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Notes to Accounts of Ashok Leyland Ltd.

Mar 31, 2015

1. Shares issued in preceeding 5 years

The Company had issued and allotted during the year 2011-12, 133,03,38,317 equity shares as fully paid-up bonus shares by utilisation of securities premium reserve in the ratio of 1:1.

2. Shares held by the Holding Company

Hinduja Automotive Limited, the holding company, holds 110,46,46,899 (2014: 110,46,46,899) Equity shares and 54,86,669 (2014: 54,86,669) Global Depository Receipts (GDRs) equivalent to 32,92,00,140 (2014: 32,92,00,140) Equity shares of Rs. 1 (2014: Rs. 1) each aggregating to 50.38% (2014: 53.89%) of the total share capital.

3. Shareholders other than the Holding Company holding more than 5% of the total share capital

Life Insurance Corporation of India holds 18,76,02,225 (2014: 24,05,15,574) Equity shares of Rs. 1 (2014: Rs. 1) each aggregating to 6.59% (2014: 9.04%).

4. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity share holders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 2013.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act, 2013. Each GDR holder is entitled to receive 60 equity shares [ 2014: 60 equity shares ] of Rs. 1 each, per GDR, and their voting rights can be exercised through the Depository.

4.1 Derivatives

The Company uses derivative financial instruments such as forward contracts, currency swap to hedge certain currency exposures, present and anticipated, denominated mostly in US dollars, EURO, Japanese YEN and Great Britain Pounds. Generally such contracts are taken for exposures materialising in the next twelve months. The Company actively manages its currency / interest rate exposures through a centralized treasury division and uses derivatives to mitigate the risk from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management. The limits and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of underlying assets, liabilities or transactions, as derivatives are used only for risk management.

4.2 Accounting for long term monetary items in foreign currency, forward contracts and Advances designated as cash flow hedge

4.2.1 Exchange difference in Long term monetary items in foreign currency

Exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded or April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange differences are accumulated in "Foreign currency monetary item translation difference account" and amortised by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020 (notified earlier as March 31, 2011). The un-amortized net exchange difference in respect of long term monetary items relating to other than acquisition of depreciable assets, is a loss of Rs. 1,424.85 lakhs as at March 31, 2015 (March 31, 2014: loss of Rs. 592.89 lakhs). These amounts have now been reflected as part of the "Reserves and Surplus" in line with the guideline issued by the Institute of Chartered Accountants of India.

4.2.2 Forward contracts and Advances designated as cash flow hedges

The Company had adopted the principles of Accounting Standard 30 - Financial instruments: Recognition and measurement, issued by the Institute of Chartered Accountants of India, with effect from April 1, 2008, in respect of forward contracts for firm commitments and highly probable forecast transactions meeting necessary criteria for designation as "Cash flow hedges". The gains and losses on effective Cash flow hedges are recognized in Hedge Reserve Account till the underlying forecast transaction occurs.

b) Gratuity is administered through Group gratuity scheme with Life Insurance Corporation of India. The expected return on plan assets is based on market expectation at the beginning of the year, for the returns over the entire life of the related obligation.

c) During the year the company has recognised the following amounts in the Statement of Profit and Loss in Note 2.6 to the Financial Statements

- Salaries and wages include compensated absences Rs. 1,730.30 lakhs (2014: Rs. 28.12 lakhs).

- Contribution to provident, gratuity and other funds include Provident fund and family pension Rs. 4,700.40 lakhs (2014:

Rs. 4,503.87 lakhs), super annuation Rs. 1,545.98 lakhs (2014: Rs.1,929.23 lakhs), gratuity Rs. 1,462.34 lakhs (2014: Rs. 1,750.07 lakhs) and other funds Rs. 561.27 lakhs (2014: Rs. 424.90 lakhs).

- Welfare expenses include contribution to employee state insurance plan Rs. 33.54 lakhs (2014: Rs. 25.78 lakhs), retirement benefits charged / (reversed) of Rs. 8.56 lakhs (2014: Rs. 73.96 lakhs) and other defined employee benefits Rs. 8.26 lakhs (2014: Rs. 36.01 lakhs).

5.1 The figures for the previous year have been reclassified / regrouped / amended , wherever necessary. Signatures to the Statement of Significant Accounting Policies and Notes to the Financial Statements.


Mar 31, 2014

1. Shares issued in preceeding 5 years

The Company had issued and allotted during the year 2011-12, 133,03,38,317 equity shares as fully paid-up bonus shares by utilisation of securities premium reserve in the ratio of 1:1.

2. Shares held by the Holding Company:

Hinduja Automotive Limited, the holding company, holds 110,46,46,899 (2013: 102,72,37,424) Equity shares and 54,86,669 (2013: 54,86,669) Global Depository Receipts (GDRs) equivalent to 32,92,00,140 (2013: 32,92,00,140) Equity shares ofRs. 1 (2013: Rs. 1) each aggregating to 53.89% (2013: 50.98%) of the total share capital.

3. Shareholders other than the Holding Company holding more than 5% of the total share capital Life Insurance Corporation of India holds 24,05,15,574 (2013: 25,00,56,674) Equity shares of Rs. 1 (2013: Rs. 1) each aggregating to 9.04% (2013: 9.40%).

4. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity share holders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 1956.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act, 1956. Each GDR holder is entitled to receive 60 equity shares [2013: 60 equity shares] of Rs. 1 each, per GDR, and their voting rights can be exercised through the Depository.

b) Depreciation for the year computed on assets revalued as on March 31, 2009 over the balance useful life on straight line method includes a net charge of Rs. 1,515.89 lakhs (2013: Rs. 1,571.27 lakhs) [Rs. 1,181.62 lakhs (2013: Rs. 1,237.00 lakhs) in Note 2.8 to the Financial Statements and Rs. 334.27 lakhs (2013: Rs. 334.27 lakhs) in Note 2.9 to the Financial Statements respectively ] being the excess over the depreciation computed by the method followed by the Company prior to revaluation / period of lease in respect of leasehold land and the same has been transferred from Revaluation Reserve to the Statement of Profi t and Loss.

c) In respect of previously revalued items of fi xed assets sold / disposed, the Company has, during the year changed its earlier accounting practice to adjust the amount in revaluation reserve of such assets against the carrying value of such assets and recognized the consequent profi t / sale thereof. The impact of the said change is a higher profi t on sale / disposal of immovable properties by Rs. 10,756.56 Lakhs for the year ended March 31, 2014 (2013: NIL).

4.1. Segment information

The Company''s primary segment is identifi ed as business segment based on nature of products, risks, returns and the internal business reporting system and secondary segment is identifi ed based on the geographical location of the customers as per Accounting Standard 17. The Company is principally engaged in a single business segment viz., commercial vehicles and related components.

a) Revenue from external customers comprises of income from sale of products, services and other operating revenues. [Refer Note 2.1 to the Financial Statements]

b) Carrying amount of Segment assets comprises of non - current assets and current assets identifi ed to the respective segments. However Segment assets in India also include certain common assets used to generate revenue in both segments but not feasible of allocation.

c) Unallocated assets and capital expenditure includes current and non current assets other than considered in (b) above.

d) Capital expenditure during the year represents net additions to Tangible and Intangible assets and movement in Capital work-in-progress.

4.2 The Company had given on fi nance lease, certain vehicles. The lease was for a fi xed period and was terminable with the consent of both the parties. There are no exceptional / restrictive covenants in the lease agreement. During the year, the lease agreements were terminated.

4.3 Derivatives

The Company uses derivative fi nancial instruments such as forward contracts, currency swap to hedge certain currency exposures, present and anticipated, denominated mostly in US dollars, EURO, Japanese YEN and Great Britain Pounds. Generally such contracts are taken for exposures materialising in the next twelve months. The company actively manages its currency / interest rate exposures through a centralized treasury division and uses derivatives to mitigate the risk from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management. The limits and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of underlying assets, liabilities or transactions, as derivatives are used only for risk management.

4.4.1 Exchange diff erence in Long term monetary items in foreign currency

Exchange diff erence on translation or settlement of long term foreign currency monetary items at rates diff erent from those at which they were initially recorded or April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange diff erences are accumulated in "Foreign currency monetary item translation diff erence account" and amortised by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020 (notifi ed earlier as March 31,2011). The un-amortized net exchange diff erence in respect of long term monetary items relating to other than acquisition of depreciable assets, is a loss of Rs. 592.89 lakhs as at March 31, 2014 (March 31, 2013: Rs. 96.35 lakhs). These amounts have now been refl ected as part of the "Reserves and Surplus" in line with the guideline issued by the Institute of Chartered Accountants of India.

4.4.2 Forward contracts and Advances designated as cash fl ow hedges

The Company had adopted the principles of Accounting Standard 30 - Financial instruments: Recognition and measurement, issued by the Institute of Chartered Accountants of India, with eff ect from April 1, 2008, in respect of forward contracts for fi rm commitments and highly probable forecast transactions meeting necessary criteria for designation as "Cash fl ow hedges". The gains and losses on eff ective Cash fl ow hedges are recognized in Hedge Reserve Account till the underlying forecast transaction occurs.

b) Gratuity is administered through Group gratuity scheme with Life Insurance Corporation of India. The expected return on plan assets is based on market expectation at the beginning of the year, for the returns over the entire life of the related obligation.

c) During the year, the Company has recognised the following amounts in the Statement of Profi t and Loss in Note 2.6 to the Financial Statements

- Salaries and wages include compensated absences Rs. 28.12 lakhs (2013: Rs. 1,591.33 lakhs).

- Contribution to provident, gratuity and other funds include Provident fund and family pension Rs. 4,503.87 lakhs (2013: Rs. 4,647.48 lakhs), super annuation Rs. 1,929.23 lakhs (2013: Rs. 1,466.89 lakhs), gratuity Rs. 1,750.07 lakhs (2013: Rs. 2,024.50 lakhs) and other funds Rs. 424.90 lakhs (2013: Rs. 1,022.73 lakhs).

- Welfare expenses include contribution to employee state insurance plan Rs. 25.78 lakhs (2013: Rs. 65.56 lakhs), retirement benefi ts charged/ (reversed) ofRs. 73.96 lakhs (2013: Rs. 56.05 lakhs) and other defi ned employee benefi ts Rs. 36.01 lakhs (2013: Rs. 12.09 lakhs).

4.5 Accounting for Amalgamation

a. The Company had invested in certain associate companies, i.e. Ashley Investments Limited (AIL) and Ashley Holdings Limited(AHL) (both engaged in holding Strategic investments primarily in Auto and Auto Component Segment), Ashok Leyland Project Services Limited (ALPS) (engaged in consultancy services for promoting projects in thermal power,wind energy etc.) and Ashley Services Limited (ASL) (engaged in trading in commodities, providing technical and management support). Under a scheme of amalgamation sanctioned by the Honourable High Court of Madras vide its order dated July 31, 2013, AHL, AIL and ALPS merged with ASL, eff ective April 1, 2013. Consequent thereto, ASL became a wholly owned subsidiary of the Company as on the Appointed date of April 1, 2013.

In a subsequent development, on March 21, 2014, the Honourable High Court of Madras approved the scheme for amalgamation of ASL (amalgamating company) with the Company from the Appointed Date of July 1, 2013. The said Scheme became eff ective on March 27, 2014 on fi ling with the Registrar of Companies.The said Scheme of Amalgamation was also approved by all the three Stock Exchanges in India with which the Company''s shares have been listed, namely, Madras Stock Exchange, Bombay Stock Exchange and National Stock Exchange vide their approvals dated December 19, 2013, January 23, 2014, and January 22, 2014 respectively.

c. Accounting treatment

The Company has followed the accounting treatment prescribed in the said approved Scheme of Amalgamation, as follows:

i. The amalgamation of ASL with the Company has been accounted by the Company in the books by using the Pooling of interests method in accordance with the said approved Scheme of Amalgamation and Accounting Standard (AS) 14 as notifi ed under the Companies Act, 1956.

4.6 Exceptional Items - Voluntary retirement scheme

The Company announced Voluntary Retirement Schemes (2013) during the year for executives who could opt for an early separation from services of the Company. VRS compensation ofRs. 4,674.94 Lakhs (2013 : Nil) represents the amount settled, in respect of those executives who exercised their option and separated from the employment upto March 31, 2014.

4.7 The fi gures for the previous year have been reclassifi ed / regrouped / amended, wherever necessary.

Signatures to the Statement of Signficant Accounting Policies and Notes to the Financial Statements.


Mar 31, 2013

1. Shares held by the Holding Company:

Hinduja Automotive Limited, the holding company, holds 102,72,37,424 (2012: 102,72,37,424) Equity shares and 54,86,669 (2012: 54,86,669) Global Depository Receipts (GDRs) equivalent to 32,92,00,140 (2012: 32,92,00,140) equity shares of Rs. 1 (2012: Rs. 1) each aggregating to 50.98% of the total share capital.

2. Shareholders other than the Holding Company holding more than 5% of the total share capital:

Life Insurance Corporation of India holds 25,00,56,674 (2012: 25,93,11,056) Equity shares of Rs. 1 (2012: Rs. 1) each aggregating to 9.40% (2012: 9.75%).

3. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity share holders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 1956.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act, 1956. Each GDR holder is entitled to receive 60 equity shares [ 2012: 60 equity shares ] of Rs. 1 each, per GDR, and their voting rights can be exercised through the Depository.

3.1.1 Contingent liabilities

a) Claims against the company not acknowledged as debts 3,748.55 3,114.08 (net) - Sales tax

- Others 2,793.46 2,865.19

b) Guarantees [net of Counter Guarantees Rs. 30,840.89 13,500.47 47,593.90 Lakhs (2012: Nil)]

The outflow in respect of the above is not practicable to ascertain in view of the uncertainties involved.

3.2. Segment information

The Company''s primary segment is identified as business segment based on nature of products, risks, returns and the internal business reporting system and secondary segment is identified based on the geographical location of the customers as per Accounting Standard 17. The Company is principally engaged in a single business segment viz., commercial vehicles and related components.

a) Revenue from external customers comprises of income from sale of products, services and other operating revenues [Refer Note 2.1 to the Financial Statements]

b) Carrying amount of Segment assets comprises of non - current assets and current assets identified to the respective segments. However, Segment assets in India also include certain common assets used to generate revenue in both segments but not feasible of allocation.

c) unallocated assets and capital expenditure includes current and non current assets other than considered in (b) above.

d) Capital expenditure during the year represents net additions to Tangible and Intangible assets and movement in Capital work in progress.

3.3. Related party disclosure

a) List of parties where control exists

Holding company

Hinduja Automotive Limited, united Kingdom Machen Holdings SA

(Holding Company of Hinduja Automotive Limited, United Kingdom)

Machen Development Corporation, Panama (Holding Company of Machen Holdings SA)

Amas Holdings SA

(Holding Company of Machen Development Corporation, Panama)

b) Other related parties

Fellow subsidiaries

Hinduja Foundries Limited Hinduja Auto Components Limited Hinduja Automotive (UK) Limited Associates

Albonair GmbH, Germany

Albonair (India) Private Limited

Ashley Airways Limited (under liquidation)

Ashley Aviation Limited

Ashley Holdings Limited

Ashley Investments Limited

Ashok Leyland Defence Systems Limited

Ashok Leyland (Nigeria) Limited

Ashok Leyland (UAE) LLC, Ras Al Khaimah, UAE

Ashok Leyland (UK) Limited

Automotive Coaches and Components Limited

Defiance Technologies Limited

Defiance Testing and Engineering Services, Inc. USA

Gulf Ashley Motor Limited

Irizar TVS Limited

Lanka Ashok Leyland, PLC

Mangalam Retail Services Limited

Optare plc, UK

Joint Ventures

Ashley Alteams India Limited

Automotive Infotronics Limited

Ashok Leyland John Deere Construction Equipment Company Private Limited

Ashok Leyland Nissan Vehicles Limited

Nissan Ashok Leyland Powertrain Limited

Nissan Ashok Leyland Technologies Limited

Key management personnel

Mr. R Seshasayee, Executive Vice Chairman

Mr. Vinod K Dasari, Managing Director

3.4 Derivatives

The Company uses derivative financial instruments such as forward contracts, currency swap to hedge certain currency exposures, present and anticipated, denominated mostly in US dollars, EURO, Japanese YEN and Great Britain Pounds. Generally such contracts are taken for exposures materialising in the next twelve months. The Company actively manages its currency / interest rate exposures through a centralized treasury division and uses derivatives to mitigate the risk from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management. The limits and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of underlying assets, liabilities or transactions, as derivatives are used only for risk management.

3.5 Accounting for long term monetary items in foreign currency, forward contracts and advances designated as cash flow hedge.

3.5.1 Exchange difference in Long term monetary items in foreign currency Exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded or April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange differences are accumulated in "Foreign currency monetary item translation difference account" and amortised by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020 (notified earlier as March 31, 2011). The un-amortized net exchange difference in respect of long term monetary items relating to other than acquisition of depreciable assets, is a loss of Rs. 96.35 lakhs as at March 31, 2013 (March 31, 2012: Net gain of Rs. 415.27 lakhs). These amounts have now been reflected as part of the "Reserves and Surplus" in line with the guideline issued by the Institute of Chartered Accountants of India.

3.5.2 Forward contracts and advances designated as cash flow hedges

The Company had adopted the principles of Accounting Standard 30 - Financial instruments: Recognition and measurement, issued by the Institute of Chartered Accountants of India, with effect from April 1, 2008, in respect of forward contracts for firm commitments and highly probable forecast transactions meeting necessary criteria for designation as "Cash flow hedges". The gains and losses on effective Cash flow hedges are recognized in Hedge Reserve Account till the underlying forecast transaction occurs.

3.6 Three of the companies in which the Company has investments, namely Ashley Holding Limited (AHL), Ashley Investment Limited (AIL) and Ashok Leyland Project Services Limited (ALPS) have entered into a scheme of Amalgamation (Scheme) for merger with Ashley Services Limited, an operating company joinly promoted by these three companies. The Scheme is pending sanction of the Honourable High Court of Judicature at Madras. Upon the sanction of the Scheme, the Company shall receive shares of ASL, in lieu of its holding in AHL, AIL & ALPS. The scheme was filed on April 5, 2013 with an "appointed date" proposed as 1st April 2013.

The Company has given its consent to the "Scheme" in its capacity as an Equity Shareholder (in AHL, AIL and ALPS) and a Preference Shareholder ( in AHL and AIL). The Scheme is subject to requisite approval by the Honourable High Court of Judicature at Madras and permission or approval of the Central Government or any other statutory or regulatory authorities, which by law may be necessary for the implementation of the Scheme.

3.7 The figures for the previous periods have been reclassified / regrouped / amended, wherever necessary.

Signatures to the Statement of Significant Accounting Policies and Notes to the Financial Statements.


Mar 31, 2012

1. Shares held by the Holding Company

Hinduja Automotive Limited, the holding Company, holds 102,72,37,424 (2011: 51,36,18,712) Equity shares and 54,86,669 (2011: 54,86,669) Global Depository Receipts (GDRs) equivalent to 32,92,00,140 (2011:16,46,00,070) equity shares of Re. 1 (2011: Re.l) each aggregating to 50.98% of the total share capital.

2. Shareholders other than the Holding Company holding more than 5% of the total share capital Life Insurance Corporation of India holds 25,93,11,056 (2011: 12,59,14,895) Equity shares of Re.l each aggregating to 9.75% (2011: 9.46%).

3. Pursuant to the issue of bonus shares in the ratio of 1:1 during the year, the entitlement of GDR holders to the underlying Equity shares in the Company has increased proportionately.

4. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity shareholders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 1956.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act 1956. Each GDR holder is entitled to receive 60 equity shares [ 2011: 30 equity shares ] of Re. 1 each, per GDR, and their voting rights can be exercised through the Depository.

1. investment in Optareplc, UK.

In lieu of 19,55,57,828 Ordinary Shares in Optare pic of face value of British Pence 1 each, the Company was allotted an equal number of New Ordinary Shares with face value of British Pence 0.1 each and Deferred Shares with face value of British Pence 0.9 each pursuant to a restructuring exercise by Optare pic. The value of shares received has been recorded at lower of cost and fair value.

2. The shares in the following companies can be disposed off / encumbered only with the consent of banks / financial institutions who have given loans to these companies :

a) Ashley Al teams India Limited

b) Automotive Coaches and Components Limited

c) Hinduja Foundries Limited

1.1.1 Contingent liabilities

a) Claims against the Company not acknowledged as debts(net) - Sales tax 3,114.08 3,194.78

- Others 2,865.19 2,722.75

b) Guarantees 47,593.90 37,925.49

c) Bills is counted - 243.90

The outflow in respect of the above is not practicable to ascertain in view of the uncertainties involved.

b) Depreciation for the year computed on assets revalued as on March 31, 2009 over the balance useful life on straight line method includes a net charge of Rs.1,577.46 lakhs (2011: Rs. 2,685.06 lakhs) [Rs.1,243.18 lakhs (2011: Rs.1,170.35 lakhs) in Note 2.8 to the Financial Statements and Rs.334.28 lakhs (2011: Rs.1,514.71 lakhs) in Note 2.9 to the Financial Statements respectively] being the excess over the depreciation computed by the method followed by the Company prior to revaluation/period of lease in respect of leasehold land and the same has been transferred from Revaluation Reserve to the Statement of Profit and Loss.

c) The Company has, during the year, modified the method of amortization of value of leasehold land from "lower of 40 years and the period of lease", to "the period of lease", so as to provide a more appropriate presentation of the working results and financial position. The impact of the said modification is a write back of excess amortization of Rs.946.03 lakhs pertaining to earlier years. Had the earlier method been followed, the amortization charge for the year would be higher by Rs.223.82 lakhs. Further since the leasehold land had been revalued in 2009, appropriate reinstatement to Revaluation Reserve by Rs.2,505.09 lakhs has been made with corresponding reduction in accumulated amortization amount to adjust the excess transfer in earlier years.

1.2. Segment information

The Company's primary segment is identified as business segment based on nature of products, risks, returns and the internal business reporting system and secondary segment is identified based on the geographical location of the customers as per Accounting Standard 17. The Company is principally engaged in a single business segment viz., commercial vehicles and related components.

a) Revenue from external customers comprises fin come from sale of products, services and other operating revenues. [ Refer Note 2.1 to the Financial Statements ]

b) Carrying amount of Segment assets comprises of non - current assets and current assets identified to the respective segments. However Segment assets in India also include certain common assets used to generate revenue in both segments but not feasible of allocation.

c) Unallocated assets and capital expenditure includes current and non current assets other than considered in (b) above.

d) Capital expenditure during the year represents net additions to Tangible and Intangible assets and movement in Capital work in progress.

Notes:

i) Contingent liabilities, incurred in relation to interest in joint ventures as on March 31, 2012 is Rs. Nil (2011: Rs Nil).

ii) Share in contingent liabilities of joint ventures themselves for which the Company is contingently liable as at March 31, 2012 Rs. 1,654.88 lakhs (2011 : Rs. 357.68 lakhs).

iii) Capital commitments in relation to interests in joint ventures as on March 31, 2012 Rs.Nil (2011: Rs Nil).

iv) Share in Capital commitments of joint ventures themselves as on March 31,2012: Rs. 16,027.54 lakhs (2011: Rs. 2,342.20 lakhs).

v) The information furnished above with regard to the year 2012 is based on unaudited figures made available to the Company.

vi) Figures given above under expenses are excluding taxes.

1.3 The Company has given on finance lease, certain vehicles. The lease is for a fixed period and is terminable with the consent of both the parties. There are no exceptional / restrictive covenants in the lease agreement.

1.4 Derivatives

The Company uses derivative financial instruments such as forward contracts, currency swap to hedge certain currency exposures, present and anticipated, denominated mostly in US dollars, EURO, Japanese YEN and Great Britain Pounds. Generally such contracts are taken for exposures materializing in the next twelve months. The Company actively manages its currency / interest rate exposures through a centralized treasury division and uses derivatives to mitigate the risk from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management. The limits and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of underlying assets, liabilities or transactions, as derivatives are used only for risk management.

1.5 Accounting for long term monetary items in foreign currency, forward contracts and Advances designated as cash flow hedge

1.5.1 Exchange difference in Long term monetary items in foreign currency

Exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded or April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets. In other cases, such exchange differences are accumulated in "Foreign currency monetary item translation difference account" and amortized by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March 31, 2020 (notified earlier as March 31, 2011).

Ministry of Corporate Affairs, Government of India, has issued Notification No.G.S.R 913 (E) dated December 29, 2011, amending the Companies (Accounting Standard) Rules, 2006 in respect of the exchange differences arising (effective from April 1, 2011) on reporting of long-term foreign currency monetary items, by extending the time period for the amortization of the said differences from "up to March 31, 2011" to "up to March 31, 2020". The unamortized net exchange difference on account of the above is a gain of Rs 415.25 lakhs as at March 31, 2012 (March 31, 2011: Nil)

The impact of adopting the above said Notifications on the results for the year is a net cumulative higher charge of Rs 351.95 lakhs for the year ended March 31, 2012.

1.5.2 Forward contracts and Advances designated as cash flow hedges

The Company had adopted the principles of Accounting Standard 30 - Financial instruments: Recognition and measurement, issued by the Institute of Chartered Accountants of India, with effect from April 1, 2008, in respect of forward contracts for firm commitments and highly probable forecast transactions meeting necessary criteria for designation as "Cash flow hedges". The gains and losses on effective Cash flow hedges are recognized in Hedge Reserve Account till the underlying forecast transaction occurs.

b) Gratuity is administered through Group gratuity scheme with Life Insurance Corporation of India. The expected return on plan assets is based on market expectation at the beginning of the year, for the returns over the entire life of the related obligation.

c) During the year, the Company has recognized the following amounts in the Statement of Profit and Loss in Note 2.6 to the Financial Statements

- Salaries and wages include compensated absences Rs. 951.93 lakhs (2011: Rs. 1,728.36 lakhs).

- Contribution to provident, gratuity and other funds include Provident fund and family pension Rs. 4,175.98 lakhs (2011: Rs.4,111.61 lakhs), super animation Rs. 1,263.40 lakhs (2011: Rs.1,175.93 lakhs), gratuity Rs. 2,002.48 lakhs (2011: Rs. 2,085.39 lakhs) and other funds Rs. 1,279.50 lakhs (2011: Rs. 1,088.14 lakhs).

- Welfare expenses include contribution to employee state insurance plan Rs. 76.28 lakhs (2011: Rs. 76.02 lakhs), retirement benefits is a reversal of provision of Rs. 22.09 lakhs (2011: a charge of Rs. 139.27 lakhs) and other defined employee benefits Rs. 100.39 lakhs (2011: Rs. 74.85 lakhs).

1.6 The Company has during the year changed its Accounting Policy to adjust expenditure on issue of debentures against balance in Securities Premium account instead of amortizing the same over the period of the borrowing hitherto followed. The impact of the said change on the results for the year is a lower charge of Rs. 23.30 lakhs in the Statement of Profit and Loss.

1.7 During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its Financial Statements. Accordingly, the Company has reclassified / regrouped/ amended the previous year figures in accordance with the requirements applicable in the current year.

 
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