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Notes to Accounts of Enkei Wheels (India) Ltd.

Mar 31, 2015

1 Corporate information

Enkei Wheels (India) Limited ("the Company") is listed on the Bombay Stock Exchange. It is engaged in the manufacturing of aluminium alloy casting wheels ("products") mainly used in automotive segment of the industry in India. At times, the Company has also traded in the products mainly to supplement its manufacturing capacities.

(a) Rights of the Equity Share holders

The Company has one class of equity shares of face value of ' 5/-each. Each shareholder is eligible for one vote per share held. In the event of liquidation the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

NOTE 2 NOTES FORMING PART OF FINANCIAL STATEMNETS :

Note 2 Additional information to the financial statements a Share Capital

During the year, the Company has alloted 6,71,000 equity shares issued on preferential basis to its promoter & holding company ENKEI Corporation, Japan after receiving the requisite approvals from the regulatory authorities.

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

c Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchanges

Loans and advances in the nature of loans given to subsidiaries, associates and others and investment in shares of the Company by such parties:

Note: Figures in bracket relate to the previous year ended 31st March 2014.

d Details of the year-end foreign currency exposures that have been hedged

The company has entered into foreign exchange forward contracts to partly hedge its risks associated with the foreign currency fluctuations relating to firm commitments. Forward Exchange Contracts entered into by the Company but remained outstanding at the year end are :

(Amt. in Rs) As at As at 31st March, 31st March, 2015 2014

Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities

(a) Claims against the Company /disputed liabilities not acknowledged as debts* 55,850,000 5,000,000

(b) Guarantees and Letters of Credits issued by the banks 2,000,000 1,580,452

(c) Other money for which the company is contingently liable - Differential Tax Liability - C Forms not received 822,086,643 343,754,772

Note 3 Disclosures under Accounting Standards (contd.) m Employee benefit plans The Company has adopted Accounting Standard 15 "Employee Benefits The disclosures required by the Standard are given below:

Defined contribution plans

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 8,925,540/- (Year ended 31 March, 2014 Rs. 7,454,411/-) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

Defined Benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Leave Entitlements

Disclosures of Defined Benefit Plans in respect of Gratuity and Leave Entitlements, as per actuarial valuations by an independent valuer. The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:


Mar 31, 2014

1 Corporate information

Enkei Wheels (India) Limited (the Company) is listed on the Bombay Stock Exchange. It is engaged in the manufacturing of aluminium alloy casting wheels (products) mainly used in automotive segment of the industry in India. At times, the Company has also traded in the products mainly to supplement its manufacturing capacities.

1.(a) Rights of the Equity Share holders

Each shareholder is eligible for one vote per share held. In the event of liquidation the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Note : The balances reported above are subject to confirmation /reconciliation from the customers. The Company has initiated steps in this regard. However, all receivables are goods and realisable in the ordinary course of its business.

Note :Bank Balances do not include any margin monies. There are no deposits which have an original maturity or maturity of more than 12 months from the balance sheet date.

* The figures are in respect of main raw material, i.e. alluminium ingots. The figures of consumption have been arrived by dedcuting the closing stock from the quantity/value of opening stock as inceased by the purchases during the year.

NOTE 2 NOTES FORMING PART OF FINANCIAL STATEMNETS :

a Share Application Money Pending for Allotment

The Company has received share application money of Rs. 33,550,000/- on 2nd Dec 2013 towards proposed issue of 6,71,000 equity share on preferential basis to the Eneki Corporation, Japan.

The members of the Company have approved the proposed issue in their Extra oridinary General Meeting held on 13th Dec 2013. However, the requisite approval from the regulatory authorities for the same has been pending on the balance sheet date. As a result, the share could not be allotted to the applicant, which is none other than its Holding and Promoter Company. The application mony received has been shown in the Balance sheet as "Share application money pending allotment."

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

Note: Figures in bracket relate to the previous year ended 31st March 2012.

l Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities

(a) Claims against the Company not acknowledged as debt 5,000,000 -

(b) Guarantees 500,000 -

(c) Letters of Credits issued by the bank for imports 1,080,452 -

(d) Differential Tax Liability - C Forms not received 343,754,772 327,959,232

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for - Tangible Assets 12,466,328 111,329,243

(b) Other Commitments - -

n Employee benefit plans

The Company has adopted Accounting Standard 15 "Employee Benefits". The disclosures required by the Standard are given below:

Defined contribution plans

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 7,454,411/- (Year ended 31 March, 2013 Rs. 6,097,720/-) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

Defined Benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Leave Entitlements

The estimates of future salary increase, considered in actuarial valuation, take into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The above information is certified by the actuary.

p Disclosure in respect of Leases pursuant to Accounting Standard (AS-19) "Leases".

i) where the Company is a lessee :

Finance Leases

The Company has acquired a vehicle (motor car) on finance lease. The lease covers a period, which is fixed and non- cancellable. The minimum lease rentals and the present value of minimum lease payments in respect of assets acquired under finance leases are as follows.

Operating Leases

The Company has operating leases in respect of its plants, premises, computers, etc. Further, lease rentals payable in respect of the same which are non-cancellable are as follows.

q Figures of the previous year have been regrouped & reclassified wherever necessary to correspond with the current year classification/ disclousre.


Mar 31, 2013

1 Corporate information

Enkei Wheels (India) Limited (the Company) is listed on the Bombay Stock Exchange. It is engaged in the manufacturing and selling of aluminium alloy casting wheels (products) mainly used in automotive segment of the industry in India. At times, the Company has also traded in the products mainly to supplement its manufacturing capacities.

a Compulsorily Convertible Preference Shares

The Board of Directors in its meeting held on 5th Feb''2013 approved the conversion of 39,51,250 Compulsorily Convert- ible Preference Shares of Face value of Rs. 10/- each earlier issued on preferential basis. Accordingly,5,21,860 equity shares of Face value of Rs. 5/- each at a premium of Rs. 70/- each have been alloted to the promoter company, viz. Enkei Corporation, Japan. The said allotment is in compliance with clause 40A of the Listing Agreement.

b Employee benefit plans

The Company has adopted Accounting Standard 15 "Employee Benefits". The disclosures required by the Standard are given below:

Defined contribution plans

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 6,097,720/- (Year ended 31 March, 2012 Rs. 5,035,767/-) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

c Disclosure in respect of Leases pursuant to Accounting Standard (AS-19) " Leases".

i) where the Company is a lessee : Finance leases

The Company has acquired a vehicle (motor car) on finance lease. The lease covers a period of 36 months, which is fixed and non-cancellable. The minimum lease rentals and the present value of minimum lease payments in respect of assets acquired under finance leases are as follows.

d Figures of the previous year have been regrouped & reclassified wherever necessary.


Mar 31, 2012

1 Corporate information

Enkei Wheels (India) Limited (the Company) is listed on the Bombay Stock Exchange. It is engaged in the manufacturing and selling of aluminium alloy casting wheels (products) mainly used in automotive segment of the industry in India. At times, the Company has also traded in the products mainly to supplement its manufacturing capacities.

*0f total number of equity shares issued, 11,000,000 (PY 11,000,000) equity shares were issued pursuant to the scheme of arrangement (de-merger) of wheel division of Enkei Castalloy Limited (Now, Alicon Castalloy Limited) into the Company without payment being received in cash.

Rights of the Preference Share Holders:

(i) The right to a Cumulative Preferential dividend at such rate as may be prescribed by the terms of issue of such shares, on the share capital for the time being paid-up thereon, free of Company's income-tax, but subject to deduction of taxes at source at the rate or rates prescribed from time to time.

(ii) The right in the event of winding up to payment of such capital and arrears of dividend, whether earned, accrued, declared or not, down to the commencement of the winding up, in priority to the Equity Shares but shall not confer any further right to participate in profits or assets.

(iii) The Preference Shares shall not confer on the holders thereof the right to either in person or by proxy at any General Meeting of the Company the extent and in the manner provided by Section 87 (2) of the Act.

* Restriction of Preference Share Holders

Convertible Preference Shares will be locked in for entire tenure of 18 months from date of allotment and will not be listed. Equity shares issued pursuant to conversion of preference shares will be locked in for a period of 3 years from the date of allotment of convertible preference shares and will be listed on the stock exchange wherever equity shares are listed.

Allotment of equity shares on conversion of preference shares

The Board of Directors in its meeting held on 13th February 2012 approved the conversion of 9,251,250 Compulsorily Convertible Preference Shares of Face value of Rs. 10/- each earlier issued on preferential basis. Accordingly, 1,233,500 equity shares of Face value of Rs. 5/- each at a premium of Rs. 70/- each have been alloted to the promoter company, viz. Enkei Corporation, Japan. The said allotment is in compliance with clause 40A of the Listing Agreement. Balance 3,913,950 Compulsorily Convertible Preference Shares will be dealt with as advised by the Reserve Bank of India, where necessary papers are being filed.

Rights of the Equity Share holders

Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

1.1 Compulsorily Convertible Preference Shares

The Board of Directors in its meeting held on 13th February 2012 approved the conversion of 9,251,250 Compulsorily Convertible Preference Shares of Face value of Rs. 10/- each earlier issued on preferential basis. Accordingly, 1,233,500 equity shares of Face value of Rs. 5/- each at a premium of Rs. 70/- each have been alloted to the promoter company, viz. Enkei Corporation, Japan. The said allotment is in compliance with clause 40 A of the Listing Agreement. Balance 3,913,950 Compulsorily Convertible Preference Shares will be dealt with as advised by the Reserve Bank of India, where necessary papers are being filed.

1.2 Contingent liabilities and commitments (to the extent not provided for) (Rs.)

For the year ended For the year ended

(I) Contingent liabilities 31" March 2012 31" March 2011

a Claims against the company not acknowledged as debt Nil Nil

b Guarantees Nil Nil

c Letters of credits issued by the bank for imports Nil 12,259,968

d Differential tax liability - C Forms not received 643,196,878 361,914,270

(ii) Commitments

a Estimated amount of contracts remaining to be executed on capital account and not provided for- Tangible Assets 54,052,738 7,529,033

b Other Commitments Nil Nil

Note

2 Employee benefit plans

The company has adopted Accounting Standard 15 "Employee Benefits". The disclosures required by the Standard are given below:

2.1 Defined contribution plans

The company makes provident fund contributions to defined contribution plans for qualifying employees. Under the schemes, the company is required to contribute a specified percentage of the payroll costs to fund the benefits. The company recognised Rs.5,035,767/- (Year ended 31st March 2011 Rs.3,929,324/-) for provident fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the company are at rates specified in the rules of the schemes.

2.2 Defined benefit plans

The company offers the following employee benefit schemes to its employees:

i. Gratuity

ii. Leave Entitlements

Disclosures of defined benefit plans in respect of gratuity and leave entitlements, as per actuarial valuations by an independent valuer. The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:


Mar 31, 2010

1. Enkei Wheels (India) Ltd. was incorporated on 30.03.2009 under the Companies Act, 1956. The entire share capital of the Company was held by Enkei Castalloy Ltd. However, since there was no single business activity during the year ended 31.03.2009, the accounts were not prepared and filed. Hence, the present accounts are for the period beginning with 30.03.2009 and ending with 31.03.2010. This being the first accounting period of the Company, figures of the previous year/period are not applicable. On the same footing, the requirement of preparation of cash flow statement is not applicable to the Company.

2. Pursuant to the Scheme of Arrangement (de-merger) sanctioned by the Hon'ble High Court of Bombay, the Wheel Division of Enkei Castalloy Limited (ECL/ Demerged Company) was de-merged into Enkei Wheels (India) Limited ('EWIL/ Resulting Company') with effect from end of the day of 31st March 2010.

The Scheme had provided that 'though it shall become effective from the Effective Date, i.e. the date on which the certified copy of the order of High Court of Bombay under sections 391 and 394 of the Companies Act, 1956, sanctioning the scheme is filed with the Registrar of Companies, Pune and which is end of the day of 31st March 2010, the provisions of the Scheme shall be applicable and come into operation from the Appointed Date, which means the 1st day of April 2009 or such other date as may be approved by the High Court of Bombay'.

Now, since the High Court of Bombay has sanctioned the Scheme of de-merger and the Appointed Date being as defined in the Scheme, all assets and liabilities in respect of the Wheel Division of ECL/Demerged Company, as appearing in the books of ECL/ Demerged Company as on 1st April 2009, i.e. the Appointed Date as defined in the Scheme, were transferred to and vested with EWIL/Resulting Company'.

In the light of the above and the clause 4 of the Scheme which provides that 'upon the coming into effect of this Scheme and on and from the Appointed Date entire business of the 'Wheel Division' of ECL/ Demerged Company shall, without any further act, instrument or deed, subject to other provisions of the Scheme and pursuant to sections 391 & 394(2) and other relevant provisions of the Act, be transferred to and vested in or be deemed to have been demerged from ECL/ Demerged Company and be transferred to and vested in EWIL/Resulting Company, as a going concern." the old shareholding of ECL/ Demerged Company in EWIL/Resulting Company stood automatically cancelled and EWIL/ Resulting Company have ceased to be a wholly owned subsidiary of ECL/Demerged Company as an integral part of the Scheme, pending the allotment of shares by EWIL/ Resulting Company to the existing shareholders of ECL/Demerged Company and completion of all necessary legal formalities including payment of stamp duty, incidental to the demerger by EWIL/ Resulting Company. Pending adjudication of stamp duty on immovable properties received from ECL/ Demerged Company on demerger, EWIL/ Resulting Company has not provided for the necessary expense in the accounts.

As a result of all the above, accounting entries pursuant to PART-IV of the Scheme have been made in the books of the EWIL/Resulting Company retrospectively from the Appointed Date, i.e. 1stApril 2009 and which are summarised below.

a) Book value of Assets net of Liabilities transferred from ECL/ Demerged Company recorded on 01.04.2009..............Rs. 9,08,92,308/-

b) Credit to Share Capital Account.............................Rs. 5,50,00,000/-

(aggregate face value of Equity Shares issued to the shareholders of ECL/ Demerged Company pursuant to clause 12.1.1 of Part II of the Scheme, pending receipt of statutory approvals and completion of legalities as of the Balance sheet Date.)

c) Credit to Securities Premium Account......................Rs. 3,58,92,308/-

(Excess of book value of Assets net of Liabilities received from ECL/ Demerged Company over face value of Equity Shares - (a-b))

3. In pursuance of Part IV of the Scheme, post demerger and as identified by the Board of directors, EWIL/ Resulting Company has valued its immovable properties at their fair value based on the valuation report from an independent registered valued and the excess of such value over the book value has been credited to 'Business Reconstruction Reserve.'

4. Segment Reporting

The Company has single business segment viz. that of automotive castings of Alloy Wheels. Accordingly, disclosure requirements as per Accounting Standard 17 "Segment Reporting" specified in the Companies (Accounting Standard) Rules 2006 are not applicable to the Company.

5. Excise Duty

Excise Duty being recovered from the customers through sales invoices raised on them during the year, have been reported separately as a deduction from 'Income from Operations' in the Profit and Loss account".

6. Fixed Assets

Book values of Fixed Assets as recorded in the books of the Company on 01.04.2009 are the same received from demerged company. However, legal formalities including payment of stamp duty, offering those to the banks/institutions for fresh charges, registrations etc. are pending.

7. Borrowing Cost

Of total borrowing cost of Rs.5.17 lakhs incurred during the year has been debited to Capital Work in progress.

8. Bank Balances

Maximum Balance outstanding in current accounts with the scheduled and foreign banks is as under:

9. Confirmation under Micro, Small and Medium Enterprises Act, 2006

During the year, the Company initiated the process of obtaining the confirmation from its suppliers as regard to their status under Micro, Small and Medium Enterprises Act, 2006 (Act), but was able to obtain only for some enterprises. On the basis of information available, the principal amount remaining unpaid to Micro and Small Enterprises covered under the Act as at the end of the year have been shown and classified separately under schedule 10 for Current Liabilities.

10. Year-end balances the receivables, advances and payables are subject to confirmation and reconciliations. However, post demerger and in accordance with Part IV of the Scheme, old debtors of Rs.223.93 lakhs and old supplier advances of Rs.139.06 lakhs, have been identified by the board as irrecoverable and thus have been written off to 'Business Reconstruction Reserve'.

The closing balances in respect of all current assets, loans and advances are stated at values realisable in the ordinary course of business and all known liabilities are adequately provided for in the opinion of the board.

 
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