TWENTY EIGHTHANNUAL REPORT

2012-13

DENSO INDIA LIMITED

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BOARD OF DIRECTORS

MANAGING DIRECTOR

Mr. Koji Shiga

DIRECTORS

Mr. J.S. Baijal

Mr. A.C. Chakrabortti

Mr. R.K. Bhatnagar

Mr. K. Asai

Mr. Sadahiro Usui (w.e.f. 14th August 2012)

Mr. Koji Arima (till 14th August 2012)

Mr. M. Adachi

Mr. E. Seto (till 7th August, 2013)

Mr. T. Takashima (w.e.f. 7th August, 2013)

Mr. N. Takamura (Alternate Director to Mr. M. Adachi)

Mr. M. Ono (Alternate Director to Mr. S. Usui w.e.f. 14th August 2012)(Alternate Director to Mr. K. Arima till 14th August 2012)

Mr. Taro Nanko (Alternate Director to Mr. T. Takashima w.e.f. 7th August 2013)(Alternate Director to Mr. E. Seto till 7th August, 2013)

CONTENTS : Page No. (s)

Board of Directors 1

Notice 2-3

Directors’ Report 4-8

Report on Corporate Governance 9-16

Auditors’ Report 17-19

Balance Sheet 20

Profit & Loss Account 21

Cash Flow Statement 22-23

Notes 24-51

COMPANY SECRETARY

Mr. Alok Mathur

AUDITORSDeloitte Haskins & SellsChartered Accountants,Gurgaon

REGISTERED OFFICEB-1/D-4, Ground Floor,Mohan Co-operative Industrial EstateMathura Road,New Delhi-110044Tel. No. : 26953994, 26952308Fax : 26953993E-mail : DNIN_CS@denso.co.in

WORKS1. Noida-Dadri Road, P.O. Tilpatta, Tehsil-Dadri, District Gautam Budh Nagar, Uttar Pradesh-203 207

2. Plot No. 16, Industrial Park-II Salempur, Mehdood, Haridwar Uttrakhand - 2494023. Kannamangala,

Whitefield Hoskota Road, Bangluru Karnataka-560067

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NOTICENotice is hereby given that the Twenty Eighth Annual General Meeting of the Company shall be held on Monday, 30th day of September, 2013 at 10.30 a.m. at Sri Sathya Sai International Center, Pragati Vihar, Institutional Area, Lodhi Road, New Delhi - 110 003 to transact the following business:

ORDINARY BUSINESS:

1. To receive and adopt the Audited Profit and Loss Account for the year ended March 31, 2013 and the Audited Balance Sheet as at that date together with the reports of the Directors and Auditors thereon.

2. To appoint Auditors of the Company in place of those retiring and to fix their remuneration. The present Auditors are eligible for reappointment.

3. To appoint a Director in place of Mr. A.C. Chakrabortti who retires by rotation and being eligible offers himself for re-appointment.

4. To appoint a Director in place of Mr. S. Usui who retires by rotation and being eligible offers himself for re-appointment.

By Order of the Board

Place: New Delhi Alok Mathur

Date : 7 August, 2013 Company Secretary

NOTES:

(A) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND ON POLL, VOTE INSTEAD OF HIMSELF. THE PROXY NEED NOT BE A MEMBER OF THE COMPANY.

(B) The Register of Members of the Company will be closed from 24th September, 2013 to 30th September, 2013, both days inclusive.

(C) Pursuant to the provisions of Section 205A of the Companies Act, 1956, the amount of dividend which remains unpaid/unclaimed for a period of 7 years would be transferred to the “Investor Education and Protection Fund (IEPF)”, constituted by the Central Government and Member(s) would not be able to claim any amount of dividend so transferred to the Fund. As such, Member(s) who have not yet encashed his/their dividend warrant(s) is/are requested in his/their own interest to write to the Company immediately for claiming the outstanding dividend declared by the Company for the year ended 31.3.2006 and onwards.

(D) A brief resume, expertise, shareholding in the Company and other disclosures pursuant to Clause 49 of the Listing Agreement with respect to the Directors seeking re-appointment at the Annual General Meeting, are given in the annexure to this Notice.

(E) The Ministry of Corporate Affairs (MCA) has permitted paperless compliances by the Companies; vide its circulars No. 17/2011 and No. 18/2011 dated April 21, 2011 and April 29, 2011 respectively. MCA has clarified that service of documents on Members by e-mail will constitute sufficient compliances with Section 53 of the Companies Act, 1956, provided the Members are given an advance opportunity to register their Email address or changes, if any, therein with the Company. Members are requested to provide their email ID to our Registrar M/s MAS Services Ltd. at T- 34, Second Floor, Okhla Industrial Area, Phase-II, New Delhi- 110020 for the purpose of service of documents viz. Annual Report, Notice of General Meetings, Notice of Postal Ballot etc.

(F) Members are requested to intimate any change of registered address (including PIN code number) to the Registered Office of the Company, if they are holding shares in physical forms only.

(G) PLEASE NOTE THAT NO SWEET COUPONS / GIFTS SHALL BE DISTRIBUTED AT THE FORTHCOMMING ANNUAL GENERAL MEETING.

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ANNEXURE TO THE NOTICE DATED 7 AUGUST, 2013 – ITEM NOS. 3 & 4DETAILS OF DIRECTORS SEEKING RE-APPOINTMENT

AT THE ANNUAL GENERAL MEETING

(IN PURSUANCE OF CLAUSE 49 OF THE LISTING AGREEMENT)

Name of Directors Mr. A.C. Chakrabortti Mr. S. Usui

Date of Birth 02.10.1930 09.09.1958

Date of Appointment 23rd March, 2002 14th August, 2012

Expertise Finance Economics

Qualification B.Com (First Class) from Calcutta University and is the Fellow Member of the Institute of Chartered Accounts of India.

Graduate in Economics from Nagoya University, Japan

Directorship held in other companies

La Opala Glass Limited Peerless Fund Management Co. Ltd.Peerless General Finance & Investment Company LimitedRasoi Industries LimitedTexmaco Rail & Engineering LimitedChandras’ Chemicals Enterprise Pvt Ltd.Madhya Pradesh Madhya Kshetra Vidyut Vitaran Co. Ltd.

Denso Manufacturing Italia S.p.A.Denso (Thailand) Co. Ltd.Denso Taiwan CorporationTianjin Denso Engine Electrical Products Co. Ltd.Denso Katsuyama Co. Ltd.Denso Remani Corporation

Committee Positions Member of Audit Committee, Remuneration Committee of Denso India Limited

Nil

Shareholding in the Company as on 31.03.2013

Nil Nil

Relationship with other Directors None None

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DIRECTORS’ REPORTYour Directors present Twenty Eighth Annual Report of the Company together with the audited statement of accounts for the financial year ended 31st March 2013.

FINANCIAL RESULTS

` in Million ` in MillionFor the year

ended31.03.2013

For the year ended

31.03.2012Gross Sales 13,583 11,351Sales (Net of Excise) 12,186 10,362Profit/(Loss) (before Exceptional items and Tax) (637) (691) Exceptional Items 827 (26)Profit/(Loss) for the year before Taxation 190 (717) Tax Expenses 62 5 Profit/(Loss) for the year 128 (722)

MANAGEMENT DISCUSSION AND ANALYSIS:

The Indian economy substantially slowed down during 2011-12 and the slowdown has continued further with overall growth of Gross Domestic Product (GDP) at factor cost estimated at 5.0 percent in 2012-13, with agriculture & allied activities growing at 1.8 per cent, industry at 3.1 per cent and services at 6.6 per cent as per advance estimates released by the Central Statistics Office. The slower growth in agriculture and service sectors had considerable impact on Auto industry.

During the year under review, there was no respite from spiraling oil prices, inflation and high interest rates which continued to severely dampen automotive business sentiments. Depreciation of rupee to the dollar contributed to fuel price rise. The industrial relation related problems at the end of the major customers of the Company also impacted sales and savings plan of the Company. High inflation, particularly the rising prices of vegetables, meat, dairy and other food items as well as increase in education expenses had considerable impact on three years wage settlement agreement, which the Company concluded with the workmen union during the year under review. This has increased indirect and direct labour cost of the Company. Electricity Distribution Company also raised prices by about 40% during the year.

While the inflationary pressure, adverse exchange rate fluctuations, rising fuel prices and interest rates, coupled with problems at the end of major customers of the Company resulted in severe financial strain for the Company during the year, however expected improvement in economic parameters of Indian economy and automobile market scenario, will help

the Company to come out of difficult time in coming years.

INDUSTRY STRUCTURE AND DEVELOPMENT

The industry has developed in clusters which have large number of companies with their vendor base. The major automotive hubs being in Pune region (Maharastra), NCR region, Pithampur (MP), Chennai, and Uttaranchal. Gujrat is emerging as the latest major automotive hub. This includes virtually all the major global OEMs (original Equipment Manufactures) as well as home grown companies. India has surpassed France, UK and Italy to become the 6th largest vehicle manufacture globally.

Presently the Indian Auto industry is in the midst of severe slow down and is a matter of concern for all vehicle makers and part suppliers. Though over long term, growth story is still intact, however to adjust to continuous slow down for last 15 months, the companies have resorted to planned shut downs, price discounts, extra ordinary items, laying off casual labour and have announced postponement of new investment. The industry is witnessing transition of manufacturing base from North to South and West due to various reasons. Amidst the turmoil, there have been some good short stories of success e.g. Amaze from Honda and Duster from Renault, rekindling the hope for a brighter future.

OPERATIONS:

During the year under report turnover of your Company increased to ` 13,583 million from ` 11,351 million in 2011-12. While finance cost came down to ` 78 million from ` 117 million, the cost of material consumed , employee benefit expenses , administrative and other expenses increased due to inflationary pressure.

Your Company earned a profit of ` 128 million during the year against a loss of ` 722 million suffered in 2011-12. As an exceptional item, profit of ` 827 million from transfer of Small Motor Business contributed towards the profit for the year. However, during the year Company suffered a loss of ` 637 million from operations as compared to loss of ` 691 million in 2011-12.

DIVIDEND:

Considering the present financial condition and current market situation no dividend is recommended for the year ended March 31, 2013.

SMALL MOTOR BUSINESS

The Board of Directors and the shareholders (through Postal Ballot) at their meeting held on 12th November 2011 and 21st December, 2011 respectively had granted their approvals to the Company to sell all assets (tangible and intangible),

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liabilities and transfer employees of small motor business to Denso Haryana Private Limited (DNHA), a DENSO group company, for a total consideration of ` 1477 million, which was subject to adjustments in relation to working capital in between the balance sheet of the reference date (as at 31st March, 2011) and the completion date (1st October, 2012).

During the year, your Company sold Small Motor Business i.e Front/ Rear Wiper, Power Window Motors, Blower Motors, Electric Fan Motors and Engine Cooling Modules to DENSO Haryana Private Limited, on a going concern basis, by way of slump sale, to re-align/restructure the business to address economic constraints and to focus on areas of future growth.

On 1st October, 2012 the Company transferred the small motor business having book value of ` 1049 million to DNHA against total consideration of ` 1876 million and recorded a profit of ` 827 million.

FACTORY AT HARIDWAR

Your Company had established a factory at Haridwar in year 2009, mainly to cater to the needs of M/s Hero MotoCorp Ltd. (previously Hero Honda Motors Ltd.). The Company’s factory at Haridwar is performing satisfactorily, however M/s Hero MotoCorp Ltd. lost market and had lower sales in the range of vehicle for which your Company is supplying products. This is a cause of concern for Haridwar factory of your Company where we have only one customer in our plan.

FACTORY AT BANGALORE

During the year, the Company has taken the premises on lease and has set up a new factory at Bangalore. This factory at Bangalore will cater to the requirements of two wheelers manufacturers in southern India and mainly Honda Motorcycle and Scooter India Pvt. Ltd. (HMSI). The production at Bangalore factory is expected to pick up with the setting up and increase in activities of HMSI plants in South.

OPPORTUNITIES, THREATS AND OUTLOOK:

Sensitivity to fuel prices and interest rates can cause huge fluctuations in market demand of cars and two wheelers thereby posing a significant threat to the corresponding demand of the Company’s products.

The industry is witnessing shift in customer preference from petrol driven cars to diesel driven vehicles. The uncertainty over fuel policy and raising diesel price pose a dilemma for vehicle manufacturers. Capacity allocation between petrol and diesel driven vehicles and CAPEX commitments will increasingly pose challenges before vehicle manufacturers and component industry in the coming months. The intensifying competition and unpredictability of volumes and product mix may also present major threat and challenge for your Company.

The vehicle manufacturers expect component industry to improve scalability and develop a reliable and robust manufacturing system and deliver global levels of technology and quality products. The vehicle manufacturers require their suppliers to be able to not only localize the systems or components supplied by them but also to supply the same from a location nearer to their manufacturing facility from logistics point of view to avoid delivery problems caused due to infrastructure constraints of the Country. This poses significant challenge for the component industry in the back drop of the fact that the industry is witnessing transition of manufacturing base from North to South and West due to various reasons. While on the one hand, the component industry is grappling with the problem of excess capacity, yet on the other hand is expected to set up a manufacturing facility closure to the new location of the vehicle manufacturers thereby significantly increasing CAPEX commitments and fixed costs.

The Company is making constant endeavors for localization of various parts and components and identifying cost effective ways of manufacturing them in-house or through vendors. Awareness and regulation on fuel efficiency will become a big trend in India in the next few years as it helps both the economy and the environment. The Company is conscious of these developments and poised to take advantage of these trends. Setting up a factory in Bangalore and decision to focus on Alternator/ Starter (in case of four wheelers) and CDI/ Magneto (in case of two-wheelers) businesses, which contribute to vehicle engine performance by optimizing fuel cost and reducing emissions, are the steps in that direction.

SEGMENT WISE PERFORMANCE:

The Company’s operating business is organized and managed according to the nature of product, with single Primary Reportable Segment comprising of manufacturing and supply of electrical automotive components.

INTERNAL CONTROL SYSTEMS:

The Company has an adequate system of internal controls to ensure that transaction are properly recorded, authorized and reported apart from safeguarding Company’s assets. Well-experienced Chartered Accountant firm appointed by the Company for internal audit, reviews operations at all the establishments of the Company. All significant internal audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews the adequacy and effectiveness of the internal audit.

HUMAN RESOURCES:

Your Directors wish to place on record their appreciation for the commitment and dedication shown by the employees at all the areas of operation of the Company. Various HR initiatives are taken to align the HR policies to the growing requirements

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of the business. The Industrial Relations remained cordial during the year and the Company executed a wage settlement agreement with the Workmen Union for a period of three years effective from 1st April 2012 to 31st March 2015. As on 31st March 2013 your company had 1273 employees.

INSURANCE

All the assets of your Company including Plant & Machinery, Building, Equipment, and Vehicles etc. have been adequately insured.

CAUTIONARY NOTE:

Certain statements in the “Management Discussion and Analysis” section may be forward looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which could be different from what the Directors’ envisage in terms of the future performance and outlook.

DELISTING PROPOSAL

The Company received a letter on 26th April 2013 from Denso Corporation, Japan, (“Acquirer”) one of the promoters of the Company holding 13,362,091 Equity Shares of the Company constituting 47.93% of the paid up equity capital of the Company, proposing to voluntarily delist the Equity Shares of the Company from BSE Ltd. (BSE), Delhi Stock Exchange Limited and Madras Stock Exchange Limited under the provisions of Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (“Delisting Regulations”) by acquiring up to 7,398,019 Equity Shares held by public shareholders in the Company representing 26.54% of the issued and paid up equity share capital of the Company (“Delisting Proposal”).

Denso Corporation, Japan has stated in the aforesaid letter that the main objectives of Delisting Proposal is (i) to increase ownership in the Company, which will provide the Acquirer with increased operational flexibility to support the Company’s business; and (ii) to provide an exit opportunity to the public shareholders of the Company, given the low liquidity in the Equity Shares of the Company.

The Board of Directors, in the meeting held on 27th April 2013, has Approved the Delisting Proposal pursuant to and in accordance with section 8(1)(a) of the Delisting Regulations and has consented to place the Delisting Proposal before the shareholders of the Company for their consideration and to seek their approval by special resolution passed through postal ballot in accordance with Delisting Regulations.

FIXED DEPOSITS:

The Company has not invited or availed Fixed Deposits from the public during the year under review.

AUDIT COMMITTEE

During the year the Audit Committee Meetings were conducted as per the provisions of listing agreement with the stock exchange(s). The details about the functioning of the committee are being enumerated in the Corporate Governance report section, which is part of the Annual Report for the year ended March 31, 2013.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, retire at forthcoming Annual General Meeting and are eligible for re-appointment as Statutory Auditors. Observations made in the Auditors’ Report read with Notes to the Financial Statements are self explanatory and therefore, do not call for any further comments under Sec. 217 (3) of the Companies Act, 1956.

COST AUDITORS

Consequent to the issue of Cost Audit Order by the Cost Audit Branch, Ministry of Company Affairs, the Company has appointed M/s M.K. Kulshrestha & Associates, Cost Accountant as the Cost Auditors as per the provision of Section 233B of the Companies Act, 1956 to audit cost accounts for the year 2013-14 .

DIRECTORS:

Mr. Koji Arima resigned from Directorship and Mr. Sadahiro Usui was appointed as Director in casual vacancy w.e.f. 14 August, 2012. Mr. M Ono ceased to be Alternate Director to Mr. Koji Arima and was appointed as Alternate Director to Mr. Sadahiro Usui w.e.f. 14 August, 2012.

Mr. S. Usui and Mr. A C Chakrabortti retire from the Board of Directors by rotation in accordance with the provisions of the Articles of Association of the Company and are eligible for reappointment.

PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO.

The Statement pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure forming part of this Report.

PARTICULARS OF EMPLOYEES

As per the existing salary limits of Section 217(2)(A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 as amended, as on 31st March, 2013, no employee of the Company is covered.

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DIRECTORS RESPONSIBILITY STATEMENT AS PER SECTION 217(2AA) OF THE COMPANIES ACT, 1956.

1. The Financial Statement for the year ended 31.03.2013 are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards notified under section 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

2. The Directors of Denso India Ltd. accept the responsibility for the integrity and objective of these Financial Statement as reflected through the consistent application of the Accounting Policies as well as for the estimates made and the judgment exercised relating to matters not concluded by year-end.

3. The Directors believe that the Financial Statements reflect fairly the form and substance of the transactions concluded and reasonably present the Company’s financial condition and true and fair view of the results of the operation for the year and the state of affairs of the business as at 31st March, 2013.

4. The Company has installed an accounting system and the financial statements have been prepared on a going concern basis along with a system of controls which are reviewed, evaluated and updated on an on going basis.

5. Our internal Auditors have conducted periodic audits to provide reasonable assurance that the established policies and the procedures of the Company have been followed for safeguarding the assets of the Company and for preventing any form of fraud and other irregularities subject to the inherent limitations in any system and procedure and coverage thereof that should be recognized in weighing the assurance provided by any system of internal controls. These have been reviewed periodically at Audit Committee Meetings.

6. The financial statements have been audited by M/s. Deloitte Haskins & Sells, Chartered Accountants, the statutory auditors.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to place on record their deep appreciation of the unstinted support extended by the management of Denso Corporation, Japan, Sumitomo Corporation, Japan, ASMO Co. Ltd., Japan, Maruti Suzuki India Limited and Denso International India Pvt. Ltd . Your Director also wish to express their sincere gratitude to the customers, vendors, shareholders, the bankers, the Central and State Governments and other agencies for their continued co-operation and support during the year under review.

For and on behalf of the Board

NOIDA Koji Shiga M. Ono28 May, 2013 Managing Director Director

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ANNEXURE TO DIRECTORS’ REPORTINFORMATION REQUIRED UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988.

A. CONSERVATION OF ENERGY

Form A of Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 – Not Applicable.

B. TECHNOLOGY ABSORPTION

The Company has obtained technical know how for the manufacture of auto components from Denso Corporation, Japan. The process of absorption of the technology is a continuing process

No expenditure either of Capital or Revenue nature on Research & Development has been incurred during the year under review.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:

Efforts made : New models are being developed to help in further localisation by vehicle makers.

Benefits derived: In-house skills are being developed in design, production engineering and endurance testing. Extensive help is also being provided to vendors to upgrade their technology to meet quality requirements.

a) Technology imported: Import of technology for the manufacture of auto electricals

b) Year of import:

Product Year

Alternators 1984

Regulators -do-

Starters -do-

Wiper Motors (with Link) -do-

AC Generators / Flywheel Magnetos 1988

Ignition coils for two/thee wheeler -do-

CDI Systems for two/three wheelers -do-

Fan Motor Assembly for Ventilation/ -do-

Engine Cooling -do-

c) Has technology been fully absorbed, areas where this has not taken place, reasons therefore and future plans of action.

Not applicable.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

The Company is pursuing its export plans. The exports of the products of the Company have been made to affiliates of Denso Companies around the world.

` in Million

EARNINGS [On Accrual Basis ]:FOB value of Exports 114

OUTGO [On Accrual Basis]:C.I.F value of Imports

Raw Material & Component (Including Trading Goods) 4659

Stores & Spare 22

Capital Goods 304

OUTGO [On Accural Basis]:Expenditure

Royalty 250

Technical Service Fees and Application Cost 158

Travelling,Training and Others 21

We are one of the major suppliers in our range of products to Maruti Suzuki India Limited for majority of their export designated vehicles.

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Report on Corporate GovernanceThe Directors are pleased to present Twelfth Corporate Governance Report for the year ended 31 March 2013.

Company’s Philosophy on “Code of Corporate Governance”

The Company is committed to achieve highest international standards of Corporate Governance. The Company’s essential character is shaped by the very values of transparency, professionalism and accountability. The Company continuously endeavors to improve on these aspects on an ongoing basis. In order to achieve this objective, the Company maintains a professional management team. The Board of Directors of the Company consists of Non-executive and Independent directors to monitor the management progress and key corporate decisions.

Board of Directors

Composition of the Board

The Board of Directors of the Company comprises Chairman, Managing Director and Independent Directors. As at 31 March 2013 the Company had 8 Directors. During the year under review, 7 Board Meetings were held, the dates being 29 May 2012, 4 June 2012, 20 July 2012, 14 August 2012, 8 September 2012, 10 November 2012 and 14 February 2013. The Annual General Meeting was held on 8 September 2012. Details of Directors and their attendance at the Board Meetings and Annual General Meeting are given below:

Name of the Director Status (Refer Note 1)

No. of Shares

held in the Company

No. of other Director - ships

(Refer Note 2)

No. of Chairmanship/ Membership in Board

Committee (Refer Note 3)

Attendance at

Chairman Member Board Meetings

Annual General Meeting

Mr. J. S. Baijal, (Chairman) NED-I - 2 - 4 6 Yes

Mr. Koji Shiga, (Managing Director) ED-NI - - - - 6 Yes

Mr. Minoru Ono (Alternate Director to Mr. Sadahiro Usai from 14 August 2012 and Alternate Director to Mr. Koji Arima till 13 August 2012 )

ED-NI - - - - 7 Yes

Mr. R. K. Bhatnagar NED-I - - - - 6 Yes

Mr. A. C. Chakrabortti NED-I - 6 2 2 5 Yes

Mr. Michio Adachi (Refer Note 4) NED-NI - - - - - -

Mr. Keiichi Asai (Refer Note 5) NED-NI - 3 — 1 1 -

Mr. Eichi Seto (Refer Note 6) NED-NI - 1 - - - -

Mr. Taro Nanko (Alternate Director to Mr. Eichi Seto)

NED-NI - - - - 4 Yes

Mr. Nobuyuki Takamura (Alternate Director to Mr. Michio Adachi

NED-NI - 1 - - 7 Yes

Mr. Sadahiro Usai (Refer Note 7) NED-NI - - - - - -

Notes : 1. The following abbreviations have been used in this table

NED-I: Non-Executive Director – Independent

NED-NI: Non-Executive Director – Non Independent

ED-NI: Executive Director – Non Independent

2. No. of other Directorships excludes Directorships held in Private Limited Companies, foreign companies and Section 25 companies.

3. In accordance with Clause 49 of the Listing agreement, Chairmanship / Membership of only Audit Committee and Shareholders’ / Investors’ Grievance Committee of Public Limited Companies has been considered.

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4. Nominee of Denso Corporation, Japan which owns 47.93% of the paid up equity share capital of the Company.

5. Nominee of the Maruti Suzuki India Limited, which owns 10.27% of the paid up equity share capital of the Company.

6. Nominee of the Sumitomo Corporation, which owns 10.27% of the paid up equity share capital of the Company.

7. Mr. Sadahiro Usui appointed as Director on 14 August 2012 to fill casual vacancy upon resignation of Mr. Koji Arima.

Remuneration

The Company has not paid commission on profits to any Non-Executive or Executive Directors during the year ended 31 March 2013. The remuneration paid to Executive Directors is approved by the Board of Directors in the Board Meeting and the Remuneration Committee Meeting, subject to the subsequent approval by the shareholder at the General Meeting and such other authorities as required for legal compliances by the Company. The remuneration is fixed considering various factors such as qualification, experience, expertise, prevailing remuneration in the corporate world and the financial position of the Company. The remuneration structure comprises of basic salary, perquisites and allowances. The Non-executive Directors of the company are paid remuneration by way of sitting fees of ` 20,000 for each meeting of the Board of Directors, Audit Committee and the Remuneration Committee. The Non-executive Directors of the company are also paid remuneration by way of sitting fees of ` 7,500 each quarter for the meetings of Investors Grievance Committee attended by them.

During the year ended 31 March 2013 the Company has paid fixed remuneration and sitting fees to the following Directors:

Name of the Director Sitting Fee (Rs)

Salary and Perquisites (Rs)

Total (Rs)

Non-executive and Independent Directors

Mr. J. S. Baijal 250,000 - 250,000

Mr. R. K. Bhatnagar 220,000 - 220,000

Mr. A. C. Chakrabortti 200,000 - 200,000

Executive Directors

Mr. Koji Shiga * - 2,826,649 2,826,649

Mr. Minoru Ono 4,447,475 4,447,475

* Mr. Koji Shiga is eligible to participate in the Employee Stock Option Plans (ESOPs) of Denso Corporation, Japan; the parent company for which no cost has been charged to the Company. Accordingly, the managerial remuneration does not include any cost towards aforesaid ESOP’s.

Company has also laid down a Code of Conduct for Board Members and Senior Management personnel of the Company. The same has also been posted on the website of the Company. All the Board Members and Senior Management personnel have affirmed compliance with the Code of Conduct as at 31 March 2013.

Audit Committee

The Audit Committee has been constituted as per Section 292A of the Companies Act, 1956 and the guidelines set out in the Listing Agreement with Stock Exchanges. As on 31 March 2013 the Audit Committee comprises of Mr. A. C. Chakrabortti, Mr. R. K. Bhatnagar and Mr. J. S. Baijal who are all Non-executive and Independent Directors of the Company. Mr. A. C. Chakrabortti is the Chairman of the Audit Committee. Mr. A. C. Chakrabortti was present in the Annual General Meeting held on 8 September 2012. All the members of the Committee are financially literate and have accounting or related financial management expertise as specified under Explanation 1 and Explanation 2 of sub clause II (A) (ii) of clause 49 of the Listing agreement. The terms of reference, role and scope of Audit Committee are in accordance with Clause 49 of the Listing Agreement with the Stock Exchanges read with Section 292A of the Companies Act, 1956.

Minutes of the Audit committee Meetings are circulated to the Members of the Board, discussed and taken note of. The Company Secretary acts as the Secretary to the Meetings of the Audit Committee. The Statutory Auditors, Managing Director and the Chief Financial Officer are invitees to the meetings of the Audit Committee.

During the year under review, 4 Audit Committee Meetings were held, the dates being 4 June 2012, 14 August 2012, 10 November 2012 and 14 February 2013. All members of the Audit Committee were present in all the above meetings.

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Remuneration Committee

As on 31 March 2013 the Remuneration Committee comprises of Mr. A. C. Chakrabortti, Mr. R. K. Bhatnagar and Mr. J. S. Baijal. Mr. A. C. Chakrabortti is the Chairman of the Remuneration Committee. During the year under review, 1 Remuneration Committee Meeting was held on 4 June 2012. All members of the Remuneration Committee were present in that meeting.

Investors’ Grievance Committee

The Investors’ Grievance Committee primarily deals with matters relating to share transfers; redressal of shareholders and investor complaints. As on 31 March 2013 the Investors Grievance Committee comprises of Mr. J. S. Baijal, Mr. Minoru Ono and Mr. Koji Shiga. Mr. J. S. Baijal is the Chairman of the Investors’ Grievance Committee. During the year under review, 24 Investors Grievance Committee Meeting was held, the dates being 16 April 2012, 30 April 2012, 15 May 2012, 14 June 2012, 30 June 2012, 16 July 2012, 30 July 2012, 16 August 2012, 1 September 2012, 28 September 2012, 8 October 2012, 17 October 2012, 31 October 2012, 7 November 2012, 27 November 2012, 12 December 2012, 24 December 2012, 2 January 2013, 17 January 2013, 29 January 2013, 12 February 2013, 27 February 2013, 6 March 2013 and 20 March 2013. Mr. J.S. Baijal was present in all Investors’ Grievance Committee meeting.

During the year ending 31 March 2013, the status of investor’s complaints is as under.

Investor complaints Number of Complaints

Unresolved at the beginning of the year -

Received during the year 5

Resolved of during the year 5

Unresolved at the end of the year -

The minutes of each Investors Grievance Committee Meeting are placed at the Board Meeting held immediately after the meeting of Investors Grievance Committee.

Brief profile of the Directors seeking re-appointment is provided in Notice convening 28th Annual General Meeting.

CEO and CFO Certification

The Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) have certified to the Board by placing a certificate thereof on the financials statements of the Company that:

(a) They have reviewed financial statements, cash flow statement and directors’ report for the year ended 31 March 2013, and to the best of their knowledge and belief;

(i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; and

(ii) These statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

(b) There are, to the best of their knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violation of the Company’s Code of Conduct.

(c) They have ensured that all the members of the Board of Directors and Senior management personnel have confirmed compliance with the Code of Conduct adopted by the Company.

(d) They accept responsibility for establishing and maintaining internal controls for financial reporting and that they have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and they have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which they are aware and the steps they have taken or propose to take to rectify these deficiencies.

(e) They have indicated to the Auditors and the Audit Committee :

(i) Significant changes in internal control over financial reporting during the year ;

(ii) Significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and

(iii) Instances of significant fraud of which they have become aware and the involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control system over financial reporting.

12

Risk Management

The Company has laid down procedures to inform Board members about the risk assessment and minimisation procedures. These procedures are periodically reviewed to ensure that executive management control risk through means of a properly defined framework.

General Body Meeting

Details of last three Annual General Meetings of the Company.

Financial Year Ended Date Venue Time

31 March 2010 31 August, 2010 FICCI Auditorium, New Delhi 10.30 a.m.

31 March 2011 29 August, 2011 Sri Sathya Sai International Center Lodhi Road, New Delhi

10.30 a.m.

31 March 2012 8 September,2012 Same as above 10.30 a.m.

No Special Resolution was passed during last three Annual General Meetings. No Extra Ordinary General Meeting was held during the year. During the last three years one Special Resolution was passed through Postal Ballot as given below.

During the year ended 31 March 2012, the members of the Company had approved through Postal Ballot a special resolution for empowering the Board of Directors to sell Small Motor Business to M/s. Denso Haryana Private Limited. The said special resolution was passed on 20 December 2011. The final results of the said Postal Ballot was published in the news paper on 22 December 2011

Means of Communication

a) Results published in the Newspapers:

Quarterly Financial Results Quarterly Financial Results were published in “Mint” and/or “Financial Express” and “Rashtiya Sahara” and/or “Jansatta” and was also informed to all the Stock Exchanges where the share are listed, through fax / couriers.

Appointment of Directors Individual letters were sent to all the shareholders for the appointment or re-appointment of a new director.

b) Official News release Not Issued

c) Presentation to Institutional Investor Not Issued

d) Financial Results/ Information on website: The Quarterly and Annual Financial Results are available on the website of the Stock Exchange, Mumbai i.e. www.bseindia.com

e) Management Discussion Analysis Report forms part of the Annual Report.

Disclosures

The Company follows the policy of placing annually before the Audit Committee a statement in summary form of transaction with related parties in the ordinary course of business carried out during the year.

In terms of the Accounting Standard-18 on “Related Party Disclosures”, the Company has identified the related parties covered therein and details of transactions with such related parties have been disclosed in the Note 47 in the financial statements. The Company has not had any transaction of material nature with the Directors and /or their relatives, promoters, management during the year that may have conflicts with the interest of the Company.

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards notified under section 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

There has neither been any non-compliance of any legal provisions of applicable law, nor any penalty, stricture was imposed by SEBI or Stock Exchanges or any other statutory authorities, on any matters related to Capital Market during the last three years.

The Company does not have a formal Whistler Blower Policy as at 31 March 2013.

13

General Shareholder’s Information:

(a) Date of Book Closure : 24 September 2013 to 30 September 2013 (Both days inclusive)(b) Date of AGM

Day of AGMTime of AGMVenue of AGM

30th September 2013 Monday10.30 A.M.Sri Sathya Sai International Center, Pragati Vihar, Institutional Area, Lodhi Road, New Delhi - 110 003

(c) Listing of Stock Exchange(s) As on March 31st, 2013, the shares of Company are listed on the following Stock Exchange(s): 1.2.3.

Delhi Stock Exchange Ltd.BSE Ltd.Madras Stock Exchange Ltd.

Listing fees for the year ended 31 March 2013 has been paid to the stock exchanges with in the stipulated time.(d) Stock Code

Demat ISIN Number for NSDL & CDSL– Physical 520022

INE502A01017

(e) Registrar and Share Transfer Agent

MAS Services Limited T-34, 2nd Floor, Okhla Industrial Area, Phase-II, New Delhi-110020Contact person: Mr. Sarvan MangalaPh.: 011-26387281-83, Fax: 011-26387386

(f) Stock Market Data

The month wise high and low quotations of the shares traded during April 1, 2012 to March 31, 2013 at BSE and BSE Sensex high are given below:

Month Open Price High Price Low Price Close Price No. of Shares No. of TradesApr 12 54.95 62.00 52.00 54.80 1,66,625 2,951May 12 55.00 56.80 47.15 49.50 31,323 846Jun 12 51.50 51.95 44.25 47.30 50,089 2,131Jul 12 47.00 50.95 43.60 45.80 30,386 1,975Aug 12 48.90 49.30 44.10 46.25 34,765 5,464Sep 12 47.95 48.25 44.00 46.50 45,133 3,660Oct 12 48.45 50.50 45.55 47.50 39,375 2,076Nov 12 47.00 48.45 42.05 45.50 58,646 3,731Dec 12 44.60 49.80 41.60 44.05 2,37,173 1,779Jan 13 44.95 46.95 40.10 41.05 1,10,357 6,002Feb 13 41.00 47.40 36.50 40.75 76,594 2,727Mar 13 40.00 51.45 40.00 43.90 1,91,671 5,516

* Sources: www.bseindia.com

(g) Stock Performance of the Company in comparison to BSE Sensex (High)

* Source: www.bseindia.com

14

(h) Share Transfer System

Share transfers are registered and returned within a period of thirty (30) days from the date of receipt, if the documents are in order in all respects. The Share Transfer Committee meets fortnightly depending upon the number of transfers received.

(i) Shareholding Pattern of the Company as on 31st March, 2013:

Category Number of shares held % Shareholding

A. Promoter’s holding

Promoters

- Indian Promoters 28,62,758 10.27

- Foreign Promoters 1,76,18,867 63.20

Person acting in concert

Sub-Total (A) 2,04,81,625 73.47

B. Non-Promoter’s holding

Institutional Investors

Mutual Fund and UTI 4,500 0.02

Banks ,Financial Institutions, Insurance Companies, Central / State Government Institutions/Non-Government Institutions

46,064 0.16

FIIs 19,74,263 7.08

Sub-Total (B) 20,24,827 7.26

Others:-

Private Corporate bodies 9,89,740 3.55

Indian Public 42,44,025 15.22

NRIs/OCBs 97,332 0.35

Clearing member 35,724 0.13

Any other (Trust) 6,371 0.02

Sub-Total (C) 53,73,192 19.27

Grand Total (A+B+C) 2,78,79,644 100.00

Distribution of Shareholding as on 31 March 2013

Shareholding of nominal value of ` Shareholders Folios Number of Shares

Numbers % to Total Numbers % to Total

Up to - 5000 12527 92.525 1432171 5.137

5001 – 10000 495 3.656 406290 1.457

10001 – 20000 239 1.765 365925 1.313

20001 – 30000 83 .613 215067 0.771

30001 - 40000 27 0.199 95645 0.343

40001 - 50000 44 0.325 208138 0.747

50001 - 100000 46 0.340 321124 1.152

100000 and above 78 0.576 24835284 89.080

Total 13539 100.00 27879644 100.00

15

(j) Outstanding ADR/GDR’s : Not Issued

(k) Plant Location

Unit – I: Noida Dadri Road, P.O. Tilpatta, Tehsil – Dadri, District Gautam Budh Nagar, Uttar Pradesh – 203 207.

Unit - II: Plot No. 16, Industrial Park–II, Salempur Method, Haridwar, Uttrakhand-249 402.

Unit- III: Kannamangala, Whitefield Hoskota Road, Bangluru Karnataka-560067

(l) Dematerialisation of Shares

The Company has an agreement with Central Depository Services (India) Limited (CDSL) and National Securities Depository Services Limited (NSDL) so that shareholders of the Company could avail the benefits of the multi-depository system. Up to March 31, 2013, 8260896 shares representing 29.63% of the total share capital is under demat which has resulted in reducing the physical delivery related problem to a large extent.

(m) Financial Calendar (tentative and subject to change)

Financial reporting for the first quarter ending, June 30, 2013 August, 2013

Financial reporting for the second quarter ending, September 30, 2013 November, 2013

Financial reporting for the third quarter ending, December 31, 2013 February, 2014

Financial results for the year ending March 31, 2014 May, 2014

Annual General Meeting for the year ending March, 31, 2014 August, 2014

(n) Investors correspondence may be addressed to

MAS Services Limited T-34, 2nd Floor, Okhla Industrial Area, Phase-II, New Delhi-110020 Ph.: 011-26387281-83, Fax: 011-26387384

Or to

Mr. Alok Mathur (Company Secretary), Denso India Limited B-1 / D-4, Ground Floor, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi –110044 Tel: 26952308, 26953994, Fax: 26953993

Shareholders holding shares in electronic mode should address all their correspondence to their respective Depository Participants.

12. Non-Mandatory Requirements:

The Company has not adopted the non-mandatory requirements as specified in Annexure-1 D of the Listing Agreement to the extent applicable.

16

Auditors’ Certificate regarding compliance of conditions of Corporate GovernanceTo the Members of Denso India Limited

We have examined the compliance of conditions of Corporate Governance by Denso India Limited for the year ended 31 March 2013, as stipulated in clause 49 of the Listing Agreements of the said Company with the Stock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has been limited to a review of the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance as stipulated in the said clause. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of information and according to the explanations given to us and representation made by the Directors and the management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the company.

For DELOITTE HASKINS & SELLSChartered Accountants

(Firm Registration No. 015125N)

(Khazat A. Kotwal)(Partner)

Gurgaon, 28 May 2013 (Membership No.103707)

17

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF DENSO INDIA LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of Denso India Limited (“the Company”), which comprise the Balance Sheet as at 31 March 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 (“the Act”) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;

(b) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

(e) On the basis of the written representations received from the directors as on 31 March 2013 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2013 from being appointed as a director in terms of Section 274(1)(g) of the Act.

For DELOITTE HASKINS & SELLS

Chartered Accountants(Firm Registration No. 015125N)

(Khazat A. Kotwal)Place : Gurgaon (Partner)Date : 28 May 2013 (Membership No. 103707)

18

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

(i) In respect of fixed assets: (a) The Company has maintained proper records showing

full particulars, including quantitative details and situation of fixed assets.

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) Although a substantial part of the fixed assets have been disposed of during the year, in our opinion and according to the information and explanations given to us, the ability of the Company to continue as a going concern is not affected.

(ii) In respect of its inventory: (a) As explained to us, the inventories have been physically

verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956 (the “Act”). Accordingly clauses (iii) (a), (iii) (b), (iii) (c) and (iii) (d) of paragraph 4 of the Order are not applicable to the Company.

The Company has not taken any secured loan from companies, firms or other parties listed in the Register maintained under Section 301 of the Act. In respect of unsecured loans taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Act, according to the information and explanations given to us:

(e) The Company has loan amounting Japanese Yen (¥) 1,172 million (equivalent to ` 800 million at the date of receipt of the loan) from one party outstanding during the year. At the year-end, the outstanding balance of such loan including interest payable was ¥ 1,174 million (one party) (equivalent to ` 684 million at the year-end) and the maximum amount outstanding during the year including interest payable was ¥ 1,175 million (one party) (equivalent to ` 848 million).

(f) The rate of interest and other terms and conditions of such loan is, in our opinion, prima facie not prejudicial to the interests of the Company.

(g) The payments of principal amounts and interest in respect of such loans are as per terms of the loan agreement.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventories and fixed assets and the sale of goods. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Act, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of ` 5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time other than some of the items purchased are of special nature and suitable alternatives sources are not readily available for obtaining comparable quotations.

(vi) According to the information and explanations given to us, the Company has not accepted any deposit from the public, within the meaning of Sections 58A & 58AA or any other relevant provisions of the Act, and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of paragraph 4(vi) of the Order is not applicable to the Company.

(vii) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business.

(viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1) (d) of the Act, and are of the opinion that, prima facie, the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities other than in case of deposit of Minimum Alternate Tax where certain delays were observed.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise

19

Duty, Cess and other material statutory dues in arrears as at 31 March 2013 for a period of more than six months from the date they became payable.

(c) Details of dues of Income-tax, Service Tax and Excise Duty which have not been deposited as at 31 March 2013 on account of disputes are given below:

Name of the statute

Nature of dues Forum where dispute is pending

Period to which the amount relates

Amount Involved (` million)

Income Tax Act Disallowance for certain expenses and transfer pricing matters.

Income tax Appellate tribunal

2002-03 27

Disallowance for certain expenses and transfer pricing matters.

Income tax Appellate tribunal

2003-04 70

Disallowance for certain expenses and transfer pricing matters.

Income tax Appellate tribunal

2004-05 23

Disallowance for certain expenses and transfer pricing matters.

Income tax Appellate tribunal

2005-06 70

Disallowance for certain expenses. CIT Appeals 2006-07 23*Interest on tax payments demanded CIT Appeals 2007-08 2

Central Excise Act Matters relating to cenvat credit on raw material and fixed assets.

CESTAT 2002-07 11

Cenvat credit disallowed on certain items. Commissioner of Excise 2002-11 3Matters relating to applicability of excise duty on certain transactions.

CESTAT 2006-09 203**

Service Tax Matters relating to credit on various input services Commissioner of service tax Prior to September 2004

3

Matters relating to credit on various input services Commissioner of service tax 2005-08 1Matters relating to credit on various input services Commissioner of service tax 2008-09 2Matters relating to credit on various input services Commissioner of service tax 2008-11 3

*Excluding ` 37 million which has been paid / adjusted by Income tax authorities under protest. **Excluding ` 5 million which has been paid under protest.(x) The Company has no accumulated losses at the end of the financial year and the Company has incurred cash losses only during

the preceding year but has not incurred any cash loss during the current financial year.(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment

of dues to banks. The Company has neither raised funds from any financial institution nor issued any debentures. Accordingly, the provisions of clause 4(xi) of the Order are not applicable to the Company.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities during the year. Accordingly, the provisions of clause 4(xii) of the Order are not applicable to the Company.

(xiii) According to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) According to the information and explanations given to us, the Company is not dealing in shares, securities and debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantees during the year for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Order are not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.

(xvii) In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short term basis have prima facie not been used during the year for long term investments.

(xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares during the year. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable to the Company.

(xix) According to the information and explanations given to us, Company has not issued any debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable to the Company.

(xx) According to the information and explanation given to us the Company has not raised any money by way of public issue during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable to the Company.

(xxi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and material fraud on the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLSChartered Accountants

(Firm Registration No. 015125N)(Khazat A. Kotwal)

20

Balance Sheet as at March 31, 2013Particulars Note

No.As at

March 31, 2013 (` in Million)

As at March 31, 2012

(` in Million)Equity and LiabilitiesShareholders' Funds Share capital 3 279 279 Reserves and surplus 4 1,220 1,092

1,499 1,371 Non-Current Liabilities Long-term borrowing 5 683 732 Long-term provisions 6 125 83

808 815 Current Liabilities Short-term borrowings 7 1,450 562 Trade payables 8 1,937 1,730 Other current liabilities 9 321 1,636 Short-term provisions 10 75 29

3,783 3,957 Total 6,090 6,143

Assets Non-Current Assets Fixed assets Tangible assets 11 1,698 1,508 Intangible assets 11 - - Capital work-in-progress 11 173 48 Deferred tax assets (net) 12 - 24 Long term loans and advances 13 140 240 Other non-current assets 14 33 -

2,044 1,820 Current Assets Inventories 15 1,856 1,606 Trade receivables 16 1,372 1,126 Cash and bank balances 17 265 796 Short-term loans and advances 18 546 353 Other current assets 19 7 442

4,046 4,323 Total 6,090 6,143

Accompanying notes forming part of the financial statements 1 to 49

In terms of our report attachedFor Deloitte Haskins and Sells Chartered Accountants

For and on behalf of the Board of Directors

KOJI SHIGA MINORU ONOManaging Director Director

KHAzAT A. KOTWAL ARUN GANGWANI ALOK MATHURPartner Deputy General Manager Company Secretary

Place : Gurgaon Place : New DelhiDate : 28 May, 2013 Date : 28 May, 2013

21

In terms of our report attachedFor Deloitte Haskins and Sells Chartered Accountants

For and on behalf of the Board of Directors

KOJI SHIGA MINORU ONOManaging Director Director

KHAzAT A. KOTWAL ARUN GANGWANI ALOK MATHURPartner Deputy General Manager Company Secretary

Place : Gurgaon Place : New DelhiDate : 28 May, 2013 Date : 28 May, 2013

Statement of Profit and Loss for the year ended March 31, 2013Particulars Note

No.For the Year ended

March 31, 2013 (` in Million)

For the Year ended March 31, 2012

(` in Million)Revenue from operations 13,583 11,351 Less : Excise duty on sales 21 1,397 989

12,186 10,362Other Income 22 150 57 Total Revenue 12,336 10,419Expenses:Cost of materials consumed 23 9,219 7,994 Purchase of traded goods 24 566 325 Changes in inventory of finished goods, work in progress and stock-in-trade

25 (88) (209)

Employee benefits expense 26 1,215 1,096 Finance costs 27 78 117 Depreciation and amortization expenses 11 383 375 Administration and other expenses 28 1,600 1,412 Total expenses 12,973 11,110(Loss) before exceptional items and tax (637) (691)Exceptional items 29,39 827 (26)Profit/(Loss) before taxProfit/(Loss) before tax from continuing operations

190 (717)304 (544)

Tax expense for continuing operationsCurrent tax (MAT) 45 38 –Tax adjustment in respect of earlier years – (1)Deferred tax expense 12 24 5 Net tax expense from continuing operations 62 4Profit/(Loss) for the period from continuing operations 242 (548)(Loss) before tax from discontinuing/discontinued operations 39 (114) (173)

Tax expense for discontinuing operations 12,39 – 1 (Loss) from discontinuing/discontinued operations 39 (114) (174)Profit/(Loss) for the year 128 (722)Loss per equity share of face value of ` 10 each (before Exceptional items):

36

Basic and Diluted [From Continuing operations] (`) (19.60) (18.71)Basic and Diluted [From Total operations] (`) (23.69) (24.95)

Earnings/loss per equity share of face value of ` 10 each (After Exceptional items):

Basic and Diluted [From Continuing operations] (`) 36 8.69 (19.64)Basic and Diluted [From Total operations] (`) 4.59 (25.88)

Accompanying notes forming part of the financial statements 1 to 49

22

Cash Flow Statement for the year ended March 31, 2013Particulars For the Year Ended

March 31, 2013(` in Million)

For the Year EndedMarch 31, 2012

(` in Million)

A. Cash flow from operating activities

Net Profit /(loss) before taxes 190 (717)

Adjustment for:

Depreciation and amortization expenses 383 375

Interest income (39) (37)

Interest expenses 75 101

(Profit)/loss on sale of fixed assets (net) (2) 1

Exceptional items (827) –

Provision for employee benefits-long term 42 1

Provision for employee benefits-short term 10 2

Provision for warranty (net) 3 –

Provision for mark to market losses on derivatives 82 68

Provision for slow moving and obsolete inventories 19 6

Provision/liabilities no longer required written back (6) –

Unrealized foreign exchange gain (net) (63) (70)

Operating loss before working capital changes (133) (270)

Adjustments for changes in working capital:

(Increase) in trade receivables (573) (376)

(Increase)/Decrease in Short term loans and advances (136) 365

Decrease/(Increase) in Long term loans and advances 3 (5)

(Increase)/Decrease in Other non-current assets (33) 25

Decrease/(Increase) in Other current assets 135 (589)

(Increase) in Inventories (851) (38)

Increase in Trade payable 413 199

Increase/(Decrease) in Short term borrowing 888 (135)

(Decrease)/Increase in Other current liabilities (28) 88

Cash used in operations (315) (736)

Net income tax refunds/(paid) 33 (24)

Net cash used in operating activities (282) (760)

B. Cash flow from investing activities

Purchase of Tangible fixed assets (631) (883)

Proceeds from sale of Tangible assets 8 4

Proceed from sale of small motor business 578 –

Interest received 45 28

Advance against sale of small motor business – 1,329

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Particulars For the Year EndedMarch 31, 2013

(` in Million)

For the Year EndedMarch 31, 2012

(` in Million)

Net cash generated from investing activities – 478

C. Cash flow from financing activities

Proceeds from long term borrowings – 800

Payments against derivative contracts (39) –

Interest paid (75) (100)

Net cash (used in)/generated from financing activities (114) 700

Net (decrease)/increase in cash and cash equivalents (396) 418

Cash and cash equivalents the beginning of the year 461 43

Cash and cash equivalents at the end of the year 65 461

Cash and cash equivalents [Refer Note 17] at year-end comprise of:

Cash -in-hand [Includes Cheques-in-hand of ` Nil (Previous year ` 1Million)] 1 3

Bank balances

- In current accounts 64 18

- In deposits (original maturity of 3 months or less) – 440

65 461

Notes :1. The above cash flow statement has been reported using the indirect method, whereby profit before tax is adjusted for the effects of

transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.

2. Previous year figures have been regrouped and recasted wherever considered necessary to conform to the current year’s classification.

3. Notes 1 to 49 form an integral part of the Cash Flow Statement.

In terms of our report of even date.For Deloitte Haskins and Sells Chartered Accountants

For and on behalf of the Board of Directors

KOJI SHIGA MINORU ONOManaging Director Director

KHAzAT A. KOTWAL ARUN GANGWANI ALOK MATHURPartner Deputy General Manager Company Secretary

Place : Gurgaon Place : New DelhiDate : 28 May, 2013 Date : 28 May, 2013

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Notes forming part of the financial statements

1. GENERAL INFORMATION:

Denso India Limited (the ‘Company”) was founded in 1984 as a Joint Venture between SRF (India) and Nippon Denso (Japan). The Joint Venture was converted into a subsidiary of Nippon Denso in 1993 and became Nippon Denso India Limited (NDIL). In 1996 the name of NDIL changed to Denso India Limited. The Company is a public limited company and is listed on the Bombay Stock Exchange, Delhi Stock Exchange and the Madras Stock Exchange (BSE: 520022 | NSE: DENSO | ISIN: INE502A01017). The Company is engaged in the business of manufacturing of automotive components and primarily sells to Original Equipment Manufacturers in India and abroad. The Company has two manufacturing plants at Noida and Haridwar. The Company is also in process of setting up a new manufacturing plant at Bengaluru. The Company also has three warehousing locations at Delhi, Chennai and Noida.

2. SIGNIFICANT ACCOUNTING POLICIES:

I. Basis of preparation of financial statements:

The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention.

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current – non current classification of assets and liabilities.

II. Use of estimates:

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

III. Tangible fixed assets and depreciation:

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes taxes, duties, freight, insurance, labour cost and directly attributable cost to the construction / acquisition of the assets, net of excise duty and other taxes subsequently recoverable by the Company. Fixed assets are depreciated over the expected remaining useful life of such assets as estimated by the Management. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net realisable value and are disclosed separately in the Balance Sheet.

For assets aquired, sold or otherwise disposed off during the year depreciation is calculated on a pro-rata basis from/to the date of addition, sales or disposal.

Depreciation is provided on a straight line method at the following rates based on the Management’s estimates of the useful lives of the fixed assets, which are higher than / equal to the rates as per the Schedule XIV to the Companies Act, 1956:

Land

- Free hold No depreciation is recognised- Lease hold Over the primary lease periodBuildings 20 yearsPlant and Machinery - Jigs and Tools 5 years- Others 7 yearsComputers 3 yearsFurniture and Fixtures 5 yearsVehicles 5 years

Assets costing less than ` 5,000 are fully charged off as expenses in the year of purchase.

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Capital work-in-progress:

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost and related incidental expenses.

IV. Intangible assets and amortisation:

Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase/completion is recognised as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset. The useful life of intangible assets is determined on the basis of tenure of the contractual agreements governing the intangible assets.

Intangible assets are amortised over the estimated useful life. The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern.

V. Impairment of assets:

The carrying values of cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

VI. Inventories:

Inventories are valued at the lower of cost and net realisable value after providing for obsolescence and other losses where ever considered necessary. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

The methods of determining cost of various categories of inventories are as follows:

Raw materials, Stores and Spares and Stock in trade : Weighted average costFinished Goods and Work in progress : Material cost plus appropriate share of labour and manufacturing

overheads Cost of finished goods includes excise duty

VII. Cash and cash equivalents:

Cash comprises cash on hand and demand deposits with banks with original maturity upto 3 month. Cash equivalents are short-term balances (with an original maturity of three months or less, highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

Demand deposits with original maturity of more than three months and less than twelve months are clubbed under Cash and cash equivalants.

Demand deposits with original maturity of more than twelve months are disclosed under Long term deposit.

VIII. Employee benefits:

Benefits to employees comprise of provident fund, gratuity, leave encashment / compensated absences, superannuation and long service award.

a) Defined contribution plans:

The Company has a separate Superannuation Scheme for its officers under the aegis of the Life Insurance Corporation of India. Contributions made in accordance with the scheme of the Life Insurance Corporation of India are charged to the Statement of Profit and Loss.

Contributions to the employees’ state insurance fund, administered by the prescribed government authorities, are made in accordance with the Employees’ State Insurance Act, 1948 and are recognized as an expense on an accrual basis.

b) Defined benefit plans:

Contributions towards Company’s gratuity liability made to Life Insurance Corporation of India are adjusted against the gratuity liability determined by an independent actuary as at year-end on the basis of “Projected Unit Credit Method”

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and the short fall, if any, is charged to the Statement of Profit and Loss. In case fair value of plan assets is in excess of the present value of the defined benefit obligations, the resultant asset is recognized as at balance sheet date.

Actuarial gains and losses comprise experience adjustments and the effects of change in actuarial assumptions and are recognised immediately in the Statement of Profit and Loss as income or expense.

c) Multi-employer benefit:

Contribution to the provident fund and family pension fund, administered through a private trust, is made in accordance with the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is recognised as an expense on an accrual basis. Further, the Company gets an actuarial valuation done as at year-end to determine liability towards guaranteed interest rates, if any, and the same is also recognised as an expense on an accrual basis.

d) Other employee benefits:

The liability for long term compensated absence and long-term service award is recognised in accordance with the rules of the Company, based on actuarial valuation by an independent actuary carried out at the balance sheet date on the basis of “Projected Unit Credit Method”.

The liabilities for employee benefit in form of short-term compensated absence (vesting as well as non-vesting) have been recognised at undiscounted amount, in accordance with the rules of the Company.

Actuarial gains and losses comprise experience adjustments and the effects of change in actuarial assumptions and are recognised immediately in the Statement of Profit and Loss as income or expense.

IX. Foreign currency transactions:

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction.

Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost.

Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

X. Revenue recognition:

Sale of goods

Sale of goods are recognised, net of returns, trade discounts and repayable taxes on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers for domestic sales and when delivered to carrier for export sales.

Interest income

Interest income is recognised on time proportionate basis determined by the amount outstanding and the rate applicable and where no significant uncertainty as to measurability or collectability exists.

XI. Research and development expenditure:

All revenue expenses pertaining to research and development are charged to the Statement of Profit and Loss in the year in which these are incurred and expenditure of capital nature is capitalised as fixed assets.

XII. Leases:

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Lease rentals under operating lease are recognised in the Statement of Profit and Loss on a straight-line basis.

XIII. Borrowing cost:

Borrowing costs include interest; amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

XIV. Earnings/(loss) per share:

Basic earnings per share is computed by dividing the profit/(loss) after tax (including the post tax effect of extraordinary

27

items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit/(loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive securities are adjusted for share splits / reverse share splits and bonus shares, as appropriate.

XV. Income tax:

Income tax expense comprises current tax and deferred tax charges.

Current tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when there is convincing evidence that the Company will pay income tax higher than that computed under MAT, during the period MAT is permitted to be set off under the Income Tax Act, 1961.

Deferred tax

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise t