Home  »  Company  »  Centum Electronics L  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Centum Electronics Ltd.

Mar 31, 2015

Rights, preferences and restrictions attached to equity shares

The Company has only one class of share referred to as equity share having par value of Rs.10. Each holder of the equity share, as reflected in the records of the Company as of the date of the shareholder meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the shareholder's meeting.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting."During the year ended 31 March 2015, the amount of per share interim dividend recognised as distributions to equity shareholders was Re.1 (previous year: Re 1) and per share final dividend was Rs.2 (previous year: Rs 1.50). The total dividend appropriation for the year ended 31 March, 2015 amounted to Rs.37,769,288 (previous year: Rs 31,108,015) including corporate dividend tax of Rs.Nil (previous year: Rs Nil).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the 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.

Refer note 1 for disclosure in relation to employee stock option plan.

Cash credit and Packing credit from bank is secured by way of hypothecation on the inventories, book debts and other current assets of the Company. Additionally it is secured by way of collateral charge on plant and machinery and an equitable mortgage of land.

*The term loan from others represents vehicle loan taken from a non banking financial institution and secured by vehicle of the company. The term loan carries an interest rate of 10.45% per annum on the outstanding amount of the loan. The interest was payable monthly along with the principle repayment. The term loan from other was repayable in thirty five equal monthly installments commencing from 1 February 2012. The term loan has been fully repaid in the current year.

Finance lease obligation is towards laptops and computers purchased on finance lease and secured by the leased assets. The finance lease obligation is repayable in twelve quarterly installments from the date of lease of the leased assets.The finance lease obligation has been fully repaid in the current year.

There is no continuing default in the principal and repayment amount.

2. Capital commitments and contigent liabilities (Amount in Rs ) As at As at Particulars 31 March 2015 31 March 2014

Capital commitment

Estimated amount of contracts remaining to be executed on capital account and provided(net of advances) 435,582,192 49,078,476

Contingent liabilities

Claims against the Company not acknowledged as debts in respect of:

Income tax 34,015,175 54,053,780

Sales tax 10,559,633 10,559,633

Excise duty 9,988,320 9,988,320

Stamp duty [refer schedule 41] 5,107,137 5,107,137

The estimate of future salary increases, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.The Company does not have any planned assets.

3. Employee stock options:

The company has two stock option plans.

Centum employee stock option plan 2007

The Centum ESOP - 2007 was approved by the board of directors of the Company in October 2007 and by the shareholders in December 2007. The 2007 plan provides for the issue of 416,666 shares to the employees. The plan is administered by a compensation committee. Options will be issued to employees of the Company and also its subsidiary at an exercise price, which shall not be less than the market price immediately preceding the date of grant. The equity shares covered under these options vest over a period ranging from twelve to forty eight months from the date of grant. The exercise period is ten years from the date of vesting. Option activity during the year ended 31 March 2015 and the related weighted average exercise price of stock options under the Centum ESOP plan 2007 is presented below.

Centum employee stock option plan 2013

The Centum ESOP -2013 was approved by the board of directors of the Company in May 2013 and by the shareholders in August 2013. The 2013 plan provides for the issue of 250,000 shares to the employees. The plan is administered by a compensation committee. Options will be issued to employees of the Company and also its subsidiary at an exercise price, which shall not be less than the market price immediately preceding the date of grant. The equity shares covered under these options vest over a period ranging from twelve to forty eight months from the date of grant. The exercise period is ten years from the date of vesting. Option activity during the year ended 31 March 2015 and the related weighted average exercise price of stock options under the Centum ESOP plan 2013 is presented below.

The options outstanding as at 31 March 2015 had an exercise price of Rs 71.25 and the weighted average remaining contractual life of 11.35 years.

The Company applies the intrinsic value method of accounting for determining compensation cost for its stock based compensation plan. The Company has therefore adopted the pro forma disclosure provisions as required by the Guidance Note on "Accounting for Employee Share Based Payments" issued by the Institute of Chartered Accountants of India with effect from 1 April 2005.

Had the compensation been determined using the fair value approach described in the aforesaid Guidance Note, the Company's net profit and basic and diluted earnings per share as reported would have reduced to the pro forma amounts as indicated:

4 Leases

The Company has taken office facilities under cancelable operating lease agreement. The Company intends to renew the agreement in the normal course of its business. Total lease rentals recognised in the profit and loss for the year in respect of the aforementioned lease is Rs 19,130,347 (previous year: Rs 17,108,134).

The Company has also given office facilities under cancelable operating lease agreement to its subsidiary. Total lease rental income recognized in the profit and loss for the year with respect to the above is Rs 3,032,400 (previous year: Rs 3,032,400).

5. Segment Information

The Company operates through two divisions, products business comprising of Modules (Products segment) and Electronic Manufacturing Services (Services segment), which are considered to be the primary segments and geography as the secondary segment.

The accounting principles used in the preparation of the financial statements are also consistently applied to record income and expenditure in individual segments.

Assets, liabilities, revenues and direct expenses in relation to segments are categorised based on items that are individually identified to that segment, while other items, wherever allocable, are apportioned to the segments on appropriate basis. Certain items are not specifically allocable to individual segments as the underlying services are used interchangeably. The Company, therefore, believes that it is not practicable to provide segment disclosures relating to such items, and accordingly such items are separately disclosed as 'unallocated'.

6 Related party disclosures

A. Parties where control exists:

Apparao V Mallavarapu (directly and indirectly exercises 60.28% voting power in the Company) Subsidiary of the company Centum Rakon India Private Limited

B. Other related parties where transactions have taken place during the year:

Parties under common control Centum Industries Private Limited

C. Key executive management personnel represented on the Board:

Apparao V Mallavarapu - Chairman and Managing Director S Krishnan (Director)

Rajiv C Mody (Director)

Pranav Patel (Director)

Manoj Nagrath (Director)

Swarnalatha Mallavarapu ( Additional Director) (Appointed with effect from 26 March 2015) Dr.P Rama Rao (Director) (Resigned with effect from 1 August 2014)

K S Desikan (Chief Financial Officer)

Ramu Akkili (Company Secretary)

7. The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the 'Micro, Small and Medium Enterprises Development Act, 2006' ('the Act'). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2015 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.

8. Based on a demand notice dated 12 February 2010 received from District Registrar, Stamps and Registration Department, Karnataka, the Company has estimated and provided Rs 11,174,165 towards additional stamp duty liability against a claim of Rs 16,281,302 in the aforementioned demand notice, payable pursuant to the demerger of EMS business from Centum Electronics Limited (formerly known as Solectron Centum Electronics Limited) on 1 October 2006, as per the Scheme of Arrangement approved by the Honorable High Court of Karnataka effective 13 July 2007. The differential amount of Rs 5,107,137 has been disclosed as a contingent liability [refer note 25].

The Company has also provided Rs 8,411,723 towards stamp duty payable pursuant to the merger of Solectron EMS India Limited with the Company.


Mar 31, 2013

1. Employee stock options:

Centum employee stock option plan 2007

The Centum ESOP -2007 was approved by the board of directors of the Company in October 2007 and by the shareholders in December 2007. The 2007 plan provides for the issue of 416,666 shares to the employees. The plan is administered by a compensation committee. Options will be issued to employees of the Company and also its subsidiary at an exercise price, which shall not be less than the market price immediately preceding the date of grant. The equity shares covered under these options vest over a period ranging from twelve to forty eight months from the date of grant. The exercise period is ten years from the date of vesting.

Option activity during the year ended 31 March 2013 and the related weighted average exercise price of stock options under the Centum ESOP plan 2007 is presented below. There was no new employee stock option plan during the year ended 31 March 2013.

The options outstanding as at 31 March 2013 had an exercise price of Rs 58.09 and the weighted average remaining contractual life of 10.78 years.

The Company applies the intrinsic value method of accounting for determining compensation cost for its stock based compensation plan. The Company has therefore adopted the pro forma disclosure provisions as required by the Guidance Note on "Accounting for Employee Share Based Payments" issued by the Institute of Chartered Accountants of India with effect from 1 April 2005.

2 Leases

The Company has taken office facilities under cancelable operating lease agreement. The Company intends to renew the agreement in the normal course of its business. Total lease rentals recognised in the statement of profit and loss for the year in respect of the aforementioned lease is Rs 13,916,072 (previous year: Rs 9,789,229).

The Company has also given office facilities under cancelable operating lease agreement to its subsidiary. Total lease rental income recognised in the statement of profit and loss for the year with respect to the above is Rs 3,032,400 (previous year: Rs 3,032,400).

3. Segment Information

The Company operates through two divisions, component business comprising of Modules (Products segment) and Electronic Manufacturing Services (Services segment), which are considered to be the primary segments and geography as the secondary segment.

The accounting principles used in the preparation of the financial statements are also consistently applied to record income and expenditure in individual segments.

Assets, liabilities, revenues and direct expenses in relation to segments are categorised based on items that are individually identified to that segment, while other items, wherever allocable, are apportioned to the segments on appropriate basis. Certain items are not specifically allocable to individual segments as the underlying services are used interchangeably. The Company, therefore, believes that it is not practicable to provide segment disclosures relating to such items, and accordingly such items are separately disclosed as ''unallocated''.

4 Related party disclosures

A. Parties where control exists:

Apparao V Mallavarapu (directly and indirectly exercises 61% voting power in the Company) Subsidiary of the company Centum Rakon India Private Limited

B. Other related parties where transactions have taken place during the year:

Parties under common control

Centum Industries Private Limited

C. Key executive management personnel represented on the Board:

Mr. Apparao V Mallavarapu - Chairman and Managing Director

5.The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the ''Micro, Small and Medium Enterprises Development Act, 2006'' (''the Act''). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2013 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.

6. Based on a demand notice dated 12 February 2010 received from District Registrar, Stamps and Registration Department, Karnataka, the Company has estimated and provided Rs 11,174,165 towards additional stamp duty liability against a claim of Rs 16,281,302 in the aforementioned demand notice, payable pursuant to the demerger of EMS business from Centum Electronics Limited (formerly known as Solectron Centum Electronics Limited) on 1 October 2006, as per the Scheme of Arrangement approved by the Honourable High Court of Karnataka effective 13 July 2007. The differential amount of Rs 5,107,137 has been disclosed as a contingent liability [refer note 26].

The Company has also provided Rs 7,379,248 during 2010-11 towards stamp duty payable pursuant to the merger of Solectron EMS India Limited with the Company.

7. As at March 31, 2013, the Company has outstanding forward contracts amounting to USD 750,000 (As at March 31, 2012: USD Nil). These derivative instruments have been entered to hedge highly probable forecasted sales.

In accordance with the provisions of AS 30, these derivative instruments qualify for cash flow hedge accounting and have been fair valued at the balance sheet date and the resultant exchange loss has been debited to hedge reserve (Refer Note 3).

8. The comparative figures have been re-grouped/reclassified wherever necessary to conform to the current year''s presentation.

 
Subscribe now to get personal finance updates in your inbox!