.000	0.000
(b) Trade payables	6521.900	6451.177	6472.759
(c) Other current liabilities	1276.574	1260.269	1162.273
(d) Short-term provisions	888.267	853.230	699.725
Total Current Liabilities (4)	8686.741	8564.676	8334.757
TOTAL	31162.800	26275.102	22528.758
II. ASSETS
(1) Non-current assets
(a) Fixed Assets
(i) Tangible assets	7754.281	6210.159	5483.349
(ii) Intangible Assets	62.005	45.969	93.443
(iii) Capital work-in-progress	392.514	533.922	114.542
(iv) Intangible assets under development	0.000	42.258	17.646
(b) Non-current Investments	0.500	0.500	0.500
(c) Deferred tax assets (net)	0.000	0.000	0.000
(d) Long-term Loan and Advances	1301.259	1246.911	380.422
(e) Other Non-current assets	0.000	0.000	0.000
Total Non-Current Assets	9510.559	8079.719	6089.902
(2) Current assets
(a) Current investments	0.000	0.000	0.000
(b) Inventories	3240.806	3972.294	3330.891
(c) Trade receivables	7407.441	6937.909	5768.665
(d) Cash and cash equivalents	9116.886	5585.361	5451.875
(e) Short-term loans and advances	1823.153	1666.369	1871.091
(f) Other current assets	63.955	33.450	16.334
Total Current Assets	21652.241	18195.383	16438.856
TOTAL	31162.800	26275.102	22528.758

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2013	31.03.2012	31.03.2011
	SALES
		Income	51577.486	54554.522	44505.257
		Other Income	1411.943	1118.856	784.769
		TOTAL (A)	52989.429	55673.378	45290.026
Less	EXPENSES
		Cost of Materials Consumed	31144.690	32952.116	25923.087
		Purchases of Stock-in-Trade	3360.653	3532.192	3009.103
		Changes in inventories of finished goods, work-in-progress and Stock-in-Trade	439.544	(13.750)	(517.476)
		Employees benefits expense	2613.231	2242.669	1863.845
		Other expenses	7547.712	8095.061	7020.658
		TOTAL (B)	45105.830	46808.288	37299.217
	PROFIT/ (LOSS) BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		7883.599	8865.090	7990.809
Less	FINANCIAL EXPENSES (D)		0.577	5.400	35.868
	PROFIT / (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		7883.022	8859.690	7954.941
Less/ Add	DEPRECIATION/ AMORTISATION (F)		798.532	752.857	647.840
	PROFIT/ (LOSS) BEFORE TAX (E-F) (G)		7084.490	8106.833	7307.101
Less	TAX (H)		2318.629	2627.345	2482.016
	PROFIT/ (LOSS) AFTER TAX (G-H) (I)		4765.861	5479.488	4825.085
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		17358.000	13345.676	8520.591
Less	APPROPRIATIONS
		Transfer to General Reserve	0.000	2.267	0.000
		Utilization for Equity Share buyback during the year	0.000	1464.897	0.000
	BALANCE CARRIED TO THE B/S		22123.861	17358.000	13345.676
	EARNINGS IN FOREIGN CURRENCY
		Export of goods calculated on F.O.B. basis	6953.847	5143.602	3279.819
		Export of services	236.840	133.786	79.129
	TOTAL EARNINGS		7190.687	5277.388	3358.948
	IMPORTS
		Raw material, components and spare parts	4515.153	4991.676	3404.266
		Capital goods	96.450	466.543	177.626
		Trading machines	38.969	73.234	73.878
	TOTAL IMPORTS		4650.572	5531.453	3655.770
	Earnings / (Loss) Per Share (Rs.)		5385.15	6038.53	5315.90

KEY RATIOS

PARTICULARS		31.03.2013	31.03.2012	31.03.2011
PAT / Total Income	(%)	8.99	9.84	10.65
Net Profit Margin (PBT/Sales)	(%)	13.74	14.86	16.42
Return on Total Assets (PBT/Total Assets}	(%)	23.02	31.55	32.63
Return on Investment (ROI) (PBT/Networth)		0.32	0.46	0.52
Debt Equity Ratio (Total Debt/Networth)		0.00	0.00	0.00
Current Ratio (Current Asset/Current Liability)		2.49	2.12	1.97

FINANCIAL ANALYSIS

[all figures are in Rupees Millions]

DEBT EQUITY RATIO

Particular	31.03.2011	31.03.2012	31.03.2013
	(Rs. In Millions)	(Rs. In Millions)	(Rs. In Millions)
Share Capital	90.767	88.500	88.500
Reserves & Surplus	13869.537	17371.767	22137.628
Net worth	13960.304	17460.267	22226.128
long-term borrowings	0.000	0.000	0.000
Short term borrowings	0.000	0.000	0.000
Total borrowings	0.000	0.000	0.000
Debt/Equity ratio	0.000	0.000	0.000

YEAR-ON-YEAR GROWTH

Year on Year Growth	31.03.2011	31.03.2012	31.03.2013
	(Rs. In Millions)	(Rs. In Millions)	(Rs. In Millions)
Sales	44505.257	54554.522	51577.486
		22.580	-5.457

NET PROFIT MARGIN

Net Profit Margin	31.03.2011	31.03.2012	31.03.2013
	(Rs. In Millions)	(Rs. In Millions)	(Rs. In Millions)
Sales	44505.257	54554.522	51577.486
Profit	4825.085	5479.488	4765.861
	10.84%	10.04%	9.24%

LOCAL AGENCY FURTHER INFORMATION

Sr. No.	Check List by Info Agents	Available in Report (Yes / No)
1]	Year of Establishment	Yes
2]	Locality of the firm	Yes
3]	Constitutions of the firm	Yes
4]	Premises details	No
5]	Type of Business	Yes
6]	Line of Business	Yes
7]	Promoter's background	Yes
8]	No. of employees	No
9]	Name of person contacted	No
10]	Designation of contact person	No
11]	Turnover of firm for last three years	Yes
12]	Profitability for last three years	Yes
13]	Reasons for variation <> 20%	-----
14]	Estimation for coming financial year	No
15]	Capital in the business	Yes
16]	Details of sister concerns	Yes
17]	Major suppliers	No
18]	Major customers	No
19]	Payments terms	No
20]	Export / Import details (if applicable)	No
21]	Market information	-----
22]	Litigations that the firm / promoter involved in	Yes
23]	Banking Details	Yes
24]	Banking facility details	Yes
25]	Conduct of the banking account	-----
26]	Buyer visit details	-----
27]	Financials, if provided	Yes
28]	Incorporation details, if applicable	Yes
29]	Last accounts filed at ROC	Yes
30]	Major Shareholders, if available	Yes
31]	Date of Birth of Proprietor/Partner/Director, if available	Yes
32]	PAN of Proprietor/Partner/Director, if available	No
33]	Voter ID No of Proprietor/Partner/Director, if available	No
34]	External Agency Rating, if available	No

LITIGATION DETAILS

IN THE HIGH COURT OF DELHI AT NEW DELHI

ITA 195/2014, CM APPL.7855/2014 and

ITA 202/2014

 COMMISSIONER OF INCOME TAX II ..... Appellant

Through: Mr. Sanjeev Sabharwal, Sr. Standing Counsel with Mr. Ruchir Bhatia, Jr. Standing Counsel.

versus

 JCB INDIA LIMITED. ..... Respondent

 Through: Mr. Mayank Nagi, Advocate.

CORAM:

HON'BLE MR. JUSTICE S. RAVINDRA BHAT

HON'BLE MR. JUSTICE VIBHU BAKHRU

 O R D E R

06.05.2014

Issue notice. Mr. Mayank Nagi, Advocate accepts notices.

The following common question of law arises for consideration: -

Did the ITAT fall into error in holding that the expenditure for AY 2007-08 (Rs.20.800 Millions) and for 2008-09 (Rs.14.900 Millions) had to be as it was essentially capital in nature given the circumstances of the case.

 List on 5th August, 2014 for hearing.

It is open to the parties to file additional documents, if any, that were part of the record before the lower authorities, subject to their being supported by the affidavits.

 S. RAVINDRA BHAT, J

MAY 06, 2014/vks/ VIBHU BAKHRU, J

INDEX OF CHARGES

S.NO.	CHARGE ID	DATE OF CHARGE CREATION/MODIFICATION	CHARGE AMOUNT SECURED	CHARGE HOLDER	ADDRESS	SERVICE REQUEST NUMBER (SRN)
1	90041234	12/05/1994	380,000.00	CANARA BANK	NEHRU GROUND, FARIDABAD, HARYANA, INDIA	-

GENERAL INFORMATION

The Company is mainly engaged in the business of 'manufacturing and trading of Excavators/Loaders, Construction Equipments, related spares and components'. The Company is a wholly subsidiary of J.C.Bamford Excavators Limited, United Kingdom.

MARKET OUTLOOK

During the year 2012-13, the Indian economy recorded a GDP growth of 5.0% which incidentally is the lowest that the country has shown in the past decade. The slowdown in growth is attributed to various regulatory roadblocks, slowdown in infrastructure investments, liquidity crunch, burgeoning current account deficit and high interest rates. These factors led to deferment of investment in various private projects and slow pace of infrastructural investment at the national level. This ultimately resulted in a sharp decline in the demand for Construction Equipments during the past 3-4 quarters. The 1st quarter of the current fiscal 2013-14 has also started on a slow note and the demand for Construction Equipment is well below the previous year. There is though hope for future - the Government has sent strong signals on reviving spending on infrastructure projects like roads, railways, highways, clearing out the licensing issues in mining sector, opening up of Foreign Direct Investment (FDI) etc.

Which should ultimately result in revival of overall demand in the economy leading also to benefit the Construction Equipment industry.

The industry estimates that long term demand drivers, primarily infrastructure needs for the economy, remain intact for infrastructural growth of the economy. The medium term growth in the industry would, however, be dependent on successful implementation of the 12th five year plan which underlines the demand for quality infrastructure.

On the internal front, the Subject continues to focus on maximizing customer satisfaction, growth in revenue, increased market penetration and addition to the product portfolio for future growth.

The Subject has continued to focus on expanding its customer base through increased efficiency of the equipment, and technology up-gradation and thereby enhance shareholders value. The Subject endeavors to reach at all segments of the customer base by way of national / regional launches and customers? meet, increased marketing initiatives and share of voice by way of electronic and print media in order to enhance its market share.

With this objective in mind and hope for favorable conditions, through a large well spread network of fifty nine dealers in India and neighboring countries , twenty regional and area offices, two parts center at Faridabad and three regional parts warehouses at Pune, Kolkata and Chennai and presence at more than 500+ locations nationwide along with a range of products in its basket, the Subject is well equipped to provide the best products and parts, support and services to its increasing number of customers. The Subject continues to work closely with its dealer network to improve their infrastructure and provide the best services and support to the customers.

BUSINESS ENVIRONMENT

The company has experienced various challenges with the new entrants in the Indian construction equipment industry. With the emergence of new market players including the Chinese and expansion plans underway, the industry is expected to become more competitive. However, the Company is well geared to take on these challenges in this business environment.

BUSINESS PERFORMANCE

The Sales and Other Income of the Subject for the financial year were Rs. 53017.700 millions as against Rs. 55700.800 millions for the previous year. The Profit before tax (after interest and depreciation charges) of Rs. 70845 lacs and the Profit after tax of Rs. 4765.900 millions for the financial year as against Rs. 8106.700 millions and Rs. 5479.400 Millions respectively for the previous financial year.

The Subject continues to focus on managing cash through improved working capital management and efficient utilization of its assets.

The Subject continues its endeavor to perform well and is geared to maintain its leadership position in the market. Various steps taken by the Subject have helped it to retain its leadership position in Backhoe segment while increasing its market share in Excavators, Wheeled Loaders, Compactors and Pick and Carry Cranes segments.

CONTINGENT LIABILITIES:

PARTICULARS	31.03.2013 (Rs. In Millions)	31.03.2012 (Rs. In Millions)
Consumer Forum and Civil suits	139.293	117.824
Escorts Finance Limited	--	--
Employment related cases disputed by the Company	12.358	10.866
Excise duty and service tax show cause cum demand notices being contested by the Company	1949.946	1781.641
Demand from Municipal Corporation of Faridabad and Haryana Urban Development Authority	--	--
Demand from Employees State Insurance and Provident Fund disputed by the Company	4.358	4.209
Sales Tax, disputed by the Company	162.499	313.874
Income-tax demands against the Company not provided for in respect of which the Company is in appeal before the Income-tax Appellate Tribunal /other Authorities	2049.865	1507.035
Others	14.972	14.972
Total	4333.291	3750.421
NOTE The amounts above represent the best possible estimates arrived on the basis of available information. The future cash flows and possible reimbursements are dependant on outcome of various legal proceedings pending with various forums/authorities.

FIXED ASSETS

Tangible Assets

· Land (Leasehold)

Land (freehold)

Buildings

Plant and Machinery

Office Equipments

Furniture and Fixtures

Vehicles

Intangible Assets

· Technical know-how

Software

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.60.81
UK Pound	1	Rs.100.06
Euro	1	Rs.78.47

INFORMATION DETAILS

Information Gathered by :	PRT
Analysis Done by :	DIV
Report Prepared by :	MRI

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	7
--RESERVES	1~10	9
--CREDIT LINES	1~10	7
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	NO
--LITIGATION	YES/NO	YES
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
DEFAULTER
--RBI	YES/NO	NO
--EPF	YES/NO	NO
TOTAL		67

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.