Accounting Policies of Bajaj Holdings & Investment Ltd. Company
Mar 31, 2023
1 Bajaj Holdings & Investment Ltd. (the ''Company'') is a public limited company domiciled in India and incorporated under the provisions of Companies Act, 1913. The Company operates as an Investment Company and consequently is registered as a Non-Banking Financial Institution - Investment and Credit Company (''NBFC-ICC'') with the Reserve Bank of India (RBI) vide registration number N-13.01952. As per RBI''s ''Scale Based Regulations'' (SBR), the Company is classified as NBFC - Base Layer (NBFC-BL).
The Company''s registered office is at Bajaj Auto Ltd. Complex, Mumbai-Pune road, Pune, Maharashtra, India. Its shares are listed on two recognised stock exchanges in India.
Financial statements were subject to review and recommendation of Audit Committee and approval of Board of Directors. On 27 April 2023, Board of Directors of the Company approved and recommended the financial statements for consideration and adoption by the shareholders in its Annual General Meeting.
2 Significant accounting policies followed by the Company 2A Basis of preparation
These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS)notified under section 133 of the Companies Act, 2013 (''the Act'') read together with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, other relevant provisions of the Act and the RBI guidelines / regulations to the extent applicable on an accrual basis.
The financial statements have been prepared on a historical cost basis, except for certain financial assets and financial liabilities that are measured at fair value.
The financial statements are presented in INR, which is also the Company''s functional currency and all values are rounded to the nearest crore (INR 0,000,000), except when otherwise indicated.
2B Summary of significant accounting policies followed by the Company
1. Use of estimates
Estimates and assumptions used in the preparation of the financial statements and disclosures are based upon Management''s evaluation of the relevant facts and circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date.
2. Revenue recognition Income
Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ''control'' of the goods or services underlying the particular performance obligation is transferred to the customer. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation.
1. Interest income
Interest income from debt instruments is recognised using the effective interest rate (EIR) method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
The EIR is calculated by taking into account any discount or premium on acquisition, fees and costs that are an integral part of the EIR. The Company recognises interest income using a rate of return that represents the best estimate of a constant rate of return over the expected life of the instrument. Hence, it recognises the effect of potentially different interest rates charged at various stages, if any, and other characteristics of the product life cycle (including prepayments, penalty interest and charges).
If expectations regarding the cash flows on the financial asset are revised for reasons other than credit risk, the adjustment is booked as a positive or negative adjustment to the carrying amount of the asset in the Balance Sheet with an increase or reduction in interest income. The adjustment is subsequently amortised through interest income in the Statement of Profit and Loss.
Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment is established, and it is probable that the economic benefits associated with the dividend will flow to the Company and that the amount of the dividend can be measured reliably.
The Company recognises other income on accrual basis. Rental income is accounted on a straightline basis over the lease terms.
3. Property, plant and equipment and depreciation/amortisationA. Property, plant and equipment
i) Property, plant and equipment, capital work in progress except land are carried at cost of acquisition or construction as the case may be, less accumulated depreciation and amortisation. Land is carried at cost of acquisition. Cost comprises of the purchase price including import duties and non-refundable taxes, and directly attributable expenses incurred to bring the asset to the location and condition necessary for it to be capable of being operated in the manner intended by the Management. Changes in the expected useful life, if any, are accounted for by changing the amortisation period and treated as changes in accounting estimates. All other repair and maintenance costs are recognised in the Statement of Profit and Loss as incurred.
ii) An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.
B. Depreciation and amortisationa. Leasehold land
Premium on leasehold land is amortised over the period of lease.
b. On other tangible assets
i. a. Depreciation is provided on the straight line method over the useful lives of
the assets.
b. Where a significant component (in terms of cost) of an asset has an economic useful life shorter than that of its corresponding asset, the component is depreciated over such shorter life.
c. Useful life of assets are determined by the Management by internal technical assessments.
ii. Depreciation is calculated using the straight line method to write down the cost of property and equipment to their residual values over their estimated useful lives. Land is not depreciated. The estimated useful lives are, as follows
⢠Buildings - 25 to 40 years
⢠Computers - 3 years
⢠Others - furniture, electric fittings and office equipment - 2 to 10 years
iii. Assets which are depreciated over useful life/residual value different than those indicated by Schedule II to the Companies Act, 2013 are as under
|
Assets given on lease in relation to investment properties |
as per Schedule II |
useful life |
|
Building (interior) |
60 years |
5 years |
|
Computers |
6 years |
5 years |
|
Furniture |
10 years |
5 years |
|
Electric fittings |
10 years |
5 years |
|
Assets given on lease in relation to investment properties having nil residual value |
||
|
Computers |
||
|
Furniture |
||
|
Office equipment |
||
|
Electric fittings |
||
iv. Depreciation on additions is being provided on pro rata basis from the month of such additions.
v. Depreciation on assets sold, discarded or demolished during the year is being provided up to the month in which such assets are sold, discarded or demolished.
vi. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
C. Impairment of property, plant and equipment
An assessment is done at each balance sheet date as to whether there are any indications that an asset may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset/Cash Generating Unit (CGU) is made. Where the carrying value of the asset/CGU exceeds the recoverable amount, the carrying value is written down to the recoverable amount.
Land and buildings which are held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment properties. Investment properties are measured initially at their cost, including related transaction costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are expensed when incurred. Depreciation on investment properties is provided on a pro rata basis on straight line method over the estimated useful lives. Useful life of assets, as assessed by the Management, corresponds to those prescribed by Schedule II- Part ''C''.
5. Investments and financial assetsA. Investment in subsidiaries and associates
Interest in subsidiaries and associates are recognised at cost and not adjusted to fair value at the end of each reporting period. Cost represents amount paid for acquisition of the said investments.
The Company assesses at the end of each reporting period, if there are any indications that the said investments may be impaired. If so, the Company estimates the recoverable value/amount of the investment and provides for impairment, if any i.e. the deficit in the recoverable value over cost.
B. Other investments and financial assetsI. Classification
The Company classifies its financial assets in the following measurement categories
⢠those to be measured subsequently at fair value through other comprehensive income (FVTOCI), or
⢠those to be measured subsequently at fair value through profit or loss (FVTPL), and
⢠those to be measured subsequently at amortised cost
The classification is done depending upon the Company''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets classified as ''measured at fair value'', gain/loss will either be recorded in profit or loss or other comprehensive income, as elected.
Business model assessment
The Company determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective.
The Company''s business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:
⢠How the performance of the business model and the financial assets held within that business model are evaluated and reported to the entity''s key management personnel
⢠The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed
⢠The expected frequency, value and timing of sales are also important aspects of the Company''s assessment
If cash flows after initial recognition are realised in a way that is different from the Company''s original expectations, the Company does not change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased financial assets going forward.
The SPPI test (Solely Payments of Principal and Interest)
As a second step of its classification process the Company assesses the contractual terms of financial instruments to identify whether they meet the SPPI test.
''Principal'' for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset.
The most significant elements of interest within a lending arrangement are typically the consideration for the time value of money and credit risk.
Initial measurement
Financial assets are initially recognised on the trade date, i.e., the date that the Company becomes a party to the contractual provisions of the instrument. At initial recognition, the Company measures a financial asset at its fair value including, in the case of ''a financial asset not at FVTPL'', transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at ''FVTPL'' are expensed in profit or loss. However, trade receivables that do not contain a significant financing component are measured at transaction price.
Subsequent measurement
Subsequent measurement of financial assets depends on the Company''s business model for managing the financial asset and the cash flow characteristics of the financial asset. There are three measurement categories into which the Company classifies its financial instruments.
Subsequently measured at amortised cost
Financial assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain/ loss on a financial asset that is subsequently measured at amortised cost is recognised in the Statement of Profit and Loss when the asset is derecognised or impaired. Interest income from these financial assets is included in investment income using the effective interest rate method.
Subsequently measured at FVTPL
Financial assets that do not meet the criteria for amortised cost, are measured at FVTPL e.g. investments in mutual funds. A gain or loss on a financial asset that is subsequently measured at FVTPL is recognised in profit or loss and presented net in the Statement of Profit and Loss as revenue from operations with other gain/(loss) in the period in which it arises.
Equity instruments subsequently measured at FVTOCI
The Company subsequently measures all equity investments at FVTPL, unless the Company''s Management has elected to classify irrevocably some of its equity investments as equity instruments at FVTOCI, when such instruments meet the definition of equity under Ind AS 32 Financial Instruments: Presentation. Such classification is determined on an instrument-byinstrument basis.
Gain and loss on these equity instruments is never recycled to Statement of Profit and Loss. Dividends are recognised in Statement of Profit and Loss as dividend income when the right of the payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the instrument, in which case, such gain is recorded in OCI. Equity instruments at FVTOCI are not subject to an impairment assessment.
Debt instruments subsequently measured at FVTOCI
Debt instruments are measured at FVTOCI when both of the following conditions are met:
⢠The instrument is held within a business model, the objective of which is both collecting contractual cash flows and selling financial assets;
⢠The contractual terms of the financial asset meet the SPPI test.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment gain/loss and interest income which are recognised in profit and loss.
When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to Statement of Profit and Loss and recognised in other gain/loss. Interest income from these financial assets is included in investment income using the effective interest rate method. Impairment expenses are presented as separate line item in the Statement of Profit and Loss.
III. Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk and if so, assess the need to provide for the same in the Statement of Profit and Loss.
The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument.
Since the Company makes investments in highly rated debt securities, which are categorized as ''subsequently measured at FVTOCI'', the risk parameters such as tenor, the probability of default corresponding to the credit rating by rating agency (viz. CRISIL, ICRA), for each of these instruments is considered in estimating the probable credit loss over life time of such securities.
ECL impairment loss allowance (or reversal) is recognised during the period only if material and is recognised as income/expense in the Statement of Profit and Loss. This amount is reflected under the head ''other expenses'' in the Statement of Profit and Loss.
Financial assets measured at amortised cost and revenue receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the Balance Sheet.
The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
IV. Reclassification of financial assets and liabilities
The Company does not reclassify its financial assets subsequent to their initial recognition, apart from the exceptional circumstances in which the Company acquires, disposes of, or terminates a business line or changes its business model. Financial liabilities are never reclassified. However, such reclassifications, if any, are done prospectively.
V. Derecognition of financial assets
A financial asset is derecognised only when Company has transferred the rights to receive cash flows from the financial asset. Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised.
Financial liabilities are classified as measured at amortised cost or FVTPL. Financial liabilities at FVTPL are measured at fair value and net gain and loss, including any interest expense, are recognised in Statement of Profit and Loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Interest expense and foreign exchange gain and loss are recognised in the Statement of Profit and Loss. Any gain or loss on derecognition is also recognised in the Statement of Profit and Loss.
A financial liability is a contractual obligation to deliver cash or another financial asset or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the Company or a contract that will or may be settled in the Company''s own equity instruments and is a non derivative contract for which the Company is or may be obliged to deliver a variable number of its own equity instruments, or a derivative contract over own equity that will or may be settled other than by the exchange of a fixed amount of cash (or another financial asset) for a fixed number of the Company''s own equity instruments.
All financial liabilities are recognised initially at fair value and, in the case of payables, net of directly attributable transaction costs.
After initial recognition, all financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Any gain or loss arising on derecognition of liabilities are recognised in the Statement of Profit and Loss.
The Company derecognises financial liability when the obligation under the liability is discharged, cancelled or expired.
a. Compensated absences and long-term incentive plan
Compensated absences entitlements are recognised as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and or encashed at any time during the tenure of employment the liability is recognised on the basis of an independent actuarial valuation.
The Company''s liability towards long-term incentive plan, being a defined benefit plan, is accounted for on the basis of an independent actuarial valuation.
They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.
Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which covers the same under Cash Accumulation Policy and Debt fund of the Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALIC). However, any deficit in plan assets managed by LIC and BALIC as compared to the liability on the basis of an independent actuarial valuation is recognised as a liability.
The liability or asset recognised in the Balance Sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method in conformity with the principles and manner of computation specified in Ind AS 19.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income.
The Company has three defined contribution plans for its employees:
⢠Contribution to superannuation fund as per the scheme of the Company
⢠Contribution to provident fund is made to Government Provident Fund Authority
⢠Contribution to Employees Pension Scheme 1995 is made to Government Provident Fund Authority
The Company recognises contribution payable to these fund/schemes as an expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the prepayment will lead to, for example, a reduction in future payment or a cash refund.
a. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, in accordance with the Income Tax Act, 1961 and the Income Computation and Disclosure Standards prescribed therein. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Management periodically evaluates positions taken in the tax returns with respect to situations
in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
b. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
c. Minimum Alternate Tax (MAT) in respect of a year is charged to the Statement of Profit and Loss as current tax for the year. The deferred tax asset is recognised for MAT credit available only to the extent that it is probable that the Company will pay normal income tax and thereby utilising MAT credit during the specified period, i.e., the period for which MAT credit is allowed to be carried forward and utilised. In the year in which the Company recognises MAT credit as an asset, it is created by way of credit to the Statement of Profit and Loss and shown as part of deferred tax asset. The Company reviews the ''MAT credit entitlement'' asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.
d. Deferred tax is provided using the asset-liability method on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax is determined using tax rates that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
e. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences.
f. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
g. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
h. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
9. Goods and service tax/value added taxes paid on acquisition of assets or on incurring
expenses.
Expenses and assets are recognised net of the goods and services tax/value added taxes paid, except
⢠When the tax incurred on a purchase of assets, goods or services is not eligible for recovery from the taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable
⢠When receivables and payables are stated with the amount of tax included
The net amount of tax recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the Balance Sheet.
10. Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a result of a past event and, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When the likelihood of outflow of resources is remote, no provision or disclosure is made.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
11. Leases including investment properties
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
a. Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to note 2B clause 3C for accounting policies on impairment of non-financial assets.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments primarily comprise of fixed payments.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made.
The Company applies the short-term lease recognition exemption to its short-term leases of office spaces (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases are recognised as expense on a straight-line basis over the lease term.
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents includes cash on hand, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company''s earnings per share is the net profit for the period.
The weighted average number of equity shares outstanding during the period and all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of share outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
Operating segments are reported in a manner consistent with the internal reporting provided to the Core Management Committee which includes the Managing Director who is the Chief Operating Decision Maker. The Core Management Committee examines performance both from product and a geographical perspective.
15. Foreign currency translation Functional and presentational currency
The standalone financial statements are presented in INR which is also functional currency of the Company.
Transactions in foreign currencies are initially recorded in the functional currency at the spot rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated into the functional currency at the spot rate of exchange at the reporting date. All differences arising on non-trading activities are taken to other income/expense in the Statement of Profit and Loss.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the spot exchange rates as at the date of recognition.
16. Derivative financial instruments and hedge accounting
The Company enters into forward contracts to hedge the foreign currency risk of firm commitments. Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain/ loss is recognised in the Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the Statement of Profit and Loss depends on the nature of the hedging relationship and the nature of the hedged item.
The Company enters into derivative financial instruments viz. foreign exchange forward contracts to manage its exposure to foreign exchange rate risks. The Company does not hold derivative financial instruments for speculative purposes.
The Company designates certain hedging instruments in respect of foreign currency risk as cash flow hedges. At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management
objective and strategy for undertaking the hedge. The documentation includes the Company''s risk management objective and strategy for undertaking hedge, the hedging/economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrument''s fair value in offsetting the exposure to changes in the hedged item''s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated. The effective portion of changes in the fair value of the designated portion of derivatives that qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain/loss relating to the ineffective portion is recognised immediately in the Statement of Profit and Loss.
Amounts previously recognised in other comprehensive income and accumulated in other equity relating to (effective portion as described above) are re-classified to the Statement of Profit and Loss in the periods when the hedged item affects profit or loss.
17. Dividends on equity shares
The Company recognises a liability to make cash distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company.
The Company measures financial instruments other than equity investment in subsidiaries, joint venture, associates and open ended target maturity funds, at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole
⢠Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
⢠Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The Company has set policies and procedures for both recurring and non-recurring fair value measurement of financial assets, which includes valuation techniques and inputs to use for each case.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Mar 31, 2022
1 Bajaj Holdings & Investment Ltd. (the ''Company'') is a public limited company domiciled in India and incorporated under the provisions of Companies Act, 1913. The Company operates as an Investment Company and consequently is registered as a Non-Banking Financial Institution - Investment and Credit Company (''NBFC-ICC'') with the Reserve Bank of India (RBI) vide registration number N-13.01952.
The Company''s registered office is at Bajaj Auto Ltd. Complex, Mumbai-Pune road, Pune, Maharashtra, India. Its shares are listed on two recognised stock exchanges in India.
2 Summary of significant accounting policies followed by the Company 2A Basis of preparation
These financial statements have been prepared in accordance with Indian Accounting Standards(Ind AS) notified under section 133 of the Companies Act, 2013 (''the Act'') read together with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, other relevant provisions of the Act and the RBI guidelines / regulations to the extent applicable on an accrual basis.
The financial statements have been prepared on a historical cost basis, except for certain financial assets and financial liabilities that are measured at fair value.
The financial statements are presented in INR, which is also the Company''s functional currency and all values are rounded to the nearest crore (INR 0,000,000), except when otherwise indicated.
2B Summary of significant accounting policies followed by the Company
Estimates and assumptions used in the preparation of the financial statements and disclosures are based upon Management''s evaluation of the relevant facts and circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date.
The Company recognises income (including rent, etc.) on accrual basis to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. However, where the ultimate collection of revenue lacks reasonable certainty, revenue recognition is postponed.
Interest income from debt instruments is recognised using the effective interest rate (EIR) method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
The EIR is calculated by taking into account any discount or premium on acquisition, fees and costs that are an integral part of the EIR. The Company recognises interest income using a rate of return that represents the best estimate of a constant rate of return over the expected life of the instrument. Hence, it recognises the effect of potentially different interest rates charged at various stages, if any, and other characteristics of the product life cycle (including prepayments, penalty interest and charges).
If expectations regarding the cash flows on the financial asset are revised for reasons other than credit risk,the adjustment is booked as a positive or negative adjustment to the carrying amount of the asset in the Balance Sheet with an increase or reduction in interest income. The adjustment is subsequently amortised through Interest income in the Statement of Profit and Loss.
Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment is established, and it is probable that the economic benefits associated with the dividend will flow to the Company and that the amount of the dividend can be measured reliably.
The Company recognises income (including rent) on accrual basis.
3. Property, plant and equipment and depreciation/ amortisation
A. Property, plant and equipment
i) Property, plant and equipment, capital work in progress except land are carried at cost of acquisition or construction as the case may be, less accumulated depreciation and amortisation. Land is carried at cost of acquisition. Cost comprises of the purchase price including import duties and non-refundable taxes, and directly attributable expenses incurred to bring the asset to the location and condition necessary for it to be capable of being operated in the manner intended by the Management. Changes in the expected useful life, if any, are accounted for by changing the amortisation period and treated as changes in accounting estimates. All other repair and maintenance costs are recognised in the Statement of Profit and Loss as incurred.
ii) An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.
B. Depreciation and amortisationa. Leasehold land
Premium on leasehold land is amortised over the period of lease.
i. a. Depreciation is provided on the straight line method over the useful lives of the assets.
b. Where a significant component (in terms of cost) of an asset has an economic useful life shorter than that of its corresponding asset, the component is depreciated over such shorter life.
c. Useful life of assets are determined by the Management by internal technical assessments.
ii. Depreciation is calculated using the straight line method to write down the cost of property and equipment to their residual values over their estimated useful lives. Land is not depreciated. The estimated useful lives are, as follows
⢠Buildings - 25 to 40 years
⢠Computers - 3 years
⢠Others - furniture, electric fittings and office equipment - 2 to 10 years
iii. Assets which are depreciated over useful life/residual value different than those indicated by Schedule II to the Companies Act, 2013 are as under
|
Assets given on lease in relation to investment properties |
as per Schedule II |
useful life |
|
Building (interior) |
60 years |
5 years |
|
Computers |
6 years |
5 years |
|
Furniture |
10 years |
5 years |
|
Electric fittings |
10 years |
5 years |
|
Assets given on lease in relation to investment properties having nil residual value |
||
|
Computers |
||
|
Furniture |
||
|
Office equipment |
||
|
Electric fittings |
||
iv. Depreciation on additions is being provided on pro rata basis from the month of such additions.
v. Depreciation on assets sold, discarded or demolished during the year is being provided up to the month in which such assets are sold, discarded or demolished.
vi. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
C. Impairment of property, plant and equipment
An assessment is done at each balance sheet date as to whether there are any indications that an asset may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset / Cash Generating Unit (CGU) is made. Where the carrying value of the asset/CGU exceeds the recoverable amount, the carrying value is written down to the recoverable amount.
Land and buildings which are held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment properties. Investment properties are measured initially at their cost, including related transaction costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are expensed when incurred. Depreciation on investment properties is provided on a pro rata basis on straight line method over the estimated useful lives. Useful life of assets, as assessed by the Management, corresponds to those prescribed by Schedule II- Part ''C''.
5. Investments and financial assetsA. Investment in subsidiaries and associates
Interest in subsidiaries and associates are recognised at cost and not adjusted to fair value at the end of each reporting period. Cost represents amount paid for acquisition of the said investments.
The Company assesses at the end of each reporting period, if there are any indications that the said investments may be impaired. If so, the Company estimates the recoverable value/amount of the investment and provides for impairment, if any i.e. the deficit in the recoverable value over cost.
B. Other investments and financial assetsi. Classification
The Company classifies its financial assets in the following measurement categories:
⢠those to be measured subsequently at fair value through other comprehensive income (FVTOCI), or
⢠those to be measured subsequently at fair value through profit or loss (FVTPL), and
⢠those to be measured subsequently at amortised cost
The classification is done depending upon the Company''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets classified as ''measured at fair value'', gains and losses will either be recorded in profit or loss or other comprehensive income, as elected.
The Company determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective.
The Company''s business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:
⢠How the performance of the business model and the financial assets held within that business model are evaluated and reported to the entity''s key management personnel
⢠The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed
⢠The expected frequency, value and timing of sales are also important aspects of the Compay''s assessment
If cash flows after initial recognition are realised in a way that is different from the Company''s original expectations, the Company does not change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased financial assets going forward.
The SPPI test (Solely Payments of Principal and Interest)
As a second step of its classification process the Company assesses the contractual terms of financial instruments to identify whether they meet the SPPI test.
''Principal'' for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset.
The most significant elements of interest within a lending arrangement are typically the consideration for the time value of money and credit risk.
ii. MeasurementInitial measurement
Financial assets are initially recognised on the trade date, i.e., the date that the Company becomes a party to the contractual provisions of the instrument. At initial recognition, the Company measures a financial asset at its fair value including, in the case of ''a financial asset not at FVTPL'', transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at ''FVTPL'' are expensed in profit or loss.
Subsequent measurement of financial assets depends on the Company''s business model for managing the financial asset and the cash flow characteristics of the financial asset. There are three measurement categories into which the Company classifies its financial instruments:
Subsequently measured at amortised cost
Financial assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a financial asset that is subsequently measured at amortised cost is recognised in the Statement of Profit and Loss when the asset is derecognised or impaired.
Interest income from these financial assets is included in investment income using the effective interest rate method.
Subsequently measured at FVTPL
Financial assets that do not meet the criteria for amortised cost, are measured at FVTPL e.g. investments in mutual funds. A gain or loss on a financial asset that is subsequently measured at FVTPL is recognised in profit or loss and presented net in the Statement of Profit and Loss as revenue from operations with other gains/(losses)in the period in which it arises.
Equity instruments subsequently measured at FVTOCI
The Company subsequently measures all equity investments at FVTPL, unless the Company''s Management has elected to classify irrevocably some of its equity investments as equity instruments at FVTOCI, when such instruments meet the definition of equity under Ind AS 32 Financial Instruments: Presentation. Such classification is determined on an instrument-by-instrument basis.
Gains and losses on these equity instruments are never recycled to Statement of Profit and Loss. Dividends are recognised in Statement of Profit and Loss as dividend income when the right of the payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the instrument, in which case, such gains are recorded in OCI. Equity instruments at FVTOCI are not subject to an impairment assessment.
Debt instruments subsequently measured at FVTOCI
Debt instruments are measured at FVTOCI when both of the following conditions are met:
⢠The instrument is held within a business model, the objective of which is both collecting contractual cash flows and selling financial assets;
⢠The contractual terms of the financial asset meet the SPPI test.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses and interest income which are recognised in profit and loss.
When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to Statement of Profit and Loss and recognised in other gains/ (losses). Interest income from these financial assets is included in investment income using the effective interest rate method. Impairment expenses are presented as separate line item in the Statement of Profit and Loss.
iii. Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk and if so, assess the need to provide for the same in the Statement of Profit and Loss.
The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument.
Since the Company makes investments in highly rated fixed income securities, which are categorised as ''subsequently measured at FVTOCI'', the risk parameters such as tenor, the probability of default corresponding to the credit rating by rating agency (viz. CRISIL, ICRA), for each of these instruments is considered in estimating the probable credit loss over life time of such securities.
ECL impairment loss allowance (or reversal) is recognised during the period only if material and is recognised as income/ expense in the Statement of Profit and Loss. This amount is reflected under the head ''other expenses'' in the Statement of Profit and Loss.
Financial assets measured at amortised cost and revenue receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the Balance Sheet.
The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
iv. Reclassification of financial assets and liabilities
The Company does not reclassify its financial assets subsequent to their initial recognition, apart from the exceptional circumstances in which the Company acquires, disposes of, or terminates a business line or changes its business model. Financial liabilities are never reclassified.
However, such reclassifications, if any, are done prospectively.
v. Derecognition of financial assets
A financial asset is derecognised only when Company has transferred the rights to receive cash flows from the financial asset. Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised.
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
a. Compensated absences and long-term incentive plan
Compensated absences entitlements are recognised as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and/or encashed at any time during the tenure of employment the liability is recognised on the basis of an independent actuarial valuation.
The Company''s liability towards long-term incentive plan, being a defined benefit plan, is accounted for on the basis of an independent actuarial valuation.
They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.
Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which covers the same under Cash Accumulation Policy and Debt fund of the Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALIC). However, any deficit in plan assets managed by LIC and BALIC as compared to the liability on the basis of an independent actuarial valuation is recognised as a liability.
The liability or asset recognised in the Balance Sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method in conformity with the principles and manner of computation specified in Ind AS 19.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income.
The Company has three defined contribution plans for its employees:
⢠Contribution to superannuation fund as per the scheme of the Company
⢠Contribution to provident fund is made to Government Provident Fund Authority
⢠Contribution to Employees Pension Scheme 1995 is made to Government Provident Fund Authority
The Company recognises contribution payable to these fund/ schemes as an expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the contribution
already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the prepayment will lead to, for example, a reduction in future payment or a cash refund.
a. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, in accordance with the Income Tax Act, 1961 and the Income computation and Disclosure Standards prescribed therein. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Management periodically evaluates positions taken in the tax returns with respect to situations
in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
b. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
c. Minimum Alternate Tax (MAT) in respect of a year is charged to the Statement of Profit and Loss as current tax for the year. The deferred tax asset is recognised for MAT credit available only to the extent that it is probable that the Company will pay normal income tax and thereby utilising MAT credit during the specified period, i.e., the period for which MAT credit is allowed to be carried forward and utilised. In the year in which the Company recognises MAT credit as an asset, it is created by way of credit to the Statement of Profit and Loss and shown as part of deferred tax asset. The Company reviews the ''MAT credit entitlement'' asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.
d. Deferred tax is provided using the asset-liability method on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax is determined using tax rates that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
e. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences.
f. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
g. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
h. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
9. Goods and service tax/value added taxes paid on acquisition of assets or on incurring expenses.
Expenses and assets are recognised net of the goods and services tax/value added taxes paid, except
⢠When the tax incurred on a purchase of assets, goods or services is not eligible for recovery from the taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable
⢠When receivables and payables are stated with the amount of tax included
The net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet.
10. Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a result of a past event and, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When the likelihood of outflow of resources is remote, no provision or disclosure is made.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
11. Operating leases including investment properties
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
a. Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to note 2B clause 3C for accounting policies on impairment of non-financial assets.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments primarily comprise of fixed payments.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made.
The Company applies the short-term lease recognition exemption to its short-term leases of office spaces (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases are recognised as expense on a straight-line basis over the lease term.
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents includes cash on hand, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
Earnings considered in ascertaining the Company''s earnings per share is the net profit for the period.
The weighted average number of equity shares outstanding during the period and all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of share outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
Operating segments are reported in a manner consistent with the internal reporting provided to the Core Management Committee which includes the Managing Director who is the Chief Operating Decision Maker. The Core Management Committee examines performance both from product and a geographical perspective.
15. Foreign currency translation Functional and presentational currency
The standalone financial statements are presented in INR which is also functional currency of the Company.
Transactions in foreign currencies are initially recorded in the functional currency at the spot rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated into the functional currency at the spot rate of exchange at the reporting date. All differences arising on non-trading activities are taken to other income/expense in the Statement of Profit and Loss.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the spot exchange rates as at the date of recognition.
16. Derivative financial instruments and hedge accounting
The Company enters into forward contracts to hedge the foreign currency risk of firm commitments. Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the Statement of Profit and Loss depends on the nature of the hedging relationship and the nature of the hedged item.
The Company enters into derivative financial instruments viz. foreign exchange forward contracts to manage its exposure to foreign exchange rate risks. The Company does not hold derivative financial instruments for speculative purposes.
The Company designates certain hedging instruments in respect of foreign currency risk as cash flow hedges. At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Company''s risk management objective and strategy for undertaking hedge, the hedging/economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrument''s fair value in offsetting the exposure to changes in the hedged item''s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated. The effective portion of changes in the fair value of the designated portion of derivatives that qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the Statement of Profit and Loss.
Amounts previously recognised in other comprehensive income and accumulated in other equity relating to (effective portion as described above) are re-classified to the Statement of Profit and Loss in the periods when the hedged item affects profit or loss.
17. Dividends on equity shares
The Company recognises a liability to make cash distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company.
The Company measures financial instruments, such as, investment in mutual funds at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole
⢠Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
⢠Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The Company has set policies and procedures for both recurring and non-recurring fair value measurement of financial assets, which includes valuation techniques and inputs to use for each case.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Mar 31, 2021
1 Bajaj Holdings & Investment Ltd. (the ''Company'') is a public limited company domiciled in India and incorporated under the provisions of Companies Act, 1913. The Company operates as an Investment Company and consequently is registered as a Non-Banking Financial Institution - Investment and Credit Company (''NBFC-ICC'') with the
Reserve Bank of India (RBI) vide registration number N-13.01952. The Company''s registered office is at Bajaj Auto Ltd. Complex, Mumbai-Pune road, Pune, Maharashtra, India. Its shares are listed on two recognised stock exchanges in India.
2 Summary of significant accounting policies followed by the Company
2A Basis of preparation
These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (''the Act'') read together with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, other relevant provisions of the Act and the RBI guidelines/regulations to the extent applicable on an accrual basis.
The financial statements have been prepared on a historical cost basis, except for certain financial assets and financial liabilities that are measured at fair value.
The financial statements are presented in INR, which is also the Company''s functional currency and all values are rounded to the nearest crore (INR 0,000,000), except when otherwise indicated.
2B Summary of significant accounting policies followed by the Company
1. Use of estimates
Estimates and assumptions used in the preparation of the financial statements and disclosures are based upon Management''s evaluation of the relevant facts and circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date.
2. Revenue recognition Income
The Company recognises income (including rent, etc.) on accrual basis to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. However, where the ultimate collection of revenue lacks reasonable certainty, revenue recognition is postponed.
1. Interest income
Interest income from debt instruments is recognised using the effective interest rate (EIR) method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
The EIR is calculated by taking into account any discount or premium on acquisition, fees and costs that are an integral part of the EIR. The Company recognises interest income using a rate of return that represents the best estimate of a constant rate of return over the expected life of the instrument. Hence, it recognises the effect of potentially different interest rates charged at various stages, if any, and other characteristics of the product life cycle (including prepayments, penalty interest and charges).
If expectations regarding the cash flows on the financial asset are revised for reasons other than credit risk.
The adjustment is booked as a positive or negative adjustment to the carrying amount of the asset in the Balance Sheet with an increase or reduction in interest income. The adjustment is subsequently amortised through Interest income in the Statement of Profit and Loss.
2. Dividends
Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment is established, and it is probable that the economic benefits associated with the dividend will flow to the Company and that the amount of the dividend can be measured reliably.
3. Rent and other income
The Company recognises income (including rent) on accrual basis.
3. Property, plant and equipment and depreciation/amortisation
A. Property, plant and equipment
i) Property, plant and equipment, capital work in progress except land are carried at cost of acquisition or construction as the case may be, less accumulated depreciation and amortisation. Land is carried at cost of acquisition. Cost comprises of the purchase price including import duties and non-refundable taxes, and directly attributable expenses incurred to bring the asset to the location and condition necessary for it to be capable of being operated in the manner intended by the Management. Changes in the expected useful life, if any, are accounted for by changing the amortisation period and treated as changes in accounting estimates. All other repair and maintenance costs are recognised in the Statement of Profit and Loss as incurred.
ii) An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.
B. Depreciation and amortisation
a. Leasehold land
Premium on leasehold land is amortised over the period of lease.
b. On other tangible assets
i. a. Depreciation is provided on the straight line method over the useful lives of the assets.
b. Where a significant component (in terms of cost) of an asset has an economic useful life shorter than that of its corresponding asset, the component is depreciated over such shorter life.
c. Useful life of assets are determined by the Management by internal technical assessments.
ii. Depreciation is calculated using the straight line method to write down the cost of property and equipment to their residual values over their estimated useful lives. Land is not depreciated.
The estimated useful lives are, as follows
Buildings - 25 to 40 years Computers - 3 years
Others - furniture, electric fittings and office equipment - 2 to 10 years
iii. Assets which are depreciated over useful life/residual value different than those indicated by Schedule II to the Companies Act, 2013 are as under:
|
Assets given on lease in relation to investment properties |
as per schedule II |
useful life |
|
Building (interior) |
60 years |
5 years |
|
Computers |
6 years |
5 years |
|
Furniture |
10 years |
5 years |
|
Electric fittings |
10 years |
5 years |
|
Assets given on lease in relation to investment properties having nil residual value |
||
|
Computers |
||
|
Furniture |
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Office equipment |
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Electric fittings |
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iv. Depreciation on additions is being provided on pro rata basis from the month of such additions.
v. Depreciation on assets sold, discarded or demolished during the year is being provided up to the month in which such assets are sold, discarded or demolished.
vi. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
C. Impairment of property, plant and equipment
An assessment is done at each balance sheet date as to whether there are any indications that an asset may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset/Cash Generating Unit (CGU) is made. Where the carrying value of the asset/CGU exceeds the recoverable amount, the carrying value is written down to the recoverable amount.
4. Investment properties
Land and buildings which are held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment properties. Investment properties are measured initially at their cost, including related transaction costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are expensed when incurred. Depreciation on investment properties is provided on a pro rata basis on straight line method over the estimated useful lives. Useful life of assets, as assessed by the Management, corresponds to those prescribed by Schedule II- Part ''C''.
5. Investments and financial assets
A. Investment in subsidiaries and associates
Interest in subsidiaries and associates are recognised at cost and not adjusted to fair value at the end of each reporting period. Cost represents amount paid for acquisition of the said investments.
The Company assesses at the end of each reporting period, if there are any indications that the said investments may be impaired. If so, the Company estimates the recoverable value/amount of the investment and provides for impairment, if any i.e. the deficit in the recoverable value over cost.
B. Other investments and financial assets
i. Classification
The Company classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value through other comprehensive income (FVTOCI), or those to be measured subsequently at fair value through profit or loss (FVTPL), and those to be measured subsequently at amortised cost
The classification is done depending upon the Company''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets classified as ''measured at fair value'', gains and losses will either be recorded in profit or loss or other comprehensive income, as elected.
Business model assessment
The Company determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective.
The Company''s business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:
How the performance of the business model and the financial assets held within that business model are evaluated and reported to the entity''s key management personnel
The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed
The expected frequency, value and timing of sales are also important aspects of the Company''s assessment
If cash flows after initial recognition are realised in a way that is different from the Company''s original expectations, the Company does not change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased financial assets going forward.
The SPPI test (Solely Payments of Principal and Interest)
As a second step of its classification process the Company assesses the contractual terms of financial instruments to identify whether they meet the SPPI test.
''Principal'' for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset.
The most significant elements of interest within a lending arrangement are typically the consideration for the time value of money and credit risk.
ii. Measurement
Initial Measurement
Financial assets are initially recognised on the trade date, i.e., the date that the Company becomes a party to the contractual provisions of the instrument. At initial recognition, the Company measures a financial asset at its fair value including, in the case of ''a financial asset not at FVTPL'', transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at ''FVTPL'' are expensed in profit or loss.
Subsequent Measurement
Subsequent measurement of financial assets depends on the Company''s business model for managing the financial asset and the cash flow characteristics of the financial asset. There are three measurement categories into which the Company classifies its financial instruments:
Subsequently measured at amortised cost
Financial assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a financial asset that is subsequently measured at amortised cost is recognised in the Statement of Profit and Loss when the asset is derecognised or impaired. Interest income from these financial assets is included in investment income using the effective interest rate method.
Subsequently measured at FVTPL
Financial assets that do not meet the criteria for amortised cost, are measured at FVTPL e.g. investments in mutual funds. A gain or loss on a financial asset that is subsequently measured at FVTPL is recognised in profit or loss and presented net in the Statement of Profit and Loss as revenue from operations with other gains/(losses) in the period in which it arises.
Equity instruments subsequently measured at FVTOCI
The Company subsequently measures all equity investments at FVTPL, unless the Company''s Management has elected to classify irrevocably some of its equity investments as equity instruments at FVTOCI, when such instruments meet the definition of equity under Ind AS 32 Financial Instruments: Presentation.
Such classification is determined on an instrument-by-instrument basis
Gains and losses on these equity instruments are never recycled to Statement of Profit and Loss.
Dividends are recognised in Statement of Profit and Loss as dividend income when the right of the payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the instrument, in which case, such gains are recorded in OCI. Equity instruments at FVTOCI are not subject to an impairment assessment.
Debt instruments subsequently measured at FVTOCI
Debt instruments are measured at FVTOCI when both of the following conditions are met:
The instrument is held within a business model, the objective of which is both collecting contractual cash flows and selling financial assets;
The contractual terms of the financial asset meet the SPPI test.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses and interest income which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to Statement of Profit and Loss and recognised in other gains/(losses). Interest income from these financial assets is included in investment income using the effective interest rate method. Impairment expenses are presented as separate line item in the Statement of Profit and Loss.
iii. Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk and if so, assess the need to provide for the same in the Statement of Profit and Loss.
The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables.
The application of simplified approach does not require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument.
Since the Company makes investments in highly rated fixed income securities, which are categorised as ''subsequently measured at FVTOCI'', the risk parameters such as tenor, the probability of default corresponding to the credit rating by rating agency (viz. CRISIL, ICRA), for each of these instruments is considered in estimating the probable credit loss over life time of such securities.
ECL impairment loss allowance (or reversal) is recognised during the period only if material and is recognised as income/expense in the Statement of Profit and Loss. This amount is reflected under the head ''other expenses'' in the Statement of Profit and Loss.
Financial assets measured at amortised cost and revenue receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the Balance Sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
iv. Reclassification of financial assets and liabilities
The Company does not reclassify its financial assets subsequent to their initial recognition, apart from the exceptional circumstances in which the Company acquires, disposes of, or terminates a business line or changes its business model. Financial liabilities are never reclassified. However, such reclassifications, if any, are done prospectively.
v. Derecognition of financial assets
A financial asset is derecognised only when Company has transferred the rights to receive cash flows from the financial asset. Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised.
6. Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
7. Employee benefits
a. Compensated absences and long-term incentive plan
Compensated absences entitlements are recognised as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and/or encashed at any time during the tenure of employment the liability is recognised on the basis of an independent actuarial valuation.
The Company''s liability towards long-term incentive plan, being a defined benefit plan, is accounted for on the basis of an independent actuarial valuation.
They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.
b. Gratuity
Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which covers the same under Cash Accumulation Policy and Debt fund of the Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALIC). However, any deficit in plan assets managed by LIC and BALIC as compared to the liability on the basis of an independent actuarial valuation is recognised as a liability.
The liability or asset recognised in the Balance Sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.
The defined benefit obligation is calculated annually by actuaries using the projected unit credit method in conformity with the principles and manner of computation specified in Ind AS 19.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income.
c. Defined contribution plans
The Company has three defined contribution plans for its employees:
Contribution to superannuation fund as per the scheme of the Company
Contribution to provident fund is made to Government Provident Fund Authority
Contribution to Employees Pension Scheme 1995 is made to Government Provident Fund Authority
The Company recognises contribution payable to these fund/schemes as an expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the prepayment will lead to, for example, a reduction in future payment or a cash refund.
8. Taxation
a. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, in accordance with the Income Tax Act, 1961 and the Income computation and Disclosure Standards prescribed therein. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
b. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
c. Minimum Alternate Tax (MAT) in respect of a year is charged to the Statement of Profit and Loss as current tax for the year. The deferred tax asset is recognised for MAT credit available only to the extent that it is probable that the Company will pay normal income tax and thereby utilising MAT credit during the specified period, i.e., the period for which MAT credit is allowed to be carried forward and utilised. In the year in which the Company recognises MAT credit as an asset, it is created by way of credit to the Statement of Profit and Loss and shown as part of deferred tax asset. The Company reviews the ''MAT credit entitlement'' asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.
d. Deferred tax is provided using the asset-liability method on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
e. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences.
f. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
g. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
h. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
9. Goods and service tax/value added taxes paid on acquisition of assets or on incurring expenses.
Expenses and assets are recognised net of the goods and services tax/value added taxes paid, except:
When the tax incurred on a purchase of assets, goods or services is not eligible for recovery from the taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable
When receivables and payables are stated with the amount of tax included
The net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet.
10. Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a result of a past event and, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When the likelihood of outflow of resources is remote, no provision or disclosure is made.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
11. Operating leases including investment properties
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
As a lessee
a. Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to note 2B clause 3C for accounting policies on impairment of non-financial assets.
b. Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments primarily comprise of fixed payments.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made.
c. Short term leases
The Company applies the short-term lease recognition exemption to its short-term leases of office spaces (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases are recognised as expense on a straight-line basis over the lease term.
As a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income
12. Cash and cash equivalents
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents includes cash on hand, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
13. Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company''s earnings per share is the net profit for the period. The weighted average number of equity shares outstanding during the period and all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of share outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
14. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Core Management Committee which includes the Managing Director who is the Chief Operating Decision Maker. The Core Management Committee examines performance both from product and a geographical perspective.
15. Foreign currency translation Functional and presentational currency
The standalone financial statements are presented in INR which is also functional currency of the Company. Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency at the spot rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated into the functional currency at the spot rate of exchange at the reporting date. All differences arising on non-trading activities are taken to other income/expense in the Statement of Profit and Loss.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the spot exchange rates as at the date of recognition.
16. Derivative financial instruments and hedge accounting
The Company enters into forward contracts to hedge the foreign currency risk of firm commitments. Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the Statement of Profit and Loss depends on the nature of the hedging relationship and the nature of the hedged item.
The Company enters into derivative financial instruments viz. foreign exchange forward contracts to manage its exposure to foreign exchange rate risks. The Company does not hold derivative financial instruments for speculative purposes.
Hedge accounting:
The Company designates certain hedging instruments in respect of foreign currency risk as cash flow hedges. At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Company''s risk management objective and strategy for undertaking hedge, the hedging/economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrument''s fair value in offsetting the exposure to changes in the hedged item''s fair value or cash flows attributable to the hedged risk. Such hedges are
expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated. The effective portion of changes in the fair value of the designated portion of derivatives that qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the Statement of Profit and Loss.
Amounts previously recognised in other comprehensive income and accumulated in other equity relating to (effective portion as described above) are re-classified to the Statement of Profit and Loss in the periods when the hedged item affects profit or loss.
17. Dividends on equity shares
The Company recognises a liability to make cash distributions to equity holders of the parent when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
18. Fair value measurement
The Company measures financial instruments, such as, investment in mutual funds at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The Company has set policies and procedures for both recurring and non-recurring fair value measurement of financial assets, which includes valuation techniques and inputs to use for each case.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Notes to standalone financial statements for the year ended 31 March 2021 (Contd.)
|
('' In Crore) As at 31 March |
||
|
Particulars |
2021 |
2020 |
|
Balances with banks |
21.75 |
20.09 |
|
21.75 |
20.09 |
|
|
4 Bank balances other than cash and cash equivalents |
||
|
('' In Crore) As at 31 March |
||
|
Particulars |
2021 |
2020 |
|
Unclaimed dividend accounts |
5.10 |
10.15 |
|
|
5.10 |
10.15 |
||
|
5 Investments |
|||
|
('' In |
Crore) |
||
|
As at 31 March |
|||
|
Particulars |
2021 |
2020 |
|
|
A Investment in subsidiaries and associates |
||
|
Investment in equity instruments carried at cost |
||
|
In subsidiaries |
||
|
Bajaj Auto Holdings Ltd. |
0.25 |
0.25 |
|
Maharashtra Scooters Ltd. * |
239.49 |
239.49 |
|
Cost |
239.74 |
239.74 |
|
In associates |
||
|
Bajaj Auto Ltd. |
1,929.79 |
1,929.79 |
|
Bajaj Finserv Ltd. |
743.82 |
743.82 |
|
Cost |
2,673.61 |
2,673.61 |
|
Total (A) |
2,913.35 |
2,913.35 |
* The Company has on 17 June 2019 acquired 3,085,712 equity shares representing 27% stake in Maharashtra Scooters Ltd. (MSL) from Western Maharashtra Development Corporation Ltd. (WMDC), pursuant to the Supreme Court Order dated 9 January 2019 for a total consideration of '' 239.25 crore, comprising of a price of '' 232 per share aggregating '' 71.59 crore along with interest at 18% p.a. from the date of the arbitral award i.e. 14 January 2006 up to the date of payment amounting to '' 167.66 crore (gross of TDS). Upon this acquisition, the Company holds 51% of the share capital of MSL and MSL has since become a subsidiary.
88
Mar 31, 2019
1. Use of estimates
Estimates and assumptions used in the preparation of the financial statements and disclosures are based upon Managementâs evaluation of the relevant facts and circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date.
2. Revenue recognition
A. Income
The Company recognises income (including rent, etc.) on accrual basis to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. However, where the ultimate collection of revenue lacks reasonable certainty, revenue recognition is postponed.
1. Interest income
Interest income from debt instruments is recognised using the effective interest rate (EIR) method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
The EIR (and therefore, the amortised cost of the asset) is calculated by taking into account any discount or premium on acquisition, fees and costs that are an integral part of the EIR. The Company recognises interest income using a rate of return that represents the best estimate of a constant rate of return over the expected life of the instrument. Hence, it recognises the effect of potentially different interest rates charged at various stages, if any, and other characteristics of the product life cycle (including prepayments, penalty interest and charges).
If expectations regarding the cash flows on the financial asset are revised for reasons other than credit risk.
The adjustment is booked as a positive or negative adjustment to the carrying amount of the asset in the Balance Sheet with an increase or reduction in interest income. The adjustment is subsequently amortised through Interest income in the Statement of Profit and Loss.
2. Dividends
Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment is established, and it is probable that the economic benefits associated with the dividend will flow to the Company and that the amount of the dividend can be measured reliably.
3. Other income
The Company recognises other income on accrual basis as it becomes due.
3. Property, plant and equipment and depreciation/amortisation
A. Property, plant and equipment
i) Property, plant and equipment, capital work in progress except land are carried at cost of acquisition or construction as the case may be, less accumulated depreciation and amortisation. Land is carried at cost of acquisition. Cost comprises of the purchase price including import duties and non-refundable taxes, and directly attributable expenses incurred to bring the asset to the location and condition necessary for it to be capable of being operated in the manner intended by the Management. Changes in the expected useful life, if any, are accounted for by changing the amortisation period or methodology, as appropriate, and treated as changes in accounting estimates. All other repair and maintenance costs are recognised in the Statement of Profit and Loss as incurred.
ii) An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.
B. Transition to Ind AS
On Transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as at 1 April 2017 measured as per previous GAAP which in case of the Company, corresponds with carrying costs measured in accordance with Ind AS 16 Property, plant and equipment.
C. Depreciation and amortisation
a. Leasehold land
Premium on leasehold land is amortised over the period of lease.
b. On other tangible assets
i. a. Depreciation is provided on the straight line method over the useful lives of the assets.
b. Where a significant component (in terms of cost) of an asset has an economic useful life shorter than that of its corresponding asset, the component is depreciated over such shorter life.
c. Useful life of assets are determined by the Management by internal technical assessments.
ii. Depreciation is calculated using the straight line method to write down the cost of property and equipment to their residual values over their estimated useful lives. Land is not depreciated. The estimated useful lives are, as follows
- Buildings - 25 to 40 years
- Computers - 3 years
- Others - furniture, electric fittings and office equipment - 2 to 10 years
iii. Assets which are depreciated over useful life/residual value different than those indicated by Schedule II to the Companies Act, 2013 are as under
iv. Depreciation on additions is being provided on pro rata basis from the month of such additions.
v. Depreciation on assets sold, discarded or demolished during the year is being provided up to the month in which such assets are sold, discarded or demolished.
vi. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
D. Impairment of property, plant and equipment
An assessment is done at each balance sheet date as to whether there are any indications that an asset may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset/Cash Generating Unit (CGU) is made. Where the carrying value of the asset/CGU exceeds the recoverable amount, the carrying value is written down to the recoverable amount.
4. Investment property
Land and buildings which are held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property measured initially at its cost, including related transaction costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are expensed when incurred. Depreciation on investment property is provided on a pro rata basis on straight line method over the estimated useful lives. Useful life of assets, as assessed by the Management, corresponds to those prescribed by Schedule II- Part âCâ.
Transition to Ind AS
On Transition to Ind AS, the Company has elected to continue with the carrying value of investment property recognised as at 1 April 2017 which in case of the Company, corresponds with carrying costs measured in accordance with Ind AS 40 Investment Properties.
5. Investments and financial assets
A. Investment in subsidiary, associates and joint venture
Interest in subsidiary, associates and a joint venture are recognised at cost and not adjusted to fair value at the end of each reporting period. Cost represents amount paid for acquisition of the said investments.
The Company assesses at the end of each reporting period, if there are any indications that the said investments may be impaired. If so, the Company estimates the recoverable value/amount of the investment and provides for impairment, if any i.e. the deficit in the recoverable value over cost.
B. Other investments and financial assets
i. Classification
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income (FVTOCI), or through profit or loss(FVTPL)), and
- those measured at amortised cost.
The classification is done depending upon the Companyâs business model for managing the financial assets and the contractual terms of the cash flows.
For assets classified as âmeasured at fair valueâ, gains and losses will either be recorded in profit or loss or other comprehensive income, as elected. For assets classified as âmeasured at amortised costâ, this will depend on the business model and contractual terms of the cash flows.
ii. Measurement Initial Measurement
Financial assets are initially recognised on the trade date, i.e., the date that the Company becomes a party to the contractual provisions of the instrument. At initial recognition, the Company measures a financial asset at its fair value including, in the case of âa financial asset not at fair value through profit or lossâ, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at âfair value through profit or lossâ are expensed in profit or loss.
Subsequent Measurement
Subsequent measurement of financial assets depends on the Companyâs business model for managing the financial asset and the cash flow characteristics of the financial asset. There are three measurement categories into which the Company classifies its financial instruments:
Subsequently measured at amortised cost
Financial assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost e.g. Debentures, Bonds etc. A gain or loss on a financial asset that is subsequently measured at amortised cost is recognised in the Statement of Profit and Loss when the asset is derecognised or impaired. Interest income from these financial assets is included in investment income using the effective interest rate method.
Subsequently measured at fair value through profit or loss
Financial assets that do not meet the criteria for amortised cost, are measured at fair value through profit or loss e.g. investments in mutual funds. A gain or loss on a financial asset that is subsequently measured at fair value through profit or loss is recognised in profit or loss and presented net in the Statement of Profit and Loss within other gains/(losses) in the period in which it arises.
Equity instruments subsequently measured at fair value through other comprehensive income
The Company subsequently measures all equity investments at fair value through profit or loss, unless the Companyâs Management has elected to classify irrevocably some of its equity investments as equity instruments at FVTOCI, when such instruments meet the definition of definition of Equity under Ind AS 32 Financial Instruments: Presentation. Such classification is determined on an instrument-by-instrument basis
Gains and losses on these equity instruments are never recycled to Statement of Profit and Loss. Dividends are recognised in Statement of Profit and Loss as dividend income when the right of the payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the instrument, in which case, such gains are recorded in OCI. Equity instruments at FVTOCI are not subject to an impairment assessment.
Business model assessment
The Company determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective.
The Companyâs business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:
- How the performance of the business model and the financial assets held within that business model are evaluated and reported to the entityâs key management personnel
- The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed
- The expected frequency, value and timing of sales are also important aspects of the Companyâs assessment
If cash flows after initial recognition are realised in a way that is different from the Companyâs original expectations, the Company does not change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased financial assets going forward.
The SPPI test (Solely Payments of Principal and Interest)
As a second step of its classification process the Company assesses the contractual terms of financial assets to identify whether they meet the SPPI test.
âPrincipalâ for the purpose of this test is defined as the fair value of the financial assets at initial recognition and may change over the life of the financial asset.
The most significant elements of interest within a lending arrangement are typically the consideration for the time value of money and credit risk.
iii. Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk and if so, assess the need to provide for the same in the Statement of Profit and Loss.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables.
The application of simplified approach does not require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument.
Since the Company makes investments in highly rated fixed income securities, which are categorised as âsubsequently measured at amortised costâ, the risk parameters such as tenor, the probability of default corresponding to the credit rating by rating agency (viz. CRISIL, ICRA), for each of these instruments is considered in estimating the probable credit loss over life time of such securities.
ECL impairment loss allowance (or reversal) is recognised during the period only if material and is recognised as income/expense in the Statement of Profit and Loss. This amount is reflected under the head âother expensesâ in the Statement of Profit and Loss.
Financial assets measured at amortised cost and revenue receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the Balance Sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
iv. Reclassification of financial assets and liabilities
The Company does not reclassify its financial assets subsequent to their initial recognition, apart from the exceptional circumstances in which the Company acquires, disposes of, or terminates a business line. Financial liabilities are never reclassified. The Company did not reclassify any of its financial assets or liabilities in 2018-19 and 2017-18.
v. Derecognition of financial assets
A financial asset is derecognised only when Company has transferred the rights to receive cash flows from the financial asset. Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised.
6. Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
7. Employee benefits
a. Compensated absences and long-term incentive plan
Compensated absences entitlements are recognised as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and/or encashed at any time during the tenure of employment the liability is recognised on the basis of an independent actuarial valuation.
The Companyâs liability towards long-term incentive plan, being a defined benefit plan, is accounted for on the basis of an independent actuarial valuation.
They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.
b. Gratuity
Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully covers the same under Cash Accumulation Policy and Debt fund of the Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALIC). However, any deficit in plan assets managed by LIC and BALIC as compared to the liability on the basis of an independent actuarial valuation is recognised as a liability.
The liability or asset recognised in the Balance Sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.
The defined benefit obligation is calculated annually by actuaries using the projected unit credit method in conformity with the principles and manner of computation specified in Ind AS 19.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised Other Comprehensive Income.
c. Defined contribution plans
The Company operates three defined contribution plans for its employees:
- Contribution to superannuation fund as per the scheme of the Company
- Contribution to provident fund is made to Government Provident Fund Authority
- Contribution to Employees Pension Scheme 1995 is made to Government Provident Fund Authority
The Company recognises contribution payable to these fund/schemes as an expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the prepayment will lead to, for example, a reduction in future payment or a cash refund.
8. Taxation
a. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, in accordance with the Income Tax Act, 1961 and the Income computation and Disclosure Standards prescribed therein. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
b. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
c. Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax for the year. The deferred tax asset is recognised for MAT credit available only to the extent that it is probable that the Company will pay normal income tax and thereby utilising MAT credit during the specified period, i.e., the period for which MAT credit is allowed to be carried forward and utilised. In the year in which the Company recognises MAT credit as an asset, it is created by way of credit to the Statement of Profit and Loss and shown as part of deferred tax asset. The Company reviews the âMAT credit entitlementâ asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.
d. Deferred tax is provided using the liability method on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
e. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences.
f. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
g. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
h. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
9. Goods and service tax/value added taxes paid on acquisition of assets or on incurring expenses.
Expenses and assets are recognised net of the goods and services tax/value added taxes paid, except:
- When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable
- When receivables and payables are stated with the amount of tax included
The net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet.
10. Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When the likelihood of outflow of resources is remote, no provision or disclosure is made.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
11. Operating leases As a lessee
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis over the period of the lease in a manner which is representative of the time pattern in which benefit derived from the use of the leased asset is diminished.
As a lessor
The Company has leased out certain assets and such leases where the Company has substantially retained all the risks and rewards of ownership are classified as operating leases. Lease income on such operating leases are recognised in the Statement of Profit and Loss on a straight line basis over the lease term in a manner which is representative of the time pattern in which benefit derived from the use of the leased asset is diminished. Initial direct costs are recognised as an expense in the Statement of Profit and Loss in the period in which they are incurred.
12. Cash and cash equivalents
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents includes cash on hand, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
13. Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Companyâs earnings per share is the net profit for the period.
The weighted average number of equity shares outstanding during the period and all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of share outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
14. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Core Management Committee which includes the Managing Director who is the Chief Operating Decision Maker. The Core Management Committee examines performance both from product and a geographical perspective.
15. Foreign currency translation
Functional and presentational currency
The standalone financial statements are presented in INR which is also functional currency of the Company. Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency at the spot rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated into the functional currency at the spot rate of exchange at the reporting date. All differences arising on non-trading activities are taken to other income/ expense in the Statement of Profit and Loss.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the spot exchange rates as at the date of recognition.
16. Dividends on equity shares
The Company recognises a liability to make cash distributions to equity holders of the parent when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
17. Fair value measurement
The Company measures financial instruments, such as, investment in mutual funds at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The Company has set policies and procedures for both recurring and non-recurring fair value measurement of financial assets, which includes valuation techniques and inputs to use for each case.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
ii) Contractual obligations
There are no contractual obligations to purchase, construct or develop investment property.
iii) Leasing arrangements
Certain investment properties are leased out to tenants under operating leases. Disclosure on future rent receivable is included in Note 29.
Estimation of fair value
The best evidence of fair value is current prices in an active market for similar properties. Investment properties leased out by the Company are cancellable leases. The market rate for sale/purchase of such premises are representative of fair values. Companyâs investment properties are at a location where active market is available for similar kind of properties. Hence fair value is ascertained on the basis of market rates prevailing for similar properties in those location determined by an independent registered valuer and consequently classified as a level 2 valuation.
Mar 31, 2018
1 Bajaj Holdings & Investment Ltd. (the ''Company'') operates as an Investment Company and consequently is registered as a Non-Banking Financial Institution (Non-Deposit taking) with Reserve Bank of India (RBI).
2 Summary of significant accounting policies followed by the Company Basis of preparation
These financial statements have been prepared in accordance with the accounting principles generally accepted in India (Indian GAAP) under the historical cost convention on an accrual basis. The Company has prepared these financial statements to comply in all material respects with the Accounting Standards notified under section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules, 2014, as amended and the Companies (Accounting Standards) Amendment Rules, 2016 and the RBI guidelines/regulations to the extent applicable.
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 III to the Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities. The accounting policy adopted in preparation of financial statements are consistent with those followed in previous year.
1) Use of estimates
Estimates and assumptions used in the preparation of the financial statements and disclosures are based upon Management''s evaluation of the relevant facts and circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date.
2) Revenue recognition Income
The Company recognizes income (including rent, etc.) on accrual basis to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. However, where the ultimate collection of revenue lacks reasonable certainty, revenue recognition is postponed.
(1) Income from debentures and bonds is accrued over the maturity of the security, net of amortization of premium/ discount, thereby recognizing the implicit yield to maturity, with reference to the coupon dates, where applicable.
(2) Dividends are recognized in the Statement of Profit and Loss only when the right to receive payment is established.
(3) On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss. Profit/loss on sale of investments is recognized on the trade date.
3) Property, plant and equipment and depreciation/amortization
A. Property, plant and equipment
i) Property, plant and equipment, capital work in progress except land are carried at cost of acquisition or construction as the case may be, less accumulated depreciation and amortization. Land is carried at cost of acquisition. Cost comprises of the purchase price including import duties and non-refundable taxes, and directly attributable expenses incurred to bring the asset to the location and condition necessary for it to be capable of being operated in the manner intended by the Management. The Company identifies and determines cost of each component/part of the asset separately, if the component/part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset. When significant parts of property, plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the Statement of Profit and Loss as incurred.
ii) Gains or losses arising from derecognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
iii) Land and buildings acquired/constructed, not intended to be used in the operations of the Company are categorized as investment property under Investments.
B. Depreciation and amortization
(a) Leasehold land
Premium on leasehold land is amortized over the period of lease.
(b) On other tangible assets
i. a. Depreciation is provided on the straight line method over the useful lives of the assets.
b. Where a significant component (in terms of cost) of an asset has an economic useful life shorter than that of its corresponding asset, the component is depreciated over such shorter life.
c. Useful life of assets are determined by the Management by internal technical assessments.
iii. Depreciation on additions is being provided on pro rata basis from the month of such additions.
iv. Depreciation on assets sold, discarded or demolished during the year is being provided up to the month in which such assets are sold, discarded or demolished.
v. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
C. Impairment of assets
An assessment is done at each Balance Sheet date as to whether there are any indications that an asset may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset/Cash Generating Unit (CGU) is made. Where the carrying value of the asset/CGU exceeds the recoverable amount, the carrying value is written down to the recoverable amount.
4) Investments
a) Current investments representing debt securities with a maturity less than 1 year and those intended to be held for a period less than 1 year from the date on which the investment is made are stated at the lower of cost adjusted for amortization and diminution; and fair value.
b) Debt securities, other than current, are carried at cost, less amortization of premium/discount, as the case may be, and provision for diminution, if any, as considered necessary.
c) Other long-term investments (eg. equity, mutual funds, etc.) are carried at cost. However, provision for diminution is made to recognize a decline, other than temporary, in the value of the investments. Current investments are valued at the lower of cost or fair value.
d) Long-term investments are carried at cost. However, provision for diminution is made to recognize a decline, other than temporary, in the value of the investments.
e) Long-term investments maturing within 12 months from the close of the year (current maturities) are disclosed as current investments.
f) Where the Management reassesses its intention of holding a security for long-term or short-term, necessary transfers are made inter se between long-term and current investments, in accordance with the prudential norms specified by RBI, applicable to the Company in this behalf.
g) The Management has laid out guidelines for the purpose of assessing likely impairments in investments and for making provisions based on given criteria. Appropriate provisions are accordingly made, which in the opinion of the Management are considered adequate.
h) Investment property represents immovable property not intended to be used for the Company''s own operations and is carried at cost, less depreciation computed in the manner prescribed under Schedule II to the Companies Act, 2013.
5) Employee benefits
a) Compensated absences and long-term incentive plan
Compensated absences entitlements are recognized as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and/or encashed at any time during the tenure of employment the liability is recognized on the basis of an independent actuarial valuation.
The Company''s liability towards long-term incentive plan, being a defined benefit plan, is accounted for on the basis of an independent actuarial valuation.
They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in Statement of Profit or Loss.
b) Gratuity
The Company operates defined benefit plan for its employees, viz., gratuity. Payment for present liability of future payment of gratuity is being made to an approved gratuity fund, which fully covers the same under cash accumulation policy and debt fund of the Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALIC). However, any deficit in plan assets managed by LIC and BALIC as compared to the liability on the basis of an independent actuarial valuation is recognized as a liability.
The liability or asset recognized in the Balance Sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.
The defined benefit obligation is calculated annually by an independent actuarial valuation using the projected unit credit method in conformity with the principles and manner of computation specified in Accounting Standard 15. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in Statement of Profit or Loss.
c) Defined contribution plans
The Company operates three defined contribution plans for its employees:
- Contribution to superannuation fund as per the scheme of the Company
- Contribution to provident fund is made to Government Provident Fund Authority
- Contribution to Employees Pension Scheme 1995 is made to Government Provident Fund Authority
The Company recognizes contribution payable to these fund/schemes as an expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the Balance Sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the Balance Sheet date, then excess is recognized as an asset to the extent that the prepayment will lead to, for example, a reduction in future payment or a cash refund.
6) Taxation
a) Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, in accordance with the Income-tax Act, 1961 and the Income Computation and Disclosure Standards prescribed therein. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
b) Minimum alternate tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax.
MAT is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income-tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset
is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal tax during the specified period.
c) Deferred tax resulting from timing difference between book profits and taxable profits are accounted for to the extent deferred tax liabilities are expected to crystalise with reasonable certainty. However, in case of deferred tax assets (representing unabsorbed depreciation or carried forward losses) are recognized, if and only if there is virtual certainty that there would be adequate future taxable income against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
7) Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
8) Operating leases As a lessee
Leases in which a significant portion of the risks and rewards of ownership are retained by the less or are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis over the period of the lease.
As a less or
Leases where the less or substantially retains all the risks and rewards of ownership are classified as operating leases. Lease income on such operating leases are recognized in the Statement of Profit and Loss on a straight line basis over the lease term which is representative of the time pattern in which benefit derived from the use of the leased asset is diminished. Initial direct costs are recognized as an expense in the Statement of Profit and Loss in the period in which they are incurred.
9) Cash and cash equivalents
In the cash flow statement, cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of 3 months or less.
10) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company''s earnings per share is the net profit for the period. The weighted average number of equity shares outstanding during the period and all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of share outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
b. Terms/rights/restrictions attached to equity shares
The Company has only one class of equity shares having a par value of H 10 per share. Each holder of equity shares is entitled to one vote per share. The interim dividend declared by the Board of Directors and the final dividend proposed by the Board of Directors and approved by the shareholders in the annual general meeting is paid in Indian rupees.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Mar 31, 2017
1 Bajaj Holdings & Investment Ltd. (the ''Company'') operates as an Investment Company and consequently is registered as a Non-Banking Financial Institution (Non-Deposit taking) with Reserve Bank of India (RBI).
2 Summary of significant accounting policies followed by the Company Basis of preparation
These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to section 133 of the Companies Act, 2013 read with rule 7 of Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been prepared to comply in all material aspects with the Accounting Standards notified under section 211(3C) of the Companies Act, 1956 [Companies (Accounting Standards) Rules, 2006, as amended], other relevant provisions of the Companies Act, 2013 and the RBI guidelines/regulations to the extent applicable.
All assets and liabilities have been classified as current or non-current as per the criteria set out in the Schedule III to the Companies Act, 2013.
1) System of accounting
i) The Company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis except in case of significant uncertainties.
ii) Financial statements are prepared under the historical cost convention. These costs are not adjusted to reflect the impact of changing value in the purchasing power of money.
iii) Estimates and assumptions used in the preparation of the financial statements and disclosures are based upon Management''s evaluation of the relevant facts and circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date.
2) Revenue recognition Income
The Company recognizes income (including rent etc.) on accrual basis. However, where the ultimate collection of the same lacks reasonable certainty, revenue recognition is postponed to the extent of uncertainty.
(1) Income from debentures and bonds is accrued over the maturity of the security, net of amortization of premium/ discount, thereby recognizing the implicit yield to maturity, with reference to the coupon dates, where applicable. However, income is accrued only where interest is serviced regularly and is not in arrears, as per the applicable prudential norms prescribed for NBFCs by RBI to the extent applicable to the Company and the guidelines framed by the Management.
(2) Dividend is accrued in the year in which it is declared whereby a right to receive is established.
(3) Profit/loss on sale of investments is recognized on the contract date.
3) Other income
The Company recognizes other income on accrual basis. However, where the ultimate collection of the same lacks reasonable certainty, income recognition is postponed to the extent of uncertainty.
4) Fixed assets and depreciation
A. Tangible assets
i) Tangible assets except land are carried at cost of acquisition, construction or at manufacturing cost, as the case may be, less accumulated depreciation and amortization. Land is carried at cost of acquisition. Cost comprises of the purchase price including import duties and non-refundable taxes, and directly attributable expenses incurred to bring the asset to the location and condition necessary for it to be capable of being operated in the manner intended by the Management. Subsequent costs related to an item of the asset are recognized in the carrying amount of the item if the recognition criteria are met.
ii) Land and buildings acquired/constructed, not intended to be used in the operations of the Company are categorized as investment property under Investments and not as Fixed assets.
B. Depreciation and amortization
(a) Leasehold land
Premium on leasehold land is amortized over the period of lease.
(b) On other tangible assets
i. a. Depreciation is provided on a pro rata basis on the straight line method over the useful lives of the assets. b. Useful life of assets are determined by the Management by internal technical assessments.
iii. Depreciation on additions is being provided on pro rata basis from the month of such additions.
iv. Depreciation on assets sold, discarded or demolished during the year is being provided up to the month in which such assets are sold, discarded or demolished.
C. Impairment of assets
An assessment is done at each Balance Sheet date as to whether there are any indications that an asset may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset is made. Where the carrying value of the asset exceeds the recoverable amount, the carrying value is written down to the recoverable amount.
5) Investments
a) Current investments representing debt securities with a maturity less than 1 year and those intended to be held for a period less than 1 year from the date on which the investment is made are stated at cost adjusted for amortization and diminution with reference to realizable value, as necessary.
b) Where the Management reassesses its intention of holding a security for long-term or short-term, necessary transfers are made inter se between long-term and current investments, in accordance with the prudential norms specified by RBI, applicable to the Company in this behalf.
c) Debt securities, other than current, are carried at cost, less amortization of premium/discount, as the case may be, and provision for diminution, if any, as considered necessary.
d) Investments other than debt securities (Eg. equity, mutual funds etc.) are valued at cost of acquisition, less provision for diminution as considered necessary where they are intended to be held for a long-term, else current investments are valued at lower of cost or realizable value.
e) Long-term investments maturing within 12 months from the close of the year (current maturities) are reclassified as current investments.
f) Long-term investments are carried at cost. However, provision for diminution is made to recognize a decline, other than temporary, in the value of the investments.
g) The Management has laid out guidelines for the purpose of assessing likely impairments in investments and for making provisions based on given criteria. Appropriate provisions are accordingly made, which in the opinion of the Management are considered adequate and also considering the prudential norms specified by RBI, applicable to the Company in this behalf.
h) Investment property represents immovable property not intended to be used for the Company''s own operations and is carried at cost, less depreciation computed in the manner prescribed for Fixed assets.
6) Employee benefits
a) Privilege leave entitlements
Privilege leave entitlements are recognized as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and/or encased at any time during the tenure of employment the liability is recognized on the basis of an independent actuarial valuation.
b) Gratuity
Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully covers the same under Cash Accumulation Policy and Debt fund of the Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALIC). However, any deficit in plan assets managed by LIC and BALIC as compared to the liability on the basis of an independent actuarial valuation is recognized as a liability.
c) Superannuation
Defined contribution to superannuation fund is being made as per the scheme of the Company.
d) Defined provident fund contribution is made to Government Provident Fund Authority.
e) Defined contribution to Employees Pension Scheme 1995 is made to Government Provident Fund Authority.
f) Long-term incentive plan
The Company''s liability towards long-term incentive plan being defined benefit plan is accounted for on the basis of an independent actuarial valuation.
7) Taxation
a) Provision for tax is made for the current accounting period (reporting period) on the basis of the taxable profits computed in accordance with the Income-tax Act, 1961 and the Income Computation and Disclosure Standards prescribed therein. Excess/short provisions and interest thereon are recognized only on completion of assessment or where adjustments made by the Assessing Officer are disputed, on receiving the ''Order Giving Effect'' to the tax determined by the CIT (Appeals) and thereafter on final settlement of further disputes.
b) MAT is recognized as an asset only when and to the extent there is reasonable certainty that the Company will pay normal income-tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal tax during the specified period.
c) Deferred tax resulting from timing difference between book profits and taxable profits are accounted for to the extent deferred tax liabilities are expected to crystallize with reasonable certainty. However, in case of deferred tax assets (representing unabsorbed depreciation or carried forward losses) are recognized, if and only if there is virtual certainty that there would be adequate future taxable income against which such deferred tax assets can be realized. Deferred tax is recognized on adjustments to revenue reserves to the extent the adjustments are allowable as deductions in determination of taxable income and they would reverse out in future periods.
8) Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
9) Operating leases As a lessee
Leases in which a significant portion of the risks and rewards of ownership are retained by the less or are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis over the period of the lease.
As a less or
The Company has leased certain tangible assets and such leases where the Company has substantially retained all the risks and rewards of ownership are classified as operating leases. Lease income on such operating leases are recognized in the Statement of Profit and Loss on a straight line basis over the lease term which is representative of the time pattern in which benefit derived from the use of the leased asset is diminished. Initial direct costs are recognized as an expense in the Statement of Profit and Loss in the period in which they are incurred.
10)Cash and cash equivalents
In the cash flow statement, cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of 3 months or less.
11) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company''s earnings per share is the net profit for the period. The weighted average number of equity shares outstanding during the period and all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of share outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
a. 4,342,676 equity shares had been issued by way of Euro equity issue represented by Global Depository Receipts (GDR) evidencing Global Depository Shares, excluding 2,171,388 equity shares allotted as bonus shares thereon. During the year 2016-17, the GDR programme of the Company was terminated w.e.f. 20 March 2017 and the GDRs were delisted from the London Stock Exchange, w.e.f. 24 March 2017.
b. Terms/rights/restrictions attached to equity shares
The Company has only one class of equity shares having a par value of H 10 per share. Each holder of equity shares is entitled to one vote per share. The interim dividend declared by the Board of Directors and the dividend proposed by the Board of Directors and approved by the shareholders in the annual general meeting is paid in Indian rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(a) At cost, except leasehold land which is at cost,less amounts written off.
(b) i Includes premises on ownership basis in Co-operative Society H 7.34 crore and cost of shares therein H 1,000.
ii Excludes premises held as investment properties and given on lease disclosed as an investment. Cost of investment property includes premises on ownership basis H 5.61 crore represented by 1,770 equity shares and 182 debentures of the face value of H 17,700 and H 18,900,000 respectively. Correspondingly Depreciation for the year on investment property amounting to H 5.09 crore (previous year H 5.09 crore) has been reduced from the same Investments under note 11.
(c) Refer note 2 clause 4) A. and B. of summary of significant accounting policies.
(d) Includes land at cost of H 47,782.
(e) Represents amount amortised over lease period.
(f) Titles/rights pending transfer in the name of the Company post change in the name of the Company consequent to demerger of erstwhile Bajaj Auto Ltd. (now, Bajaj Holdings & Investment Ltd.).
Mar 31, 2015
1 Bajaj Holdings & Investment Ltd. (the ''Company'') operates as an
Investment Company and consequently is registered as a Non-Banking
Financial Institution (Non-Deposit taking) with Reserve Bank of India
(RBI).
2 Summary of significant accounting policies followed by the Company
Basis of preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. Pursuant to section 133 of the
Companies Act, 2013 read with rule 7 of Companies (Accounts) Rules,
2014, till the standards of accounting or any addendum thereto are
prescribed by Central Government in consultation and recommendation of
the National Financial Reporting Authority, the existing Accounting
Standards notified under the Companies Act, 1956 shall continue to
apply. Consequently, these financial statements have been prepared to
comply in all material aspects with the Accounting Standards notified
under section 211(3C) of the Companies Act, 1956 [Companies (Accounting
Standards) Rules, 2006, as amended], other relevant provisions of the
Companies Act, 2013 and the RBI guidelines/regulations to the extent
applicable.
All assets and liabilities have been classified as current or
non-current as per the criteria set out in the Schedule III to the
Companies Act, 2013.
1) System of accounting
i) The Company follows the mercantile system of accounting and
recognises income and expenditure on an accrual basis except in case of
significant uncertainties.
ii) Financial statements are prepared under the historical cost
convention. These costs are not adjusted to reflect the impact of
changing value in the purchasing power of money.
iii) Estimates and assumptions used in the preparation of the financial
statements and disclosures are based upon Management''s evaluation of
the relevant facts and circumstances as of the date of the financial
statements, which may differ from the actual results at a subsequent
date.
2) Revenue recognition
Income
The Company recognises income (including rent etc.) on accrual basis.
However, where the ultimate collection of the same lacks reasonable
certainty, revenue recognition is postponed to the extent of
uncertainty.
(1) Income from debentures and bonds is accrued over the maturity of
the security, net of amortisation of premium/discount, thereby
recognising the implicit yield to maturity, with reference to the
coupon dates, where applicable. However, income is accrued only where
interest is serviced regularly and is not in arrears, as per the
applicable prudential norms prescribed for NBFCs by RBI to the extent
applicable to the Company and the guidelines framed by the Management.
(2) Dividend is accrued in the year in which it is declared whereby a
right to receive is established.
(3) Profit/loss on sale of investments is recognised on the contract
date.
3) Fixed assets and depreciation
A. Tangible assets
i) Tangible assets except land are carried at cost of acquisition,
construction or at manufacturing cost, as the case may be, less
accumulated depreciation and amortisation. Land is carried at cost of
acquisition. Cost represents all expenses directly attributable to
bringing the asset to its working condition for its expected use.
ii) Land and buildings acquired/constructed, not intended to be used in
the operations of the Company are categorised as investment property
under Investments and not as Fixed assets.
B. Depreciation and amortisation
(a) Leasehold land
Premium on leasehold land is amortised over the period of lease.
(b) On other tangible assets
i. a. From the current year, depreciation is provided on a pro rata
basis on the straight line method over the useful lives of the assets
as against the past practice of computing depreciation at rates with
reference to the life of assets subject to the minimum of rates
provided by Schedule XIV of the Companies Act, 1956.
b. Useful life of assets are determined by the Management by internal
technical assessments.
iii. Depreciation on additions is being provided on pro rata basis from
the month of such additions.
iv. Depreciation on assets sold, discarded or demolished during the
year is being provided at their rates upto the month in which such
assets are sold, discarded or demolished.
C. Impairment of assets
An assessment is done at each Balance Sheet date as to whether there
are any indications that an asset may be impaired. If any such
indication exists, an estimate of the recoverable amount of the asset
is made.
Where the carrying value of the asset exceeds the recoverable amount,
the carrying value is written down to the recoverable amount.
4) Investments
a) Current investments representing fixed income securities with a
maturity less than 1 year and those intended to be held for a period
less than 1 year from the date on which the investment is made are
stated at cost adjusted for amortisation and diminution with reference
to realisable value, as necessary.
b) Where the Management reassesses its intention of holding a security
for long-term or short-term, necessary transfers are made inter se
between long-term and current investments, in accordance with the
prudential norms specified by RBI, applicable to the Company in this
behalf.
c) Fixed income securities, other than current, are carried at cost,
less amortisation of premium/discount, as the case may be, and
provision for diminution, if any, as considered necessary.
d) Investments other than fixed income securities (Eg. equity, mutual
funds etc.) are valued at cost of acquisition, less provision for
diminution as considered necessary where they are intended to be held
for a long-term, else current investments are valued at lower of cost
or realisable value.
e) Investments with maturity of less than 3 months from the date of
acquisition are classified as cash and cash equivalents.
f) Long-term investments are carried at cost. However, provision for
diminution is made to recognise a decline, other than temporary, in the
value of the investments.
g) The Management has laid out guidelines for the purpose of assessing
likely impairments in investments and for making provisions based on
given criteria. Appropriate provisions are accordingly made, which in
the opinion of the Management are considered adequate and also
considering the prudential norms specified by RBI, applicable to the
Company in this behalf.
h) Investment property represents immoveable property not intended to
be used for the Company''s own operations and is carried at cost, less
depreciation computed in the manner prescribed for Fixed assets.
5) Employee benefits
a) Privilege leave entitlements
Privilege leave entitlements are recognised as a liability, in the
calendar year of rendering of service, as per the rules of the Company.
As accumulated leave can be availed and/or encashed at any time during
the tenure of employment the liability is recognised at actuarially
determined value by an appointed actuary.
b) Gratuity
Payment for present liability of future payment of gratuity is being
made to approved gratuity fund, which fully covers the same under Cash
Accumulation Policy and Debt fund of the Life Insurance Corporation of
India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALIC).
However, any deficit in plan assets managed by LIC and BALIC as
compared to the actuarial liability is recognised as a liability.
c) Superannuation
Defined contribution to superannuation fund is being made as per the
scheme of the Company.
d) Defined provident fund contribution is made to Government Provident
Fund Authority.
e) Defined contribution to Employees Pension Scheme 1995 is made to
Government Provident Fund Authority.
6) Taxation
a) Provision for tax is made for the current accounting period
(reporting period) on the basis of the taxable profits computed in
accordance with the Income Tax Act, 1961. Excess/short provisions and
interest thereon are recognised only on completion of assessment or
where adjustments made by the Assessing Officer are disputed, on
receiving the ''Order Giving Effect'' to the tax determined by the CIT
(Appeals) and thereafter on final settlement of further disputes.
b) MAT is recognised as an asset only when and to the extent there is
convincing evidence that the Company will pay normal income tax during
the specified period. Such asset is reviewed at each Balance Sheet date
and the carrying amount of the MAT credit asset is written down to the
extent there is no longer a convincing evidence to the effect that the
Company will pay normal tax during the specified period.
c) Deferred tax resulting from timing difference between book profits
and taxable profits are accounted for to the extent deferred tax
liabilities are expected to crystalise with reasonable certainty.
However, in case of deferred tax assets (representing unabsorbed
depreciation or carried forward losses) are recognised, if and only if
there is virtual certainty that there would be adequate future taxable
income against which such deferred tax assets can be realised. Deferred
tax is recognised on adjustments to revenue reserves to the extent the
adjustments are allowable as deductions in determination of taxable
income and they would reverse out in future periods.
7) Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
8) Operating leases As a lessee
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases are charged to the
Statement of Profit and Loss on a straight line basis over the period
of the lease.
As a lessor
The Company has leased certain tangible assets and such leases where
the Company has substantially retained all the risks and rewards of
ownership are classified as operating leases. Lease income on such
operating leases are recognised in the Statement of Profit and Loss on
a straight line basis over the lease term which is representative of
the time pattern in which benefit derived from the use of the leased
asset is diminished. Initial direct costs are recognised as an expense
in the Statement of Profit and Loss in the period in which they are
incurred.
9) Earnings per share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. Earnings
considered in ascertaining the Company''s earnings per share is the net
profit for the period. The weighted average number of equity shares
outstanding during the period and all periods presented is adjusted for
events, such as bonus shares, other than the conversion of potential
equity shares, that have changed the number of equity shares
outstanding, without a corresponding change in resources. For the
purpose of calculating diluted earnings per share, the net profit or
loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares.
3 Share capital
a. Of the above
4,342,676 equity shares issued by way of Euro equity issue represented
by Global Depository Receipts (GDR) evidencing Global Depository
Shares, excluding 2,171,388 equity shares allotted as bonus shares
thereon. Outstanding GDRs at the close of the year were 234,679
(280,420).
Mar 31, 2014
1) System of accounting
i) The Company follows the mercantile system of accounting and
recognises income and expenditure on an accrual basis except in case of
significant uncertainties.
ii) Financial statements are prepared under the historical cost
convention. These costs are not adjusted to reflect the impact of
changing value in the purchasing power of money.
iii) Estimates and assumptions used in the preparation of the financial
statements and disclosures are based upon Management''s evaluation of
the relevant facts and circumstances as of the date of the financial
statements, which may differ from the actual results at a subsequent
date.
2) Revenue recognition:
Income:
The Company recognises income (including rent etc.) on accrual basis.
However, where the ultimate collection of the same lacks reasonable
certainty, revenue recognition is postponed to the extent of
uncertainty.
(1) a) Interest income is accrued over the period of the loan. However,
where a loan is classified as a non-performing asset, as per the
prudential norms prescribed by RBI to the extent applicable to the
Company as a NBFC and guidelines framed by the Management, interest
thereon is recognised only when it is actually received.
b) Income from debentures and bonds is accrued over the maturity of the
security, net of amortisation of premium/discount, thereby recognising
the implicit yield to maturity, with reference to the coupon dates,
where applicable. However, income is accrued only where interest is
serviced regularly and is not in arrears, as per the applicable
prudential norms prescribed for NBFCs by RBI to the extent applicable
to the Company and the guidelines framed by the Management.
(2) Dividend is accrued in the year in which it is declared whereby a
right to receive is established.
(3) Profit/loss on sale of investments is recognised on the contract
date.
3) Fixed assets and depreciation
(A) Fixed assets
i) Fixed assets except freehold land are carried at cost of acquisition
or construction cost including pre-operative expenses, less accumulated
depreciation and amortisation. Freehold land is carried at cost of
acquisition.
ii) Land and buildings acquired/constructed, not intended to be used in
the operations of the Company are categorised as investment property
under Investments and not as Fixed assets.
(B) Depreciation and amortisation:
(a) Leasehold land
Premium on leasehold land is amortised over the period of lease.
(b) On other Fixed assets
Depreciation is provided at the rates specified in Schedule XIV of the
Companies Act, 1956 or at rates computed with reference to the economic
life of the assets where the estimated economic life is shorter than
the life inferred by the Schedule XIV rates such as miscellaneous
assets given on lease in relation to investment property which are
written off over the period of lease generally five years i.e.
depreciation rate of 20% vis a vis Schedule XIV rate of 6.33%.
i. Depreciation on additions is being provided on prorata basis from
the month of such additions.
ii. Depreciation on assets sold, discarded or demolished during the
year is being provided at their rates upto the month in which such
assets are sold, discarded or demolished.
4) Investments
a) Fixed income securities remaining with the Company after transfer of
demerged undertakings are carried at their fair market values as at 1
April 2007 where the carrying costs of such investments were higher on
that date, less amortisation of premium/discount thereafter, as the
case may be.
b) Current investments representing fixed income securities with a
maturity less than 1 year and those intended to be held for a period
less than 1 year from the date on which the investment is made are
stated at cost adjusted for amortisation and diminution with reference
to realisable value, as necessary.
c) Where the Management reassesses its intention of holding a security
for long-term or short-term, necessary transfers are made inter se
between long-term and current investments, in accordance with the
prudential norms specified by RBI, applicable to the Company in this
behalf.
d) Other fixed income securities, other than current, are carried at
cost, less amortisation of premium/discount, as the case may be, and
provision for diminution, if any, as considered necessary.
e) Investments other than fixed income securities (Eg. equity, mutual
funds etc.) are valued at cost of acquisition, less provision for
diminution as considered necessary where they are intended to be held
for a long-term, else current investments are valued at lower of cost
or realisable value.
f) Investments with maturity of less than 3 months from the date of
acquisition are classified as cash and cash equivalents.
g) Investments other than current investments, made by the Company are
intended to be held for long-term, hence diminutions in value of quoted
investments are generally not considered to be of a permanent nature.
h) The Management has laid out guidelines for the purpose of assessing
likely impairments in investments and for making provisions based on
given criteria. Appropriate provisions are accordingly made, which in
the opinion of the Management are considered adequate and also
considering the prudential norms specified by RBI, applicable to the
Company in this behalf.
i) Investment property is carried at cost, less depreciation computed
in the manner prescribed for Fixed assets.
5) Employee benefits
a) Privilege leave entitlements
Privilege leave entitlements are recognised as a liability, in the
calendar year of rendering of service, as per the rules of the Company.
As accumulated leave can be availed and/or encashed at any time during
the tenure of employment the liability is recognised at actuarially
determined value by an Appointed Actuary.
b) Gratuity
Payment for present liability of future payment of gratuity is being
made to approved gratuity fund, which fully covers the same under Cash
Accumulation Policy and Debt fund of the Life Insurance Corporation of
India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALIC).
However, any deficit in plan assets managed by LIC and BALIC as
compared to the actuarial liability is recognised as a liability.
c) Superannuation
Defined contribution to superannuation fund is being made as per the
scheme of the Company.
d) Defined provident fund contribution is made to Government Provident
Fund Authority.
e) Defined contribution to Employees Pension Scheme 1995 is made to
Government Provident Fund Authority.
6) Taxation
a) Provision for tax is made for the current accounting period
(reporting period) on the basis of the taxable profits computed in
accordance with the Income Tax Act, 1961. Excess/short provisions and
interest thereon are recognised only on completion of assessment or
where adjustments made by the Assessing Officer are disputed, on
receiving the "Order Giving Effect" to the tax determined by the CIT
(Appeals) and thereafter on final settlement of further disputes.
b) Deferred tax resulting from timing difference between book profits
and taxable profits are accounted for to the extent deferred tax
liabilities are expected to crystallise with reasonable certainty.
However, in case of deferred tax assets (representing unabsorbed
depreciation or carried forward losses) are recognised, if and only if
there is virtual certainty that there would be adequate future taxable
income against which such deferred tax assets can be realised. Deferred
tax is recognised on adjustments to revenue reserves to the extent the
adjustments are allowable as deductions in determination of taxable
income and they would reverse out in future periods.
7) Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Mar 31, 2013
Basis of preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under section 211(3C) [Companies (Accounting
Standards) Rules, 2006, as amended] and the other relevant provisions
of the Companies Act, 1956 and the RBI guidelines/regulations to the
extent applicable.
All assets and liabilities have been classified as current or
non-current as per the criteria set out in the Revised Schedule VI to
the Companies Act, 1956.
1) System of Accounting
i) The Company follows the mercantile system of accounting and
recognises income and expenditure on an accrual basis except in case of
significant uncertainties.
ii) Financial Statements are prepared under the Historical cost
convention. These costs are not adjusted to reflect the impact of
changing value in the purchasing power of money.
iii) Estimates and assumptions used in the preparation of the Financial
Statements and disclosures are based upon management''s evaluation of
the relevant facts and circumstances as of the date of the financial
statements, which may differ from the actual results at a subsequent
date.
2) Revenue recognition:
a) Income:
The Company recognises income (including rent etc.) on accrual basis.
However, where the ultimate collection of the same lacks reasonable
certainty, revenue recognition is postponed to the extent of
uncertainty.
(1) a) Interest income is accrued over the period of the loan. However,
where a loan is classified as a non-performing asset, as per the
prudential norms prescribed by RBI to the extent applicable to the
Company as a NBFC and guidelines framed by the management, interest
thereon is recognised only when it is actually received.
b) Income from debentures and bonds is accrued over the maturity of the
security, net of amortisation of premium/discount, thereby recognising
the implicit yield to maturity, with reference to the coupon dates,
where applicable. However, income is accrued only where interest is
serviced regularly and is not in arrears, as per the applicable
prudential norms prescribed for NBFCs by the Reserve Bank of India to
the extent applicable to the Company and the guidelines framed by the
management.
(2) Dividend is accrued in the year in which it is declared whereby a
right to receive is established.
(3) Profit/loss on sale of investments is recognised on the contract
date.
3) Fixed assets and depreciation
(A) Fixed assets
i) Fixed assets except freehold land are carried at cost of acquisition
or construction cost including pre-operative expenses, less accumulated
depreciation and amortisation. Freehold land is carried at cost of
acquisition.
ii) Land and buildings acquired/constructed, not intended to be used in
the operations of the Company are categorised as investment property
under Investments and not as Fixed assets.
(B) Depreciation and amortisation:
(a) Leasehold land:
Premium on leasehold land is amortised over the period of lease.
(b) On other Fixed assets
Depreciation is provided at the rates specified in Schedule XIV of the
Companies Act, 1956 or at rates computed with reference to the economic
life of the assets where the estimated economic life is shorter than
the life inferred by the Schedule XIV rates.
i. Depreciation on additions is being provided on prorata basis from
the month of such additions.
ii. Depreciation on assets sold, discarded or demolished during the
year is being provided at their rates upto the month in which such
assets are sold, discarded or demolished.
4) Investments
a) Fixed income securities remaining with the Company after transfer of
demerged undertakings are carried at their fair market values as at 1
April 2007 where the carrying costs of such investments were higher on
that date, less amortisation of premium/discount thereafter, as the
case may be.
b) Current investments representing fixed income securities with a
maturity less than 1 year and those intended to be held for a period
less than 1 year from the date on which the investment is made are
stated at cost adjusted for amortisation and diminution with reference
to realisable value, as necessary.
c) Other fixed income securities, other than current, are carried at
cost, less amortisation of premium/discount, as the case may be, and
provision for diminution, if any, as considered necessary.
d) Investments other than fixed income securities (Eg. equity, mutual
funds etc.) are valued at cost of acquisition, less provision for
diminution as necessary where they are intended to be held for a long
term, else current investments are valued at lower of cost or
realisable value.
e) Investments with maturity of less than 3 months from the date of
acquisition are classified as cash and cash equivalents.
f) Investments other than current investments, made by the Company are
intended to be held for long-term, hence diminutions in value of quoted
investments are generally not considered to be of a permanent nature.
g) The management has laid out guidelines for the purpose of assessing
likely impairments in investments and for making provisions based on
given criteria. Appropriate provisions are accordingly made, which in
the opinion of the management are considered adequate and also
considering the prudential norms specified by the Reserve Bank of
India, applicable to the Company in this behalf.
h) Investment property is carried at cost, less depreciation computed
in the manner prescribed for Fixed assets.
5) Employee benefits
a) Privilege leave entitlements
Privilege leave entitlements are recognised as a liability, in the
calendar year of rendering of service, as per the rules of the Company.
As accumulated leave can be availed and/or encashed at any time during
the tenure of employment the liability is recognised at actuarially
determined value by an appointed actuary.
b) Gratuity
Payment for present liability of future payment of gratuity is being
made to approved Gratuity Fund, which fully covers the same under Cash
Accumulation Policy of the Life Insurance Corporation of India (LIC)
and Bajaj Allianz Life Insurance Company Ltd. (BALIC). However, any
deficit in plan assets managed by LIC and BALIC as compared to the
actuarial liability is recognised as a liability.
c) Superannuation
Defined contribution to Superannuation fund is being made as per the
Scheme of the Company.
d) Defined provident fund contribution is made to Government Provident
Fund Authority.
e) Defined contribution to Employees Pension Scheme 1995 is made to
Government Provident Fund Authority.
6) Taxation
a) Provision for tax is made for the current accounting period
(reporting period) on the basis of the taxable profits computed in
accordance with the Income Tax Act, 1961.
b) Deferred tax resulting from timing difference between book profits
and taxable profits are accounted for to the extent deferred tax
liabilities are expected to crystalise with reasonable certainty.
However, in case of deferred tax assets (representing unabsorbed
depreciation or carried forward losses) are recognised, if and only if
there is virtual certainty that there would be adequate future taxable
income against which such deferred tax assets can be realised.
Deferred tax is recognised on adjustments to revenue reserves to the
extent the adjustments are allowable as deductions in determination of
taxable income and they would reverse out in future periods.
7) Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Mar 31, 2012
Basis of preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under Section 211(3C) [Companies (Accounting
Standards) Rules, 2006, as amended] and the other relevant provisions
of the Companies Act, 1956 and the RBI guidelines/regulations to the
extent applicable.
All assets and liabilities have been classified as current or
non-current as per the criteria set out in the Revised Schedule VI to
the Companies Act, 1956.
1) System of accounting
i) The Company follows the mercantile system of accounting and
recognises income and expenditure on an accrual basis except in case of
significant uncertainties.
ii) Financial Statements are prepared under the Historical cost
convention. These costs are not adjusted to reflect the impact of
changing value in the purchasing power of money.
iii) Estimates and Assumptions used in the preparation of the financial
statements and disclosures are based upon management's evaluation of
the relevant facts and circumstances as of the date of the Financial
Statements, which may differ from the actual results at a subsequent
date.
2) Revenue recognition:
a) Income:
The Company recognises income on accrual basis. However where the
ultimate collection of the same lacks reasonable certainty, revenue
recognition is postponed to the extent of uncertainty.
(1) a) Interest income is accrued over the period of the loan. However,
where a loan is classified as a non-performing
asset, as per the prudential norms prescribed by RBI to the extent
applicable to the Company as a NBFC and guidelines framed by the
management, interest thereon is recognised only when it is actually
received.
b) Income from debentures and bonds is accrued over the maturity of the
security, net of amortisation of premium/discount, where intended to be
held for a long-term, thereby recognising the implicit yield to
maturity, with reference to the coupon dates. However, income is
accrued only where interest is serviced regularly and is not in
arrears, as per the applicable prudential norms prescribed for NBFCs by
the Reserve Bank of India to the extent applicable to the Company and
the guidelines framed by the management.
(2) Dividend is accrued in the year in which it is declared whereby a
right to receive is established.
(3) Profit/loss on sale of investments is recognised on the contract
date.
3) Fixed Assets and depreciation
(A) Fixed assets
Fixed Assets except freehold land are carried at cost of acquisition or
construction cost including pre-operative expenses, less accumulated
depreciation and amortisation.
(B) Depreciation and amortisation:
(a) Leasehold land:
Premium on leasehold land is amortised over the period of lease.
(b) On other Fixed Assets
Depreciation on all assets is provided on 'Straight Line basis' in
accordance with the provisions of Section 205 (2) (b) of the Companies
Act, 1956, in the manner and at the rates specified in Schedule XIV to
the said Act.
i) Depreciation on additions is being provided on prorata basis from
the month of such additions.
ii) Depreciation on assets sold, discarded or demolished during the
year is being provided at their rates upto the month in which such
assets are sold, discarded or demolished.
4) Investments
a) Fixed income securities remaining with the company after transfer of
demerged undertakings are carried at their fair market values as at 1
April 2007 where the carrying costs of such investments were higher on
that date, less amortisation of premium/discount thereafter, as the
case may be.
b) Current investments representing fixed income securities with a
maturity less than 1 year and those intended to be held for a period
less than 1 year from the date on which the investment is made are
stated at cost adjusted for amortisation and diminution with reference
to realisable value, as necessary.
c) Other Fixed income securities, other than current, are carried at
cost, less amortisation of premium/discount, as the case may be, and
provision for diminution, if any, as considered necessary.
d) Investments other than fixed income securities (eg. equity, mutual
funds etc.) are valued at cost of acquisition, less provision for
diminution as necessary where they are intended to be held for a
long-term, else current investments are valued at lower of cost or
realisable value.
e) Investments other than current investments, made by the Company are
intended to be held for long-term, hence diminutions in value of quoted
investments are generally not considered to be of a permanent nature.
f) The management has laid out guidelines for the purpose of assessing
likely impairments in investments and for making provisions based on
given criteria. Appropriate provisions are accordingly made, which in
the opinion of the management are considered adequate and also
considering the prudential norms specified by the Reserve Bank of
India, applicable to the Company in this behalf.
5) Employee benefits
a) Privilege Leave entitlements
Privilege leave entitlements are recognised as a liability, in the
calendar year of rendering of service, as per the rules of the Company.
As accumulated leave can be availed and/or encashed at any time during
the tenure of employment the liability is recognised at actuarially
determined value by an Appointed Actuary.
b) Gratuity
Payment for present liability of future payment of gratuity is being
made to approved Gratuity Fund, which fully covers the same under Cash
Accumulation Policy of the Life Insurance Corporation of India (LIC)
and Bajaj Allianz Life Insurance Company Limited (BALIC). However, any
deficit in Plan Assets managed by LIC and BALIC as compared to the
actuarial liability is recognised as a liability immediately.
c) Superannuation
Defined Contribution to Superannuation Fund is being made as per the
Scheme of the Company.
d) Define Provident Fund contribution is made to Government Provident
Fund Authority.
e) Defined contribution to Employees Pension Scheme 1995 is made to
Government Provident Fund Authority.
6) Taxation
a) Provision for tax is made for the current accounting period
(reporting period) on the basis of the taxable profits computed in
accordance with the Income Tax Act, 1961.
b) Deferred tax resulting from timing difference between book profits
and taxable profits are accounted for to the extent deferred tax
liabilities are expected to crystalise with reasonable certainty.
However, in case of deferred tax assets (representing unabsorbed
depreciation or carried forward losses) are recognised, if and only if
there is virtual certainty that there would be adequate future taxable
income against which such deferred tax assets can be realised.
Deferred tax is recognised on adjustments to revenue reserves to the
extent the adjustments are allowable as deductions in determination of
taxable income and they would reverse out in future periods.
7) Provisions and Contingent Liabilities
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
b. Further, of the above:-
i) 4,342,676 equity shares issued by way of Euro equity issue
represented by Global Depository Receipts (GDR) evidencing Global
Depository Shares, excluding 2,171,388 equity shares allotted as bonus
shares thereon. Outstanding GDRs at the close of the year were 299,728
(313,713).
ii) 4,859,000 equity shares ofRs. 10 each were issued and allotted to
promoters on 27 March 2010 on conversion of 4,859,000 warrants at a
premium ofRs. 439.58 per share.
iii) 5,251,000 equity shares ofRs. 10 each were issued and allotted to
promoters on 21 January 2011 on conversion of 5,251,000 warrants at a
premium ofRs. 439.58 per share.
c. Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share. The dividend proposed by the Board of Directors and approved by
the shareholders in the Annual General Meeting is paid in Indian
rupees. In the event of liquidation of the Company, the holders of
equity shares will be entitled to receive remaining assets of the
company, after distribution of all preferential amounts. The
distribution will be in proportion to the number of equity shares held
by the shareholders.
Mar 31, 2011
1) System of Accounting
i) The Company follows the mercantile system of accounting and
recognises income and expenditure on an accrual basis except in case of
signifcant uncertainties.
ii) Financial Statements are prepared under the Historical cost
convention. These costs are not adjusted to refect the impact of
changing value in the purchasing power of money.
iii) Estimates and Assumptions used in the preparation of the financial
statements are based upon managements evaluation of the relevant facts
and circumstances as of the date of the Financial Statements, which may
difer from the actual results at a subsequent date.
2) Revenue recognition:
Income:
The Company recognises income on accrual basis. However, where the
ultimate collection of the same lacks reasonable certainty, revenue
recognition is postponed to the extent of uncertainty.
(1) a) Interest income is accrued over the period of the loan. However,
where a loan is classifed as a non-performing asset, as per the
prudential norms prescribed by RBI and to the extent applicable to the
company as a NBFC and guidelines framed by the management, interest
thereon is recognised only when it is actually received.
b) Income from debentures and bonds is accrued over the maturity of the
security, net of amortisation of premium/discount, where intended to be
held for a long term, thereby recognising the implicit yield to
maturity, with reference to the coupon dates. However, income is
accrued only where interest is serviced regularly and is not in
arrears, as per the applicable prudential norms prescribed for NBFCs by
the Reserve Bank of India and the guidelines framed by the management.
(2) Dividend is accrued in the year in which it is declared whereby a
right to receive is established.
(3) profit/loss on sale of investments is recognised on the contract
date.
3) Fixed Assets and Depreciation
(A) Fixed Assets
Fixed Assets except freehold land are carried at cost of acquisition or
construction cost including pre-operative expenses, less accumulated
depreciation and amortisation.
(B) Depreciation and Amortisation:
(a) Leasehold land:
Premium on leasehold land is amortised over the period of lease.
(b) On other Fixed Assets
Depreciation on all assets is provided on Straight Line basis in
accordance with the provisions of Section 205 (2) (b) of the Companies
Act 1956, in the manner and at the rates specifed in Schedule XIV to
the said Act.
i. Depreciation on additions is being provided on prorata basis from
the month of such additions. ii. Depreciation on assets sold,
discarded or demolished during the year is being provided at their
rates upto the month in which such assets are sold, discarded or
demolished.
4) Investments
a) Fixed income securities remaining with the company after transfer of
demerged undertakings are carried at their fair market values as at 1
April 2007 where the carrying costs of such investments were higher on
that date, less amortisation of premium/ discount thereafter, as the
case may be.
b) Current investments representing fxed income securities with a
maturity less than 1 year and those intended to be held for a period
less than 1 year from the date on which the investment is made are
stated at cost adjusted for amortisation and diminution with reference
to realisable value, as necessary.
c) Other Fixed income securities, other than current, are carried at
cost, less amortisation of premium/discount, as the case may be, and
provision for diminution, if any, as considered necessary.
d) Investments other than fxed income securities are valued at cost of
acquisition, less provision for diminution as necessary.
e) Investments other than current investments, made by the Company are
intended to be held for long-term, hence diminutions in value of quoted
investments are generally not considered to be of a permanent nature.
f) The management has laid out guidelines for the purpose of assessing
likely impairments in investments and for making provisions based on
given criteria. Appropriate provisions are accordingly made, which in
the opinion of the management are considered adequate and also
considering the prudential norms specifed by the Reserve Bank of India,
applicable to the company in this behalf.
5) employee Benefits
a) Privilege Leave entitlements
Privilege leave entitlements are recognised as a liability, in the
calendar year of rendering of service, as per the rules of the company.
As accumulated leave can be availed and/or encashed at any time during
the tenure of employment the liability is recognised at actuarially
determined value by an Appointed Actuary.
b) Gratuity
Payment for present liability of future payment of gratuity is being
made to approved Gratuity Fund, which fully covers the same under Cash
Accumulation Policy of the Life Insurance Corporation of India.
However, any defcit in Plan Assets managed by LIC as compared to the
actuarial liability is recognised as a liability immediately.
c) Superannuation
Defned Contribution to Superannuation fund is being made as per the
Scheme of the Company.
d) Provident Fund Contributions are made to Companys Provident Fund
Trust. Defcits, if any, of the fund as compared to aggregate liability
is additionally contributed by the company and recognised as an
expense.
e) Defned Contribution to employees Pension Scheme 1995 is made to
Government Provident Fund Authority.
6) Tax
a) Provision for Tax is made for the current accounting period
(reporting period) on the basis of the taxable profits computed in
accordance with the Income Tax Act, 1961.
b) Deferred Tax resulting from timing diference between book profits and
taxable profits are accounted for to the extent deferred tax liabilities
are expected to crystalise with reasonable certainty. However, deferred
tax assets (representing unabsorbed depreciation or carried forward
losses) are recognised, if and only if there is virtual certainty that
there would be adequate future taxable income against which such
deferred tax assets can be realised. Deferred tax is recognised on
adjustments to revenue reserves to the extent the adjustments are
allowable as deductions in determination of taxable income and they
would reverse out in future periods.
7) Provisions and Contingent Liabilities
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outfow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outfow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outfow of
resources is remote, no provision or disclosure is made.
Mar 31, 2010
1) System of Accounting
i) The Company follows the mercantile system of accounting and
recognises income and expenditure on an accrual basis except in case of
significant uncertainties.
ii) Financial Statements are prepared under the Historical cost
convention.These costs are not adjusted to reflect the impact of
changing value in the purchasing power of money.
iii) Estimates and Assumptions used in the preparation of the financial
statements are based upon managements evaluation of the relevant facts
and circumstances as of the date of the Financial Statements, which may
differ from the actual results at a subsequent date.
2) Revenue recognition:
Income:
The Company recognises income on accrual basis. However where the
ultimate collection of the same lacks reasonable certainty, revenue
recognition is postponed to the extent of uncertainty.
(1) a) Interest income is accrued over the period of the loan. However,
where a loan is classified as a non-performing asset, as per
the prudential norms prescribed by RBI and to the extent applicable to
the company as a NBFC and guidelines framed by the management, interest
thereon is recognised only when it is actually received.
b) Income from debentures and bonds is accrued over the maturity of the
security net of amortisation of premium/discount thereby recognising
the implicit yield to maturity, with reference to the coupon dates.
However, income is accrued only where interest is serviced regularly
and is not in arrears, as per the applicable prudential norms
prescribed for NBFCs by the Reserve Bank of India and the guidelines
framed by the management.
(2) Dividend is accrued in the year in which it is declared whereby a
right to receive is established.
(3) Profit/loss on sale of investments is recognised on the contract
date.
3) Fixed Assets and Depreciation
(A) Fixed Assets
Fixed Assets except freehold land are carried at cost of acquisition or
construction cost including pre-operative expenses, less accumulated
depreciation and amortisation.
(B) Depreciation and Amortisation:
(a) Leasehold land:
Premium on leasehold land is amortised over the period of lease.
(b) On other Fixed Assets
Depreciation on all assets is provided onStraight Line basis in
accordance with the provisions of Section 205 (2) (b) of the Companies
Act 1956, in the manner and at the rates specified in Schedule XIV to
the said Act.
i. Depreciation on additions is being provided on prorata basis from
the month of such additions.
ii. Depreciation on assets sold, discarded or demolished during the
year is being provided at their rates upto the month in which such
assets are sold, discarded or demolished.
4) Investments
a) Fixed income securities remaining with the company after transfer of
demerged undertakings are carried at their fair market values as at 1st
April 2007 where the carrying costs of such investments were higher on
that date, less amortisation of premium/ discount thereafter, as the
case may be.
b) Other Fixed income securities are carried at cost, less amortisation
of premium/discount, as the case may be, and provision for diminution,
if any, as considered necessary.
c) Investments other than fixed income securities are valued at cost of
acquisition, less provision for diminution as necessary.
d) Investments other than current investments, made by the Company are
intended to be held for long-term, hence diminutions in value of quoted
Investments are generally not considered to be of a permanent nature.
However, current investments representing fixed income securities with
a maturity less than 1 year and those intended to be held for a period
less than 1 year from the date on which the investment is made are
stated at cost adjusted for amortisation and diminution as necessary.
e) The management has laid out guidelines for the purpose of assessing
likely impairments in investments and for making provisions based on
given criteria. Appropriate provisions are accordingly made, which in
the opinion of the management are considered adequate and also
considering the prudential norms specified by the Reserve Bank of
India, applicable to the company in this behalf.
5) Employee Benefits
a) Privilege Leave entitlements
Privilege leave entitlements are recognised as a liability, in the
calendar year of rendering of service, as per the rules of the company.
As accumulated leave can be availed and/or encashed at any time during
the tenure of employment the liability is recognised at the actuarially
determined value by an Appointed Actuary.
b) Gratuity
Payment for present liability of future payment of gratuity is being
made to approved Gratuity Fund, which fully covers the same under Cash
Accumulation Policy of the Life Insurance Corporation of India.
However, any deficit in Plan Assets managed by LICas compared to the
actuarial liability is recognised as a liability immediately.
c) Superannuation
Defined Contribution to Superannuation fund is being made as per the
Scheme of the Company.
d) Provident Fund Contributions are made to Companys Provident Fund
Trust. Deficits, if any, of the fund as compared to aggregate liability
is additionally contributed by the company and recognised as an
expense.
e) Defined Contribution to Employees Pension Scheme 1995 is made to
Government Provident Fund Authority.
6) Taxation
a) Provision for Taxation is made for the current accounting period
(reporting period) on the basis of the taxable profits computed in
accordance with the Income Tax Act, 1961.
b) Deferred Tax resulting from timing difference between book profits
and taxable profits are accounted for to the extent deferred tax
liabilities are expected to crystalise with reasonable certainty.
However, in case of deferred tax assets (representing unabsorbed
depreciation or carried forward losses) are recognised, if and only if
there is virtual certainty that there would be adequate future taxable
income against which such deferred tax assets can be realised. Deferred
tax is recognised on adjustments to revenue reserves to the extent the
adjustments are allowable as deductions in determination of taxable
income and they would reverse out in future periods.
7) Provisions
Necessary provisions are made for present obligations that arise out of
events prior to the balance sheet date entailing future outflow of
economic resources. Such provisions reflect best estimates based on
available information.
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