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Overview Performance Reviews Governance Financials167Annual Report 2010-11Notes to the Financial Statements for the Financial year ended 31st March, 201120. BANKING FACILITIESThe company’s banking facilities at the existing limit of US$1,500,000 and foreign exchange limit of US$1,000,000, and letter of credit from financialinstitution as at 31st March, 2011 were secured by the following:a) Charge on all monies of the company with the bank;b) Corporate guarantee provided by the holding company ; andc) General letter of charge on all assets of the company.21. IMMEDIATE AND ULTIMATE HOLDING COMPANYThe company’s immediate and ultimate holding company is TIL Limited, a company incorporated in the Republic of India.22. SIGNIFICANT RELATED PARTY TRANSACTIONSAn entity or individual is considered a related party of the company for the purpose of the financial statements if:(i)it possesses the ability (directly or indirectly) to control or exercise significant influence over the financial and operating decisions of the companyor vice versa; or(ii) it is subject to common control or common significant influence.During the financial year, the company had significant related party transactions as detailed below on terms agreed between them :US$2010-11`2010-11US$2009-10`2009-10Warranty expenses paid to holding company 1,135,970 51,811,592 1,120,062 53,102,139Sales to related company 606,662 27,669,854 1,492,439 70,756,533Purchase from related company - - 127,177 6,029,462Management Fees paid/payable to holding company 126,700 5,778,787 207,500 9,837,575Parts commission paid/payable to holding company 950,000 43,329,500 450,439 21,355,31323 COMMITMENTS AND CONTINGENT LIABILITIESa) As at 31st March, 2011, the company had obtained bank guarantees amounting to US$919,925 and EUR21,824 (2010 : US$193,762).b) As at 31st March, 2011 of this report, the company had entered into letter of credit amounting to US$363,323 (2010 : US401,068).24 OPERATING LEASE COMMITMENTSAt the end of the reporting period, the company’s commitments in respect of operating leases are as follows;US$2010-11`2010-11US$2009-10`2009-10Due within one year 19,013 867,183 16,825 797,67319,013 867,183 16,825 797,67325. FINANCIAL RISK MANAGEMENTFinancial risk factorsThe company’s activities expose it to market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The company’s overall riskmanagement strategy seeks to minimize adverse effects from the unpredictability of financial markets on the company’s financial performance.(a)Market risk(i) Foreign currency riskThe company incurs foreign currency risk on transactions that are denominated in currency other than United States dollars such asSingapore dollars, British pounds and Euro. However, the company does not use any hedging instruments to protect against the volatilityassociated with foreign currency purchases and other assets and liabilities created in the normal course of business.