Notes to Accounts of Schaeffler India Ltd.
Dec 31, 2023
Note:
Buildings include ''250, being cost of five ordinary shares of ''50 each of Nariman Bhavan Premises Co-operative Society Limited and ''500 being cost of ten
ordinary shares of ''50 each of Parekh Market Premises Co-Operative Society Limited, which entitle the ownership.
1 The title deeds of immovable properties included in property plant and equipment are held in the name of the Company, except title deeds of immovable properties having gross carrying amount aggregating '' 21.3 million (2022: '' 21.3 million) and net carrying amount aggregating '' 21.3 million (2022: '' 21.3 million),which have been transferred to the Company, pursuant to the Schemes of Amalgamation (refer Note 47) and their title transfer proceedings are under progress.
2 The transaction of sale of assets of Mechatronics business to Schaeffler Technologies Solution India Private Limited, which was approved by the Board of Directors of the Company at its meeting held on 27 July 2022. The assets net of WDV '' 325.3 million which were disclosed as assets held for sale, have been sold during the year.
During the year ended December 31, 2023 the Company has acquired 100% shares 1,204,758 of ''10/- each of KRSV Innovative Auto Solutions Private Limited (in the following âKooversâ ) for a total purchase consideration of '' 1,424.0 million in 100% cash consideration. Consquently, Kooverâs has became a subsidiary of the Company. (refer Note 53)
The Company follows suitable provisioning norms for writing down the value of Inventories towards slow moving and non-moving inventory. As at December 31, 2023, provision for write-down of inventories to net realisable value is ''949.3 million (2022: ''1,148.6 million).
b) Rights, preferences and restrictions attached to equity shares:
The Company has a single class of equity shares having par value of ''2 per share. Accordingly, all equity shares rank equally with regard to one vote per share held. The dividends proposed by the Board of directors is subject to the approval of shareholders at the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the equity shareholders are eligible to receive assets of the Company, after distribution of all preferential amounts, in the proportion to their shareholding.
e) The Company in aggregate has not issued, any equity shares allotted as fully paid up pursuant to contract without consideration received in cash, Bonus Shares issued and shares bought back during the period of 5 years immediately preceding the financial year.
The above information has been compiled by the Company on the basis of information made available by vendors during the year ended December 31, 2023 and year ended December 31, 2022. This has been relied upon by auditors
The Companyâs exposure to currency and liquidity risks related to trade payables is disclosed in Note 40.
The management determines the information reported under Note 44 and 48 reporting is sufficient to meet the disclosure objective with respect to disaggregation of revenue and geographical segment under Ind AS 115 Revenue from contract with Customers. Hence, no separate disclosures of disaggregated revenues are reported.
Nature of CSR activities
The Company has incurred CSR expenses through our overarching programme HOPE, which emphasises four core areas: Healthcare, Occupational skills for better employability, the Preservation of heritage and environment, and the Empowerment of society which are specified in Schedule VII of the Companies Act, 2013.
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36. Contingent liabilities not provided for in respect of: Claims against the company not acknowledged as debts: |
('' in million) |
|
|
2023 |
2022 |
|
|
a) Employees and ex-employees related matters: |
||
|
(i) Matters pending in labour court / civil court / High Court for reinstatement of service / |
106.1 |
154.5 |
|
recovery of salary, PF and ESIC matters. |
||
|
(ii) Demand for discontinuing of contract system and for differential wages |
48.2 |
12.7 |
|
154.3 |
167.2 |
|
|
b) (i) Sales-tax |
||
|
For non receipt of C Forms and non acceptance of Company''s claim of certain sales as exempt sales in respect of various assessment years. |
25.7 |
65.2 |
|
(ii) Excise duty and Service tax: |
138.2 |
116.5 |
|
In respect of matters decided against the Company, for which the Company is in appeal with higher authorities |
||
|
163.9 |
181.7 |
|
|
c) Income tax: |
||
|
i) In respect of matters decided against the Company, for which the Company is in appeal |
284.6 |
160.3 |
|
with higher authorities. |
||
|
284.6 |
160.3 |
|
|
In respect of above matters, it is not practicable for the Company to estimate the closure of these issues and consequential timing of cash flows, if any. |
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|
d) Others: |
||
|
Demand notice for stamp duty on Order of Hon''ble National Company Law Tribunal, Mumbai Bench, approving the Scheme of Amalgamation of INA Bearings India Private Limited and LuK India Private Limited with the Company, for which the Company is in appeal with higher authorities. |
250.0 |
250.0 |
|
250.0 |
250.0 |
|
|
37. Commitments |
('' in million) |
|
|
2023 |
2022 |
|
|
Contracts on capital account: |
||
|
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of capital advance '' 507.6 million; 2022: '' 562.2 million). |
4,888.8 |
4,171.8 |
Amounts in brackets represents previous year amounts.
Terms and conditions with related parties;
The sales to and purchases from related parties including fixed Assets and other expenses are made in the normal course of business and on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free.
Names and details of fellow subsidiaries, affiliates and subsidiary having transaction value in excess of 10% in line transactions during the year.
The Companyâs exposure to foreign currency fluctuations relates to foreign currency assets, liabilities and forecasted cash flows. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives like forward contracts. The Company has entered into foreign currency forward contracts, majority having maturity of less than one year from reporting date, to hedge its risks associated with foreign currency fluctuations relating to such highly probable transactions. The currencies in which these transactions are mainly denominated is in US Dollars.
The Company has import and export transactions in foreign currencies. Imports are higher than exports and hence the Company has foreign currency exposure to the extent of imports being higher than exports. The risk of foreign currency fluctuation is mitigated through hedging. Please refer Note 39 for details of foreign currency exposure.
The Companyâs exposure to foreign currency risk at the end of reporting period are as follows:
Foreign Currency Sensitivity
The following table demonstrates sensitivity to a reasonable possible change in major foreign currencies like USD and EUR with all other variables held constant:
The Company has exposure to the following risks arising from financial instruments:
⢠market risk [refer 40 (A) below]
⢠liquidity risk [refer 40 (B) below]
⢠credit risk [refer 40 (C) below]
In the course of its business, the Company is exposed primarily to aforesaid risks, which may impact the fair value of its financial instruments. The Company has a risk management system which not only covers the foreign exchange risks but also other risks associated with the financial assets and liabilities such as credit risks. The risk management strategy is approved by Board of Directors which is implemented by the Companyâs management. The risk management framework aims to create a stable business planning environment by reducing the impact of market related risks, credit risks and currency fluctuations on the Companyâs earnings. The risks identified through the risk management system are analysed and evaluated by the Companyâs management and reported to the Board of Directors periodically along with report of planned mitigation measures.
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the foreign currency exchange rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.
(i) Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollars and Euro. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Companyâs functional currency (Indian Rupees).
(ii) Interest rate risk
Interest rate risk exposure: The Company does not have interest bearing borrowings and interest rate risk is towards opportunity cost on investment in tax free bonds. Surplus funds are being invested in bank deposits at fixed interest rates and the tenure is managed to match with the Companyâs liquidity profile.
The Companyâs principal sources of liquidity are cash and cash equivalents and cash flows generated from operations. The Company regularly monitors actual cash flows and forecasts to ensure that the Company maintains sufficient liquidity to meet the operation needs.
The following table shows the maturity analysis of the Companyâs financial liabilities based on contractually agreed undiscounted cash flows (except lease liabilities refer Note 49) at the balance sheet date:
Credit risk is the unexpected loss in financial instruments if the counter parties fails to discharge itâs contractual obligations in entirety and timely. The Company is exposed to credit risks arising from itâs operating and financing activities such as trade receivables, loans and advances and other financial instruments. The carrying amounts of financial assets represent the maximum credit exposure.
Trade receivables
Credit risk on trade receivables is limited due to the Companyâs diversified customer base which includes public sector enterprises and reputed private corporates. For trade receivables, the Company computes expected credit loss allowance based on provision matrix which is prepared considering customerâs industry segment and historically observed overdue rate over expected life of trade receivables ranging from 0.04% to 0.78%, except for few customer where specific provisions is being created. The expected credit loss allowance is considered as a percentage of net receivable position.
For the purpose of Companyâs capital management, capital includes equity share capital and all other reserves attributable to equity shareholders. The Company has a long-term strategy of pursuing profitable growth. Capital is managed proactively to secure the existence of the Company as a going concern in the long-term and create financial flexibility for profitable growth in order to add value to the Company. A further aim of the capital management is to ensure long-term availability of liquidity, maintain strong credit ratings and ensure optimal capital structure in order to support business through continuing growth and maximising shareholders value. The Company funds itâs operations through internal accruals and the Management along with the Board of Directors regularly monitor the returns on capital as well as dividend levels to shareholders.
42. Employee benefits: Post employment benefit plans Defined contribution plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Superannuation Fund which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund for the year aggregated to '' 206.1 million (2022: '' 189.1 million) and contribution to superannuation fund for the year aggregated to '' 33.4 million (2022: '' 33.1 million).
The Company has defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half monthâs salary for each year of completed service at the time of retirement/exit. The Scheme is funded by the plan assets.
Financial assets other than trade receivables
Credit risk on cash and cash equivalents, bank balances other than cash and cash equivalents is limited as the Company generally invest in deposits with banks which have high credit rating assigned by external agencies. Credit risk on loans given to subsidiaries are assessed for credit risk based on the underlying valuation of the entity and their ability to repay within the contractual repayment terms. Based on the Companyâs historical experience, the credit risk on other financial assets is low.
Characteristics of defined benefit plans and risks associated with them:
Valuations of defined benefit plan are performed on certain basic set of pre-determined assumptions and other
regulatory framework which may vary over time. Thus, the Company is exposed to various risks in providing the above
benefit plans which are as follows:
(i) Interest Rate risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (i.e. value of defined benefit obligation).
(ii) Salary Escalation Risk: The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the planâs liability.
(iii) Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.
(iv) Investment Risk: The Company has funded with well established Govt. of India undertaking & other IRDA approved agency and therefore, there is no material investment risk.
The carrying amounts of all financial instruments (except derivative instruments which are measured at fair value through Other Comprehensive Income and long-term loans) are not materially different from their fair values, since these are of short term nature.
Valuation techniques and significant unobservable inputs
Specific valuation techniques used in measuring Level 2 and Level 3 fair values for financial instruments include:
⢠The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date
⢠All financial assets and liabilities referred in Level 3 are measured at amortised cost, their carrying amount are reasonable approximation of their fair value
(ii) Secondary segment information
The geographical information analyses the Companyâs revenues and non-current assets by the Companyâs country of domicile (i.e. India) and outside India. In presenting the geographical information, segment revenue has been based on geographical location of customers and segment assets which have been based on the geographical location of the assets.
46. The tax year for the Company being the year ending March 31, 2024, provision for taxation for the year ended December 31, 2023 is aggregate of provision made for three months ended March 31, 2023 and provision based on amounts for remaining nine months ended December 31, 2023, the ultimate tax liability of which will be determined on the basis of figures for the fiscal year April 1, 2023 to March 31, 2024.
The Companyâs international transactions with associated enterprises are at armâs length, as per the independent accountantâs report for the year ended March 31, 2023. The Management believes that the Companyâs international transactions with associated enterprises post March 31, 2023 continue to be at armâs length and that transfer pricing legislations will not have any impact on the Ind AS financial statements, particularly on the amount of tax expenses for the year and the amount of provision for taxation at the year end.
In the year 2019 the Company elected to exercise the option permitted under section 115BAA of the Income-tax Act 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019 with effect from April 1, 2019. Accordingly, the Company has recognised provision for Income Tax and deferred tax expenses for the twelve months ended December 31, 2019 on the basis of estimated annual effective income tax rate.
47. Amalgamation of INA Bearings India Private Limited and LuK India Private Limited with the company
Scheme of Amalgamation of INA Bearings India Private Limited and LuK India Private Limited (jointly referred to as âtransferor companiesâ) with Schaeffler India Limited, has been approved by the National Company Law Tribunal, Chennai and Mumbai Benches vide their orders dated June 13, 2018 and October 8, 2018 respectively.
The Company is manufacturing and distribution of bearings, engine systems and transmission components, chassis applications and clutch systems. All sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is typically upon dispatch/ delivery.
49. Leases1. Practical expedients applied
⢠Applied discount rate based Incremental borrowing rate as per portfolio of leases of similar assets in similar economic environment with a similar period
⢠Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the date of initial application.
⢠Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
2. The Companyâs significant leasing/ licensing arrangements are mainly in respect of residential / office premises. Leases generally have a lease term ranging from 12 months to 120 months. Most of the leases are renewable by mutual consent on mutually agreeable terms.
51. Pursuant to the approval of the shareholders accorded on December 19, 2021 vide postal ballot conducted by the Company, each equity share of face value of '' 10/- per share was subdivided into 5 equity share of face value of '' 2/-per share with record date February 9, 2022.
52. Consequent to the approvals received from the Board of Directors of the Company at its meeting held on May 23, 2022, the Company has entered into a business transfer agreement on June 29, 2022 with CATENSYS India Private Limited and has sold its Chain Drive business under Automotive Technologies segment by way of a slump sale on a going concern basis for a lumpsum consideration of '' 294.2 million. The gain on sale of business amounting to '' 149.8 million has been recognised as an exceptional item in the above results.
53. The Board of Directors of the Company on August 28, 2023 had approved acquisition of 100% shares 12,04,758 of ''10/-each of KRSV Innovative Auto Solutions Private Limited (in the following âKooversâ ) for a total purchase consideration of '' 1,424.0 million in 100% cash consideration. Schaeffler india Limited has completed the above acquisition by acquring 100% shareholding of Koovers on September 8, 2023 in cash consideration. Consquently, Kooverâs has became a subsidiary of the Company. The expenditure towards acquistion of Koovers mainly includes professional/ consulting fees, stamp duties and other costs amounting to '' 47.0 million has been recognised as an exceptional items. Koovers offers spare parts solution to Indian Automotive aftermarket workshops via B-to-B e-commerce platform. The acquistion is in line with Schaeffler Indiaâs strategic initiatives for growth and provides a synergy potential. It will be a key enabler for the aftermarket ecosystem, inculding distribution partner and help to play an important role in the fast growing and evolving aftermarket digital landscape.
54. Other Statutory Information
1. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
2. The Company does not have any transactions with companies struck off.
3. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory period.
4. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
5. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign
entities (Intermediaries) with the understanding that the Intermediary shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
6. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
7. The Company does not have any such transaction which is not recorded in the books of account that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
55. The figures for the previous year have been regrouped/reclassified wherever necessary, to make them comparable. The impact of such reclassification/regrouping is not material to the financial statements.
56. The financial statement are approved for issued by the Board of Directors in their meeting held on February 16, 2024.
Dec 31, 2022
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34. Contingent liabilities not provided for in respect of: Claims against the company not acknowledged as debts: |
('' in million) |
|
|
2022 |
2021 |
|
|
(a) Employees and ex-employees related matters: |
||
|
(i) Matters pending in labour court/civil court/High Court for reinstatement of service/recovery of |
154.5 |
157.8 |
|
salary, PF & ESIC matters. |
||
|
(ii) Demand for discontinuing of contract system and for differential wages |
12.7 |
12.7 |
|
167.2 |
170.5 |
|
|
(b) (i) Sales-tax |
||
|
For non receipt of C Forms and non acceptance of Company''s claim of certain sales as exempt sales in respect of various assessment years. |
65.2 |
70.9 |
|
(ii) Excise duty and Service tax: |
116.5 |
133.4 |
|
In respect of matters decided against the Company, for which the Company is in appeal with higher authorities |
||
|
181.7 |
204.3 |
|
|
(c) Income tax: |
||
|
(i) In respect of matters decided against the Company, for which the Company is in appeal with |
160.3 |
160.3 |
|
higher authorities. |
||
|
160.3 |
160.3 |
|
|
In respect of above matters, it is not practicable for the Company to estimate the closure of these issues and consequential timing of cash flows, if any. |
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|
(d) Others: |
||
|
Demand notice for stamp duty on Order of Hon''ble National Company Law Tribunal, Mumbai Bench, approving the Scheme of Amalgamation of INA Bearings India Private Limited and LuK India Private Limited with the Company, for which the Company is in appeal with higher authorities. |
250.0 |
250.0 |
|
250.0 |
250.0 |
|
|
35. Commitments |
('' in million) |
|
|
2022 |
2021 |
|
|
Contracts on capital account: |
||
|
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of capital advance ''556.6 million; 2021: ''116.7 million). |
4,171.8 |
893.8 |
The Company''s exposure to foreign currency fluctuations relates to foreign currency assets, liabilities and forecasted cash flows. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives like forward contracts. The Company has entered into foreign currency forward contracts, majority having maturity of less than one year from reporting date, to hedge its risks associated with foreign currency fluctuations relating to such highly probable transactions. The currencies in which these transactions are mainly denominated is in US Dollars.
In the course of its business, the Company is exposed primarily to aforesaid risks, which may impact the fair value of its financial instruments. The Company has a risk management system which not only covers the foreign exchange risks but also other risks associated with the financial assets and liabilities such as credit risks. The risk management strategy is approved by Board of Directors which is implemented by the Company''s management. The risk management framework aims to create a stable business planning environment by reducing the impact of market related risks, credit risks and currency fluctuations on the Companyâs earnings. The risks identified through the risk management system are analysed and evaluated by the Companyâs management and reported to the Board of Directors periodically along with report of planned mitigation measures.
(A) Market risk
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the foreign currency exchange rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.
(i) Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollars and Euro. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Companyâs functional currency (Indian Rupees).
The Company has import and export transactions in foreign currencies. Imports are higher than exports and hence the Company has foreign currency exposure to the extent of imports being higher than exports. The risk of foreign currency fluctuation is mitigated through hedging. Please refer Note 37 for details of foreign currency exposure.
(ii) Interest rate risk
The Company recovers interest as per the terms of the agreement which approximates the prevailing market rate of interest, from time to time.
The Company''s borrowings comprise of fixed rate loan from the related parties. The terms of the agreement which approximates the prevailing market rate of interest.
Surplus funds are being invested in bank deposits at fixed interest rates and the tenure is managed to match with the Company''s liquidity profile.
(B) Liquidity risk
The Companyâs principal sources of liquidity are cash and cash equivalents and cash flows generated from operations.
The Company regularly monitors actual cash flows and forecasts to ensure that the Company maintains sufficient liquidity to meet the operation needs.
(C) Credit Risk
Credit risk is the unexpected loss in financial instruments if the counter parties fails to discharge it''s contractual obligations in entirety and timely. The Company is exposed to credit risks arising from it''s operating and financing activities such as trade receivables, loans and advances and other financial instruments. The carrying amounts of financial assets represent the maximum credit exposure.
Trade receivables
Credit risk on trade receivables is limited due to the Companyâs diversified customer base which includes public sector enterprises and reputed private corporates. For trade receivables, the Company computes expected credit loss allowance based on provision matrix which is prepared considering customer''s industry segment and historically observed overdue rate over expected life of trade receivables. The expected credit loss allowance is considered as a percentage of net receivable position.
Other financial assets
The Company does not have significant credit risk from loans given considering available securities against which such loans have been given.
For the purpose of Company''s capital management, capital includes equity share capital and all other reserves attributable to equity shareholders. The Company has a long-term strategy of pursuing profitable growth. Capital is managed proactively to secure the existence of the Company as a going concern in the long-term and create financial flexibility for profitable growth in order to add value to the Company. A further aim of the capital management is to ensure long-term availability of liquidity, maintain strong credit ratings and ensure optimal capital structure in order to support business through continuing growth and maximising shareholders value. The Company funds it''s operations through internal accruals and the Management along with the Board of Directors regularly monitor the returns on capital as well as dividend levels to shareholders.
40. Employee benefits: Post employment benefit plans Defined contribution plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Superannuation Fund which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund for the year aggregated to ''189.1 million (2021: ''171.9 million) and contribution to superannuation fund for the year aggregated to ''33.1 million (2021: ''31.2 million).
The Company has defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half monthâs salary for each year of completed service at the time of retirement/exit. The Scheme is funded by the plan assets.
Characteristics of defined benefit plans and risks associated with them:
Valuations of defined benefit plan are performed on certain basic set of pre-determined assumptions and other regulatory
framework which may vary over time. Thus, the Company is exposed to various risks in providing the above benefit plans
which are as follows:
(i) Interest Rate risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (i.e. value of defined benefit obligation).
(ii) Salary Escalation Risk: The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liabilit y.
(iii) Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.
(iv) Investment Risk: The Company has funded with well established Govt. of India undertaking & other IRDA approved agency and therefore, there is no material investment risk.
Dec 31, 2018
1.Related Party disclosures as required under Ind AS-24 are given below:
1) Name and nature of relationship of the related party where control exists:
The ultimate control lies with INA Holding Schaeffler GmbH & Co. KG, Germany.
2) Names of the Related Parties having transactions with the Company during the year
2018 2017
Ultimate holding Company Holding Company
INA Holding Schaeffler GmbH & Co. KG, Germany. INA Holding Schaeffler GmbH & Co. KG, Germany.
Fellow subsidiaries / Affiliates Fellow subsidiaries / Affiliates
Schaeffler Australia Pty. Ltd., Australia Schaeffler Australia Pty. Ltd., Australia
Schaeffler Brasil Ltda., Brazil Schaeffler Brasil Ltda., Brazil
Schaeffler (China) Co. Ltd., China Schaeffler (China) Co. Ltd., China
Schaeffler Trading (Shanghai) Co. Ltd., China Schaeffler Trading (Shanghai) Co. Ltd., China
Schaeffler (Nanjing) Co. Ltd., China Schaeffler (Nanjing) Co. Ltd., China
Schaeffler (Ningxia) Co. Ltd., China Schaeffler (Ningxia) Co. Ltd., China
Schaeffler Holding (China) Co. Ltd., China Schaeffler Holding (China) Co. Ltd., China
Schaeffler Friction Products (Suzhou) Co., Ltd., China Schaeffler Friction Products (Suzhou) Co., Ltd., China
Schaeffler Middle East FZE, Dubai Schaeffler Middle East FZE, Dubai
Schaeffler France SAS, France Schaeffler France SAS, France
Schaeffler Chain Drive Systems SAS, France Schaeffler Chain Drive Systems SAS, France
Schaeffler Technologies AG & Co. KG, Germany Schaeffler Technologies AG & Co. KG, Germany
Schaeffler AG, Germany Schaeffler AG, Germany
Schaeffler Elfershausen AG & Co. KG, Germany Schaeffler Elfershausen AG & Co. KG, Germany
Schaeffler Automotive Aftermarket GmbH & Co. KG, Germany Schaeffler Automotive Aftermarket GmbH & Co. KG, Germany
FAG Industrial Services GmbH, Germany FAG Industrial Services GmbH, Germany
LuK Truckparts GmbH & Co. KG, Germany LuK Truckparts GmbH & Co. KG, Germany
LuK GmbH & Co. KG, Germany LuK GmbH & Co. KG, Germany
WPB Water Pump Bearing GmbH & Co. KG, Germany Egon Von Ruville GmbH, Germany
Industriewerk Schaeffler INA-Ingenieurdienst GmbH, Germany WPB Water Pump Bearing GmbH & Co. KG, Germany
LuK Unna GmbH & Co. KG, Germany Industriewerk Schaeffler INA-Ingenieurdienst GmbH, Germany
Schaeffler Verwaltungsholding Sechs GmbH, Germany (formerly Schaeffler Verwaltungsholding Sechs GmbH, Germany (formerly
known as INA Beteiligungsverwaltungs GmbH) known as INA Beteiligungsverwaltungs GmbH)
Schaeffler Buhl Verwaltungs GmbH, Germany (formerly known Schaeffler Schweinfurt Beteiligungs GmbH. Germany (Formerly
as LuK Vermogensverwaltungsgesellschaft mbH) known as FAG Kugelfisher GmbH)
Schaeffler Beteiligungsgesellschaft mbH, Germany LuK Vermogensverwaltungsgesellschaft mbH, Germany
Schaeffler Buhl Beteiligungs GmbH, Germany Schaeffler Engineering GmbH, Germany
Schaeffler Friction Products GmbH, Germany Schaeffler Beteiligungsgesellschaft mbH, Germany
Schaeffler Schweiz GmbH, Switzerland LuK Unna GmbH & Co. KG, India
Schaeffler Hong Kong Company Ltd, Hong Kong Schaeffler Friction Products GmbH, Germany
Schaeffler Savaria Kft., Hungary Schaeffler Hong Kong Company Ltd, Hong Kong
Schaeffler Bearings Indonesia, PT, Indonesia Schaeffler Savaria Kft., Hungary
Schaeffler Water Pump Bearing Italia S.r.l., Italy Schaeffler Bearings Indonesia, PT, Indonesia
Schaeffler Japan Co. Ltd. Japan Schaeffler Water Pump Bearing Italia S.r.l., Italy
Schaeffler Korea Corporation, Korea Schaeffler Italia S.r.l., Italy
Schaeffler Ansan Corporation, Korea Schaeffler Japan Co. Ltd. Japan
LuK Puebla, S. de R.L. de C.V., Mexico Schaeffler Korea Corporation, Korea
Schaeffler Mexico, S. de R.L. de C.V., Mexico Schaeffler Ansan Corporation, Korea
2018 2017
Schaeffler Mexico Services, S. de R.L. de C.V., Mexico LuK Puebla, S. de R.L. de C.V., Mexico
Schaeffler Automotive Aftermarket Mexico, S. de R.L. de C.V., Schaeffler Mexico, S. de R.L. de C.V., Mexico Mexico
Schaeffler Nederland B.V., Netherlands Schaeffler Nederland B.V., Netherlands
Schaeffler Philippines Inc., Philippines Schaeffler Philippines Inc., Philippines
Schaeffler Portugal Unipessoal Lda., Portugal Schaeffler Portugal Unipessoal Lda., Portugal
SC Schaeffler Romania S.R.L., Romania SC Schaeffler Romania S.R.L., Romania
Schaeffler (Singapore) Pte. Ltd., Singapore Schaeffler (Singapore) Pte. Ltd., Singapore
Schaeffler Kysuce, spol. s.r.o, Slovakia Schaeffler Kysuce, spol. s.r.o, Slovakia
Schaeffler Skalica, spol. s r.o., Slovakia Schaeffler Skalica, spol. s r.o., Slovakia
Schaeffler South Africa (Pty.) Ltd., South Africa Schaeffler South Africa (Pty.) Ltd., South Africa
Schaeffler Schweiz GmbH, Switzerland Schaeffler Schweiz GmbH, Switzerland
Schaeffler (Thailand) Co. Ltd., Thailand Schaeffler (Thailand) Co. Ltd., Thailand
Schaeffler Manufacturing (Thailand) Co.,Ltd., Thailand Schaeffler Manufacturing (Thailand) Co.,Ltd., Thailand
Schaeffler Group USA Inc, USA Schaeffler Group USA Inc, USA
Schaeffler Transmission Systems, LLC, USA Schaeffler Transmission Systems, LLC, USA
Schaeffler (UK) Ltd. UK Schaeffler (UK) Ltd. UK
The Barden Corporation (U.K.) Ltd., UK The Barden Corporation (U.K.) Ltd., UK
Schaeffler Vietnam Co. Ltd., Vietnam Schaeffler Automotive Aftermarket (UK) Ltd. UK
Schaeffler Vietnam Co. Ltd., Vietnam
Key Management Personnel
Mr. Dharmesh Arora, Managing Director Mr. Dharmesh Arora, Managing Director (w.e.f. March 6, 2017)
Mr. Rajendra Anandpara, Managing Director (up to March 3, 2017)
2. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- market risk [refer 39 (A) below]
- liquidity risk [refer 39 (B) below]
- credit risk [refer 39 (C) below]
In the course of its business, the Company is exposed primarily to aforesaid risks, which may impact the fair value of its financial instruments. The Company has a risk management system which not only covers the foreign exchange risks but also other risks associated with the financial assets and liabilities such as credit risks. The risk management strategy is approved by Board of Directors which is implemented by the Companyâs management. The risk management framework aims to create a stable business planning environment by reducing the impact of market related risks, credit risks and currency fluctuations on the Companyâs earnings. The risks identified through the risk management system are analysed and evaluated by the Companyâs management and reported to the Board of Directors periodically along with report of planned mitigation measures.
A) Market risk
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the foreign currency exchange rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.
(i) Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollars and Euro. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the Companyâs functional currency (Indian Rupees).
The Company has import and export transactions in foreign currencies. Imports are higher than exports and hence the Company has foreign currency exposure to the extent of purchases being higher than exports. The risk of foreign currency fluctuation is mitigated through hedging. Please refer Note 38 for details of foreign currency exposure.
The Companyâs exposure to foreign currency risk at the end of reporting period are as follows:
(ii) Interest rate risk
The Company has granted loans to third party. The Company recovers interest as per the terms of the agreement which approximates the prevailing market rate of interest, from time to time. Accordingly, interest rate risk for loans given is not considered to be substantial.
The Companyâs borrowings comprise of fixed rate loan from the related parties. The terms of the agreement which approximates the prevailing market rate of interest.
Surplus funds are being invested in bank deposits at fixed interest rates and the tenure is managed to match with the Companyâs liquidity profile.
B) Liquidity Risk
The Companyâs principal sources of liquidity are cash and cash equivalents and cash flows generated from operations. The Company regularly monitors actual cash flows and forecasts to ensure that the Company maintains sufficient liquidity to meet the operation needs.
C) Credit Risk
Credit risk is the unexpected loss in financial instruments if the counter parties fails to discharge itâs contractual obligations in entirety and timely. The Company is exposed to credit risks arising from itâs operating and financing activities such as trade receivables, loans and advances and other financial instruments. The carrying amounts of financial assets represent the maximum credit exposure.
Trade receivables
Credit risk on trade receivables is limited due to the Companyâs diversified customer base which includes public sector enterprises and reputed private corporates. For trade receivables, the Company computes expected credit loss allowance based on provision matrix which is prepared considering customerâs industry segment and historically observed overdue rate over expected life of trade receivables. The expected credit loss allowance is considered as a percentage of net receivable position.
Other financial assets
The Company does not have significant credit risk on non-current loans given considering available security against which such loans have been given.
3. Capital management
For the purpose of Companyâs capital management, capital includes equity share capital and all other reserves attributable to equity shareholders. The Company has a long-term strategy of pursuing profitable growth. Capital is managed proactively to secure the existence of the Company as a going concern in the long-term and create financial flexibility for profitable growth in order to add value to the Company. A further aim of the capital management is to ensure long-term availability of liquidity, maintain strong credit ratings and ensure optimal capital structure in order to support business through continuing growth and maximizing shareholders value. The Company funds itâs operations through internal accruals and the Management along with the Board of Directors regularly monitor the returns on capital as well as dividend levels to shareholders.
4. Employee benefits: Post employment benefit plans
Defined contribution plans
The Company makes contributions, determined as a specified percentage of employee salaries in respect of qualifying employees towards Provident Fund and Superannuation Fund, which are defined contribution plans. The Company has no obligations other than to make these specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognized as an expense towards contribution to Provident Fund for the year aggregate to Rs, 136.6 million (2017: Rs, 123.9 million) and contribution to superannuation fund for the year aggregating to Rs, 33.5 million (2017: Rs, 35.3 million).
Defined benefit plans
The Company has defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half monthâs salary for each year of completed service at the time of retirement/exit. The Scheme is funded by the plan assets.
As at December 31, 2018, weighted-average duration of the defined benefit obligation was 6.22 years (December 31, 2017: 7.58 years).
Note: The estimates of future salary increases, considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.
Sensitivity Analysis
The following table summarizes the impact in percentage terms on the reported defined benefit obligation at the end of the reporting period arising on account of an increase or decrease in the reported assumption by 100 basis points:
These sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analyses.
The carrying amounts of all financial instruments (except derivative instruments which are measured at fair value through Other Comprehensive Income and long-term loans) are not materially different from their fair values, since these are of short term nature.
B) Fair value hierarchy
The following table provides quantitative disclosures of fair value measurement hierarchy of financial instruments as refered above:
Valuation techniques and significant unobservable inputs
Specific valuation techniques used in measuring Level 2 and Level 3 fair values for financial instruments include:
- the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date
- the fair value of remaining financial instruments is determined using the quoted discounted cash flow analysis
5. The tax year for the Company being the year ending March 31, 2019, provision for taxation for the year ended December 31,
2018 is aggregate of provision made for three months ended March 31, 2018 and provision based on amounts for remaining nine months ended December 31, 2018, the ultimate tax liability of which will be determined on the basis of figures for the fiscal year April 1, 2018 to March 31, 2019.
The Companyâs international and domestic transactions with associated enterprises are at armâs length, as per the independent accountantâs report for the year ended March 31, 2018. The Management believes that the Companyâs international and domestic transactions with associated enterprises post March 31, 2018 continue to be at armâs length and that transfer pricing legislations will not have any impact on the Ind AS financial statements, particularly on the amount of tax expenses for the year and the amount of provision for taxation at the year end.
6. Amalgamation of INA Bearings India Private Limited and LuK India Private Limited with the company
(a) The Scheme of Amalgamation of INA Bearings India Private Limited (âINAâ) and LuK India Private Limited (âLuKâ) jointly referred to as âtransferor companiesâ) with Schaeffler India Limited (âthe Schemeâ), has been approved by the National Company Law Tribunal, Chennai and Mumbai Benches vide their orders dated June 13, 2018 and October 8, 2018 respectively. The Company has carried out the accounting prescribed in the Scheme and made the required disclosure for Amalgamations in the nature of merger, as required under Appendix C of Ind AS 103 Business Combinations, for Business Combinations of entities under âCommon Controlâ.
(b) As per the Scheme, all assets and liabilities of INA and LuK as at appointed date (i.e. January 1, 2018) have been recorded at their carrying values determined in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) prescribed under Section 133 of the Companies Act, 2013 and other recognized accounting practices and policies to the extent applicable after eliminating inter-company balances is credited to Capital Reserve. Being
a common control business combination as per Appendix - C of âInd AS 103 - Business Combinationsâ, financial information for year ended December 31, 2017 have been restated.
In accordance with the Scheme:
The Company has taken over following assets, liabilities and other equity (before intercompany eliminations) at their respective book values against capital issuance of '' 146.4 million to the shareholders of respective transferor companies as at the appointed date and resultant surplus of '' 612.6 million has been credited to Capital reserve.
(c) In terms of the Scheme, the Company has alloted 8,214,891 equity shares of '' 10 each to existing shareholders of INA and 6,428,573 equity shares of '' 10 each to existing shareholders of LuK based on share entitlement ratio as per the Scheme.
(d) Exceptional items pertain to provision for stamp duties, professional/consulting fees and other costs incurred pursuant to the Scheme.
Dec 31, 2017
1. Related Party disclosures as required under Ind AS-24 are given below:
1) Name and nature of relationship of the related party where control exists:
FAG Kugelfischer GmbH, Germany: Holding Company holds 8,529,183 equity shares i.e. 51.33% of the equity share
capital as at the year end. The ultimate control lies with INA Holding Schaeffler GmbH & Co. KG - Germany.
2) Names of the Related Parties having transactions with the Company during the year.
2017 2016
Holding Company Holding Company
FAG Kugelfischer GmbH, Germany FAG Kugelfischer GmbH, Germany
Fellow subsidiaries / Affiliates Fellow subsidiaries / Affiliates
Schaeffler Australia Pty. Ltd., Australia Schaeffler Australia Pty. Ltd., Australia
Schaeffler Brasil Ltda., Brazil Schaeffler Brasil Ltda., Brazil
Schaeffler (China) Co. Ltd., China Schaeffler (China) Co. Ltd., China
Schaeffler Trading (Shanghai) Co. Ltd., China Schaeffler Holding (China) Co. Ltd., China
Schaeffler (Nanjing) Co. Ltd., China Schaeffler Trading (Shanghai) Co. Ltd., China
Schaeffler (Ningxia) Co. Ltd., China Schaeffler (Nanjing) Co. Ltd., China
Schaeffler Holding (China) Co. Ltd., China Schaeffler (Ningxia) Co. Ltd., China
Schaeffler Middle East FZE, Dubai Schaeffler Middle East FZE, Dubai
Schaeffler France SAS, France Schaeffler Technologies AG & Co. KG, Germany
Schaeffler Technologies AG & Co. KG, Germany Schaeffler AG, Germany
Schaeffler AG, Germany Schaeffler Automotive Aftermarket GmbH & Co. KG, Germany
Schaeffler Elfershausen AG & Co. KG, Germany Schaeffler Elfershausen AG & Co. KG, Germany
Schaeffler Automotive Aftermarket GmbH & Co. KG, Germany FAG Industrial Services GmbH, Germany
FAG Industrial Services GmbH, Germany WPB Water Pump Bearing GmbH & Co. KG, Germany
LuK Truckparts GmbH & Co. KG, Germany Schaeffler Hong Kong Company Ltd, Hong Kong
LuK GmbH & Co. KG, Germany INA Bearings India Pvt. Ltd., India
Schaeffler Hong Kong Company Ltd, Hong Kong LuK India Pvt. Ltd. India
INA Bearings India Pvt. Ltd., India Schaeffler Bearings Indonesia, PT, Indonesia
LuK India Pvt. Ltd. India Schaeffler Japan Co. Ltd. Japan
Schaeffler Bearings Indonesia, PT, Indonesia Schaeffler Korea Corporation, Korea
Schaeffler Japan Co. Ltd. Japan Schaeffler Mexico, S. de R.L. de C.V., Mexico
Schaeffler Korea Corporation, Korea Schaeffler Bearings (Malaysia) Sdn. Bhd., Malaysia
LuK Puebla, S. de R.L. de C.V., Mexico Schaeffler Portugal Unipessoal Lda., Portugal
Schaeffler Mexico, S. de R.L. de C.V., Mexico Schaeffler Philippines Inc., Philippines
Schaeffler Nederland B.V., Netherlands SC Schaeffler Romania S.R.L., Romania
Schaeffler Philippines Inc., Philippines Schaeffler (Singapore) Pte. Ltd., Singapore
Schaeffler Portugal Unipessoal Lda., Portugal Schaeffler South Africa (Pty.) Ltd., South Africa
SC Schaeffler Romania S.R.L., Romania Schaeffler Kysuce, spol. s.r.o, Slovakia
Schaeffler (Singapore) Pte. Ltd., Singapore Schaeffler (Thailand) Co. Ltd., Thailand
Schaeffler Kysuce, spol. s.r.o, Slovakia Schaeffler (UK) Ltd. UK
Schaeffler (Thailand) Co. Ltd., Thailand The Barden Corporation, USA
Schaeffler Group USA Inc, USA Schaeffler Group USA Inc, USA
Schaeffler (UK) Ltd. UK. Schaeffler Vietnam Co. Ltd., Vietnam
The Barden Corporation (U.K.) Ltd., UK.
Schaeffler Vietnam Co. Ltd., Vietnam_
Key Management Personnel
Mr. Dharmesh Arora, Managing Director Mr. Rajendra Anandpara, Managing Director
(w.e.f. March 6, 2017) (upto March 3, 2017)
2. Derivative instruments:
The Companyâs exposure to foreign currency fluctuations relates to foreign currency assets, liabilities and forecasted cash flows. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives like forward contracts. The Company has entered into foreign currency forward contracts, majority having maturity of less than one year from reporting date, to hedge its risks associated with foreign currency fluctuations relating to such highly probable transactions. The currencies in which these transactions are mainly denominated are US Dollars and Euro.
Gain / (loss) on the fair valuation of forward contracts, which qualify as effective cash flow hedge amounting to Rs, 44.8 million (2016: Loss Rs, (62.5) million) on the Balance Sheet has been recognized in Cash Flow Hedge Reserve.
The Company has exposure to the following risks arising from financial instruments:
- market risk [refer 38 (A) below]
- liquidity risk [refer 38 (B) below]
- credit risk [refer 38 (C) below]
In the course of its business, the Company is exposed primarily to aforesaid risks, which may impact the fair value of its financial instruments. The Company has a risk management system which not only covers the foreign exchange risks but also other risks associated with the financial assets and liabilities such as credit risks. The risk management strategy is approved by Board of Directors which is implemented by the Companyâs management. The risk management framework aims to create a stable business planning environment by reducing the impact of market related risks, credit risks and currency fluctuations on the Companyâs earnings. The risks identified through the risk management system are analysed and evaluated by the Companyâs management and reported to the Board of Directors perodically along with report of planned mitigation measures.
A) Market risk
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the foreign currency exchange rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.
(i) Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollars and Euro. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the Companyâs functional currency (Indian Rupees).
The Company has import and export transactions in foreign currencies. Imports are higher than exports and hence the Company has foreign currency exposure to the extent of purchases being higher than exports. The risk of foreign currency fluctuation is mitigated through hedging. Please refer Note 37 for details of foreign currency exposure.
Foreign Currency Sensitivity
The following table demonstrates sensitivity to a reasonable possible change in major foreign currencies like USD and EUR with all other variables held constant:
(ii) Interest rate risk
The Company has granted loans to related parties and third parties. The Company recovers interest as per the terms of the agreement which approximates the prevailing market rate of interest, from time to time. Accordingly, interest rate risk for loans given is not considered to be substantial.
The Company does not have any borrowings. Surplus funds are being invested in bank deposits at fixed interest rates and the tenure is managed to match with the Companyâs liquidity profile.
B) Liquidity Risk
The Companyâs principal sources of liquidity are cash and cash equivalents and cash flows generated from operations. The Company regularly monitors actual cash flows and forecasts to ensure that the Company maintains sufficient liquidity to meet the operation needs.
C) Credit Risk
Credit risk is the unexpected loss in financial instruments if the counter parties fails to discharge itâs contractual obligations in entirety and timely. The Company is exposed to credit risks arising from itâs operating and financing activities such as trade receivables, loans and advances and other financial instruments. The carrying amounts of financial assets represent the maximum credit exposure.
Trade receivables
Credit risk on trade receivables is limited due to the Companyâs diversified customer base which includes public sector enterprises and reputed private corporate. For trade receivables, the Company computes expected credit loss allowance based on provision matrix which is prepared considering customerâs industry segment and historically observed overdue rate over expected life of trade receivables. The expected credit loss allowance is considered as a percentage of net receivable position.
The Company does not have significant credit risk from loans given considering available securities against which such loans have been given.
3. Capital management
For the purpose of Companyâs capital management, capital includes equity share capital and all other reserves attributable to equity shareholders. The Company has a long-term strategy of pursuing profitable growth. Capital is managed proactively to secure the existence of the Company as a going concern in the long-term and create financial flexibility for profitable growth in order to add value to the Company. A further aim of the capital management is to ensure long-term availability of liquidity, maintain strong credit ratings and ensure optimal capital structure in order to support business through continuing growth and maximizing shareholders value. The Company funds its operations through internal accruals and the Management along with the Board of Directors regularly monitor the returns on capital as well as dividend levels to shareholders.
4. Employee benefits: Post employment benefit plans
Defined contribution plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund, which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognized as an expense towards contribution to Provident Fund for the year aggregated to Rs, 65.5 million (2016: Rs, 57.0 million) and contribution to superannuation fund for the year aggregated to Rs, 25.2 million (2016: Rs, 25.9 million).
Defined benefit plans
The Company has defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half monthâs salary for each year of completed service at the time of retirement/exit. The Scheme is funded by the plan assets.
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of certain employees towards Provident Fund to a Company managed PF Trust up to August 31, 2017. The contributions are charged to Statement of Profit and Loss as they accrued till that date. Effective September 1, 2017 the Company has started contributing directly to Provident Fund authorities.
At December 31, 2017, the weighted-average duration of the defined benefit obligation was 7.58 years (31 December 2016: 7.17 years).
Note: The estimates of future salary increases, considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.
Sensitivity Analysis
The following table summarizes the impact in percentage terms on the reported defined benefit obligation at the end of the reporting period arising on account of an increase or decrease in the reported assumption by 100 basis points:
These sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analyses.
5. Explanation of transition to Ind AS
As stated in Note 2.1, these are the Companyâs first financial statements prepared in accordance with Ind AS. For the year ended December 31, 2016, the Company has prepared itâs financial statements in accordance with Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act (âPrevious GAAPâ).
The accounting policies set out in Note 2 have been applied in prepaing these financial statements for the year ended December 31, 2017 including the comparative information for the year ended December 31, 2016 and the opening Ind AS balance sheet as on the date of transition i.e. January 1, 2016.
In preparing the Companyâs Ind AS balance sheet as at January 1, 2016 and in presenting the comparative information for the year ended December 31, 2016, the Company has adjusted amounts reported previously in financial statements prepared in accordance with Previous GAAP. This note explains the principal adjustments made by the Company in restating itâs Previous GAAP financial statements, and how the transition from Previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
(A) Exemptions availed
Ind AS 101 - âFirst-time Adoption of Indian Accounting Standardsâ allows first-time adopters certain optional / mandatory exemptions. The Company has accordingly availed the following exemptions:
(i) The Company has elected to apply Ind AS 103 - âBusiness Combinationsâ prospectively from the date of transition. Hence, business combinations occurring prior to the transition date have not been restated.
(ii) The Company has elected to continue with the carrying value determined in accordance with Previous GAAP for all of its property, plant and equipment and intangible assets as deemed cost of such assets at the transition date.
(iii) The estimates as at January 1, 2016 and December 31, 2016, are consistent with those made for the same dates in accordance with Previous GAAP (after adjustments to reflect any differences in accounting policies) apart from the following item where application of Previous GAAP did not require estimation:
- Impairment of financial assets based on expected credit loss model.
(B) Reconciliations between previously reported Previous GAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliation from Previous GAAP to Ind AS:
The transition from Previous GAAP to Ind AS does not have any material impact on the Statement of Cash Flows.
Notes:
1. Under Previous GAAP, the allowance for doubtful debts were calculated based on ageing. As per Ind AS 109, the Company is expected to estimate provision based on expected credit loss model. Consequent to this change, the Company has recognized '' 43.5 million as at January 1, 2016 as additional allowance with a corresponding charge to opening retained earnings. Further, the company has recognized '' 11.9 million during the year ended December 31, 2016 as an additional allowance.
2. Under Previous GAAP, the total expenses estimated on post-employment benefit plan, including actuarial gains and losses, were charged to the Statement of Profit and Loss. As per Ind AS, remeasurements comprising of actuarial gains and losses are required to be recognized through Other Comprehensive Income. Accordingly, the company has reclassified an amount of '' 20.7 million from âEmployee benefits expenseâ to âOther Comprehensive Incomeâ during the year ended December 31, 2016.
3. Tax adjustments include deferred tax impact on account of differences between Previous GAAP and Ind AS. On January 1, 2016 the net impact on deferred tax asset aggregating to '' 15.1 million has been adjusted to opening retained earnings. Also, deferred tax asset aggregating to '' 11.2 million has been recognized in the Statement of Profit and Loss for the year ended December 31, 2016.
4. Under Previous GAAP, dividends proposed by the Board of Directors after the reporting date but before the approval of financial statements were considered to be adjusting events and accordingly recognized as liabilities at the reporting date (including dividend distribution tax thereon). Under Ind AS, dividends so proposed by the Board of Directors are considered to be non adjusting event. Accordingly, proposed dividend and dividend distribution tax recognized under Previous GAAP has been reversed as at the transition date and for financial year 2016 respectively and adjusted in retained earnings in financial year 2016 and 2017 respectively when paid. This has resulted in an increase in other equity by '' 201.0 million as at January 1, 2016 and '' 241.1 million as at December 31, 2016.
5. Under Previous GAAP, cash discounts and other discounts directly attributable to sales was recognized as part of âOther expensesâ which has been adjusted against the revenue under Ind AS during the year ended December 31, 2016.
6. Under Previous GAAP, revenue was presented net of excise duty. However, as per Schedule III to the Companies Act, 2013, revenue from operations is to be shown inclusive of excise duty. Accordingly, excise duty has been included in revenue from operations and shown separately as an expense.
7. Under Previous GAAP, the Company had adopted hedge accounting principles as provided in Accounting Standard 30, Financial Instruments: Recognition and Measurement, issued by the Institute of Chartered Accountants of India, and accordingly the cost relating to hedging was expensed in the profit or loss to the extent considered ineffective. Under Ind AS 109, costs relating to hedging are accounted as a part of the other comprehensive income (net of tax) to the extent considered as effective and aligned to the hedging strategy. However, this has no impact on total comprehensive income and total equity as at January 1, 2016 and December 31, 2016.
The carrying amounts of all financial instruments (except derivative instruments which are measured at fair value through Other Comprehensive Income and long-term loans) are not materially different from their fair values, since these are of short term nature
Valuation techniques and significant unobservable inputs
Specific valuation techniques used in measuring Level 2 and Level 3 fair values for financial instruments include:
- the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date
- the fair value of remaining financial instruments is determined using the quoted discounted cash flow analysis
6. Dues to Micro, Small and Medium Enterprises
Under the Micro, Small and Medium Enterprises Development Act, 2006, (MSMED) which came into force from 2 October 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. On the basis of the information and records available with the management, there are no outstanding dues to the Micro and Small enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006
7. Segment reporting
The business of the Company mainly comprises of sale of âBall / Roller Bearings and related componentsâ, which has been identified as a single reportable segment for the purpose of Ind AS 108 on âOperating Segmentsâ.
The geographical information analyses the Companyâs revenues and non-current assets by the Companyâs country of domicile (i.e. India) and outside India. In presenting the geographical information, segment revenue has been based on geographical location of customers and segment assets which have been based on the geographical location of the assets.
*Non-current assets exclude financial instruments, deferred tax, post employment benefit assets and rights arising under insurance contracts, if any.
8. The tax year for the Company being the year ending March 31, 2018, provision for taxation for the year ended December 31, 2017 is aggregate of provision made for three months ended March 31, 2017 and provision based on amounts for remaining nine months ended December 31, 2017, the ultimate tax liability of which will be determined on the basis of figures for the fiscal year April 1, 2017 to March 31, 2018.
The Companyâs international and domestic transactions with associated enterprises are at armâs length, as per the independent accountantâs report for the year ended March 31, 2017. The Management believes that the Companyâs international and domestic transactions with associated enterprises post March 31, 2017 continue to be at armâs length and that transfer pricing legislations will not have any impact on the Ind AS financial statements, particularly on the amount of tax expenses for the year and the amount of provision for taxation at the year end.
9. A Scheme of Amalgamation (âthe Schemeâ) of INA Bearings India Private Limited and Luk India Private Limited with the Company was approved on August 30, 2017 by the Board of Directors of the respective companies with appointed date as January 1, 2018. The Company has filed the draft Scheme before the respective National Company Law Tribunal (NCLT) benches in Mumbai and Chennai. Pending such regulatory approvals, no effect of the aforesaid draft Scheme has been given in the financial statements.
Dec 31, 2016
1. Rights, preferences and restrictions attached to equity shares
2. The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Companyâs residual assets. The equity shares are entitled to receive dividend was declared from time to time. The voting rights of shareholders are in proportion to its share of paid up equity capital of the Company.
3. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company.
4. Fixed Assets:
5. (i) Land, Buildings and Roads were revalued as at December 31, 1985 at depreciated market Land 19 1 value on the basis of valuation made by a Government Registered Valuer. The revalued amounts . . were revised during the year ended December 31, 1987 by the said Valuer based on certain Buildings and Roads 19.° information provided by the Company. The indices, if any, used are not stated in the valuation. Total 38.1 The amounts added on revaluation after the aforesaid revision are given here:
6. Depreciation on the increase in the value of fixed assets due to revaluation is transferred to Profit & Loss balance (surplus)/ Statement of Profit and Loss and no amount of additional depreciation has been recouped from the revaluation reserve.
7. Buildings include M 250, being cost of five ordinary shares of M 50 each of Nariman Bhavan Premises Co-operative Society Limited and M 500 being cost of ten ordinary shares of M 50 each of Parekh Market Premises Co-Operative Society Limited, which entitle the Company to real estate.
8. Research and development expenses under the respective heads aggregate to M 139.4 million (Previous year M 120.9 million) including of capital nature M 0.5 million (Previous year: M Nil).
9. The tax year for the Company being the year ending March 31, 2017, provision for taxation for the year is aggregate of the provision made for three months ended March 31, 2016 and provision based on the figures for remaining nine months period up to December 31, 2016, the ultimate tax liability of which will be determined on the basis of figures for the year April 1, 2016 to March 31, 2017.
The Company''s international and domestic transactions with associated enterprises are at arm''s length, as per the independent accountant''s report for the year ended March 31, 2016. The management believes that the Company''s international and domestic transactions with associated enterprises post March 31, 2016 continue to be at arm''s length and that transfer pricing legislations will not have any impact on the financial statements, particularly on the amount of tax expenses for the year and the amount of provision for taxation at the year end.
10. Segment Reporting
The business of the Company mainly comprises of sale of âBall/Roller Bearings and related componentsâ, which has been identified as a single reportable segment for the purpose of Accounting Standard (AS) 17 on âSegment Reportingâ.
11. Disclosure in Respect of Assets Taken on Lease
Operating Leases
The Company has entered into lease rent agreement for equipment, vehicles and leave and license agreements for few office premises (along with furniture and fixtures in certain cases). The lease typically run for period ranging between 12 months to 48 months. These leasing arrangements are cancellable, and are renewable on a periodic basis by mutual consent on mutually accepted terms including escalation of lease rent. The agreements contain clause for restriction on sub leasing.
12. Excise duty paid and collected from customers is shown separately and deducted from the Sales turnover (Gross) in the Statement of Profit and Loss.
13. Excise duty appearing under other expenses represents the difference between the closing and opening stock of manufactured finished goods of M 17.6 million (Previous year: M 19.0 million).
14. Derivative Instruments
The Company has entered into foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to firm commitments and highly probable transactions.
The Company has adopted and applied the principles of hedge accounting as set out in Accounting Standard (AS) 30, âFinancial Instruments: Recognition and measurementâ issued by Institute of Chartered Accountants of India in respect of highly probable forecasted transactions or firm commitments, which were previously accounted following the principles of prudence as per AS 1.
Disclosure of Accounting Policies:
Loss on the fair valuation of forward covers, which qualify as effective cash flow hedge amounting to M 62.5 million (Previous year: Gain of M 8.6 million) on the Balance Sheet date has been recognized in the Hedging reserve account.
15. Employee benefits: Post employment benefit plans
Defined contribution plans:
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund, which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognized as an expense towards contribution to Provident Fund for the year aggregated to M 57.0 million (Previous year: M 50.8 million) and contribution to superannuation fund for the year aggregated to M 25.9 million (Previous year: M 23.9 million).
Defined benefit plans:
The Company has defined benefit plans that provide gratuity benefit and provident fund for certain employees. The gratuity plan S entitles an employee, who has rendered at least five years of continuous service, to receive one-half monthâs salary for each year of [I completed service at the time of retirement/exit. The Scheme is funded by the plan assets.
16. The Company makes contributions, determined as a specified percentage of employee salaries, in respect of certain employees c towards Provident Fund to a Company managed PF Trust. The contributions are charged to Statement of Profit and Loss as they accrue. Based on actuarial valuation report, there is no shortfall in the Trust fund as at December 31, 2016.
17. During the previous year, FAG Roller Bearings Private Limited, a wholly owned subsidiary of the Company, incorporated with the main object to manufacture of machines, was amalgamated into the Company pursuant to the Scheme of Amalgamation (''the Scheme''), as
Dec 31, 2015
? Rights, preferences and restrictions attached to equity shares
(i) The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Companyâs residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of shareholders are in proportion to its share of paid up equity capital of the Company.
(ii) On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company.
* The Company has acquired additional 75% equity shares of âFAG Roller Bearings Private Limitedâ on January 1, 2015 to make it a 100% subsidiary. Subsequently âFAG Roller Bearings Private Limitedâ was amalgamated into the Company under a Scheme of Amalgamation approved by Honorable High Court of Bombay vide its order dated November 3, 2015. The scheme became effective from appointed date i.e. January 1, 2015. (refer note 44)
Other loans and advances comprises of loans given to fellow subsidiaries INA Bearings India Private Limited RS, 850 million (Previous year: RS, 850 million) and LuK India Private Limited RS, 600 million (Previous year: RS, 600 million), secured by way of hypothecation of plant and machinery. The maximum amount outstanding of secured loan for fellow subsidiaries INA Bearings India Private Limited RS, 850 million (Previous year: RS, 850 million) and LuK India Private Limited RS, 600 million (Previous year: RS, 600 million). The Company has granted the loans to meet the working capital requirement.
The maximum amount outstanding for advances given to fellow subsidiaries Luk India Private Limited RS, 16.7 million (Previous year RS, 18.8 million), INA Bearings India Private Limited RS, 31.2 million (Previous year RS, 35.0 million), The Barden Corporation RS, 2.5 million (Previous year RS, 2.5 million), Schaeffler Trading (Shanghai) Co. Ltd. RS, 0.1 million (Previous year RS, Nil) and Schaeffler Tech. AG & Co. KG M 6.4 million (Previous year RS, 3.0 million).
* Includes bearings partially processed in house which are considered manufactured products in accordance with The Central Excise Act,1944.
** For some of these items purchased for sale, assembly / minor processing by outside parties is carried out. These items are considered as traded items.
*** The consumption figures shown above have been ascertained on the basis of materials consumed and after considering excesses and shortages ascertained on physical count.
# Excludes raw materials supplied by the Company to the outside parties for manufacture of components. Such components are considered as consumed when issued for production.
(ii) Depreciation on the increase in the value of fixed assets due to revaluation is transferred to Profit & Loss balance (surplus) / Statement of Profit and Loss and no amount of additional depreciation has been recouped from the revaluation reserve. Consequently, the depreciation charge for the year shown in the Statement of Profit and Loss is after deducting an amount of RS, Nil (Previous year: RS, 0.6 million) representing depreciation on the increase due to revaluation of Buildings and Roads.
(b) Buildings and Roads include RS, 250, being cost of five ordinary shares of RS, 50 each of Nariman Bhavan Premises Co-operative Society Limited and RS, 500 being cost of ten ordinary shares of RS, 50 each of Parekh Market Premises Co-Operative Society Limited, which entitle the Company to real estate.
1. Research and Development expenses under the respective heads aggregate to M120.9 million (Previous year RS, 97.7 million) including of capital nature RS, Nil (Previous year RS,0.2 million).
2. The tax year for the Company being the year ending March 31, 2016, the provision for taxation for the year is the aggregate of the provision made for the three months ended March 31, 2015 and the provision based on the figures for the remaining nine months up to December 31, 2015 the ultimate tax liability of which will be determined on the basis of the figures for the period April 1, 2015 to March 31, 2016.
The Company''s international and domestic transactions with associated enterprises are at arm''s length as per the independent accountant''s report for the year ended March 31, 2015. The Company is in the process of updating the documentation for the international and domestic transactions entered into with the associated enterprises during the period subsequent to March 31, 2015. Management believes that the Company''s international and domestic transactions with associated enterprises post March 31, 2015 continue to be at arm''s length and that the transfer pricing legislation will not have any impact on the financial statements particularly on the amount of the tax expense for the year and the amount of the provision for taxation at the year end.
3 SEGMENT REPORTING_
The business of the Company comprises of sale of ''Ball / Roller Bearings and related components'' and ''Sale of Machines''. ''Ball / Roller Bearings and related components'' has been identified as a single reportable segment for the purpose of Accounting Standard (AS)-17 on âSegment Reportingâ.
4. (A) DISCLOSURE IN RESPECT OF ASSETS TAKEN ON LEASE
Operating Leases
The Company has entered into rent agreement for equipment, vehicles and leave and license agreements for certain premises (along with furniture and fixtures in certain cases). The lease typically run for period ranging between 12 months to 48 months. These leasing arrangements are cancellable, and are renewable on a periodic basis by mutual consent on mutually accepted terms including escalation of lease rent. The agreements contain clause for restriction on sub leasing.
During the year, an amount of RS, Nil (Previous year RS, 3.1 million) was recognized as rental income in the Statement of Profit and Loss from the above factory and office premises. Further, the Company has sub leased part of rented premises for which rental income amounting to RS, 0.3 million ( Previous year RS, Nil) is recognized in the Statement of Profit and Loss.
5. RELATED PARTY DISCLOSURES AS REQUIRED UNDER AS-18 ARE GIVEN BELOW
(1) Name and nature of relationship of the Related Party where Control exists:
FAG Kugelfischer GmbH, Germany: Holding Company holds 8,529,183 equity shares i.e. 51.33% of the equity share capital as at the year end. The ultimate control lies with INA Holding Schaeffler GmbH & Co. KG - Schaeffler Group.
(2) Names of the Related Parties having transactions with the Company during the year: 2015 2014
(a) Holding Company (a) Holding Company
FAG Kugelfischer GmbH, Germany FAG Kugelfischer GmbH, Germany
(b) Fellow Subsidiary / Associate Companies (b) Fellow Subsidiary / Associate Companies
Schaeffler Australia Pty. Ltd., Australia Schaeffler Australia Pty. Ltd., Australia
Schaeffler Brasil Ltda., Brazil Schaeffler Brasil Ltda., Brazil
Schaeffler Canada Inc., Canada Schaeffler (China) Co. Ltd., China
Schaeffler (China) Co. Ltd., China Schaeffler (Ningxia) Co. Ltd., China
Schaeffler Holding (China) Co. Ltd., China Schaeffler Holding (China) Co. Ltd., China
Schaeffler Trading (Shanghai) Co. Ltd., China Schaeffler Trading (Shanghai) Co. Ltd., China
Schaeffler (Nanjing) Co. Ltd., China Schaeffler (Nanjing) Co. Ltd., China
Schaeffler Middle East FZE, Dubai Schaeffler Middle East FZE, Dubai
Schaeffler France S.A.S., France Schaeffler France S.A.S., France
Schaeffler Technologies AG & Co. KG, Germany Schaeffler Technologies GmbH & Co. KG, Germany
(Formerly Known as Schaeffler Technologies (Formerly known as Schaeffler Technologies AG & Co. KG.)
GmbH & C°. KG) Schaeffler AG, Germany
Schaeffler AG Germany Schaeffler Automotive Aftermarket
Schaeffler Automotive Aftermarket GmbH & Co. KG, Germany
GmbH & Co. KC^ Germany FAG Industrial Services GmbH, Germany
FAG Industrial Services GmbH, Germany LuK Truckparts GmbH & Co. KG, Germany
LuK Truckparts GmbH & Co. KG, Germany Schaeffler Verwaltung Zwei GmbH, Germany
Schaeffler Verwaltung Zwei GmbH, Germany Schaeffler Hong Kong Company Ltd., Hong Kong
WPB Water Pump Bearing GmbH & Co. KG, Germany ina Bearings India Pvt. Ltd., India
Schaeffler Hong Kong Company 1.^ Hong Kong FAG Roller Bearings Pvt. Ltd., India
INA Bearings India Private Ltd., India LuK India Pvt. Ltd., India
LuK |ndia Private Ltd., |ndia Schaeffler Bearings Indonesia, PT, Indonesia
Schaeffler Bearings |ndonesia, FT; |ndonesia Schaeffler Japan Co. Ltd., Japan
Schaeffler Japan Co. Ltd., Japan Schaeffler Korea Corporation, Korea
Schaeffler Korea Corporation, Korea Schaeffler Mexico, S. de R.L. de C.V., Mexico
Schaeffler Mexico, S. de R.L de Mexico Schaeffler Portugal S.A., Portugal
Schaeffler Bearings (Malaysia) Sdn. Malaysia Schaeffler Philippines Inc., Philippines Schaeffler Portugal S.A., Portugal
Schaeffler Philippines Inc., Philippines SC Schaeffler Romania S.R.L., Romania
SC Schaeffler Romania S.R.L., Romania Schaeffler (Singapore) Pte. Ltd., Singapore
Schaeffler (Singapore) Pte. Ltd., Singapore INA Kysuce, spol. s r.o, Slovakia
Schaeffler South Africa (Pty.) Ltd., South Africa Schaeffler (Thailand) Co. Ltd., Thailand
INA Kysuce, spol. s.r.o, Slovakia The Barden Corporation (UK) Ltd., UK
Schaeffler (Thailand) Co. Ltd., Thailand The Barden Corporation, USA
Schaeffler (Ningxia) Co. Ltd., China Schaeffler Group USA Inc., USA
The Barden Corporation (UK) Ltd., UK Schaeffler Vietnam Co. Ltd., Vietnam The Barden Corporation, USA Schaeffler Group USA Inc, USA Schaeffler Vietnam Co. Ltd., Vietnam
(c) Key Management Personnel (c) Key Management Personnel
Mr. Rajendra Anandpara, Managing Director Mr. Rajendra Anandpara, Managing Director
The Company has entered into foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to firm commitments and highly probable transactions.
The Company has adopted and applied the principles of hedge accounting as set out in Accounting Standard (AS)-30, âFinancial Instruments: Recognition and Measurementâ issued by Institute of Chartered Accountants of India with effect from August 1, 2014 to forward contracts in respect of highly probable transactions or firm commitments which were previously accounted following the principles of prudence as per AS-1 ''Disclosure of Accounting Policies''.
Gain on the fair valuation of forward covers, which qualify as effective cash flow hedge amounting to M 8.6 million (Previous year M 203.0 million - marked to market loss), on the Balance Sheet date, has been recognized in the hedging reserves account.
6. EMPLOYEE BENEFITS: POST-EMPLOYMENT BENEFIT PLANS_
Defined contribution plans:
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund, which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognized as an expense towards contribution to Provident Fund for the year aggregated to RS, 50.8 million (Previous year: RS, 49.5 million) and contribution to superannuation fund for the year aggregated to RS, 23.9 million (Previous year: RS, 22.0 million).
Defined benefit plans:
The Company has defined benefit plans that provide gratuity benefit and provident fund for certain employees. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half monthâs salary for each year of completed service at the time of retirement / exit. The Scheme is funded by the plan assets.
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of certain employees towards Provident Fund to a Company managed PF Trust. The contributions are charged to Statement of Profit and Loss as they accrue.
Based on actuarial valuation report there is no shortfall in the Trust fund as at December 31, 2015.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
Assumptions regarding future mortality are based on published statistics and mortality tables. The calculation of the defined benefit obligation is sensitive to the mortality assumptions.
7. AMALGAMATION OF FAG ROLLER BEARINGS PRIVATE LIMITED WITH THE COMPANY_
Scheme of Arrangement between FAG Roller Bearings Private Limited and the Company:
During the year, FAG Roller Bearings Private Limited, a wholly owned subsidiary of the Company, incorporated with the main object to manufacture machines, was amalgamated into the Company pursuant to the Scheme of Amalgamation (hereinafter referred to as ''Scheme''), as on and from January 1, 2015 being the appointed date pursuant to the approval of the Board of Directors and shareholders of the Company and sanctioned by the Honorable High Court of Bombay vide its order dated November 3, 2015, which was filed with Registrar of Companies on November 10, 2015.
The Company has carried out the accounting prescribed in the Scheme and made the required disclosure for Amalgamations in the nature of Merger, as required under Accounting Standard (AS)-14 ''Accounting for Amalgamations'' notified under the Companies (Accounts) Rules, 2014.
Hence, in accordance with the Scheme:
(i) The Company has taken over all the following assets aggregating to RS, 240.6 million, liabilities aggregating to RS, 176.2 million and deficit amounting to RS, 109.4 million at their respective book values. On cancellation of investments made by the Company in FAG Roller Bearings Private Limited against its share capital as on the appointed date, the resultant surplus of RS, 5.2 million has been credited to capital reserve.
(ii) No consideration is payable or receivable on implementation of the Scheme as the Scheme involves a Wholly owned Subsidiary.
(iii) In view of the above, the financial statements for the current year are not strictly comparable to those of the previous year.
8. DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES_
Under the Micro, Small and Medium Enterprises Development Act, 2006, (MSMED) which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. On the basis of the information and records available with the management, there are no outstanding dues to the Micro and Small enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006.
9. CORPORATE SOCIAL RESPONSIBILITY_
The Company has spent RS, 30.7 million during the current financial year which consists of capital expenditure amounting RS, 14.9 million and revenue expenditure amounting RS, 15.8 million. Out of RS, 30.7 million, the Company has paid out RS, 29.9 million in cash during the year and RS, 0.8 million is yet to be paid.
Dec 31, 2014
1 FIXED ASSETS
(ii) Depreciation on the increase in the value of fixed assets due to
revaluation is charged to the Revaluation Reserve. Consequently, the
depreciation charge for the year shown in the Statement of Profit and
Loss is after deducting an amount of Rs.0.6 million (Previous year:Rs.
0.6 million), representing depreciation on the increase due to
revaluation of Buildings and Roads transferred from the Revaluation
Reserve.
(b) Buildings and Roads include Rs.250, being cost of five ordinary
shares of Rs.50 each of Nariman Bhavan Premises Co-operative Society
Limited and Rs.500 being cost of ten ordinary shares of Rs.50 each of
Parekh Market Premises Co-operative Society Limited, which entitle the
Company to real estate.
2 CONTINGENT LIABILITIES NOT PROVIDED
FOR IN RESPECT OF 31.12.2014 31.12.2013
Claims against the Company not
acknowledged as debts:
(a) Em loyees and ex-employees
related matters:
(i) Matters pending in Labour Court
/ Civil Court / High Court for
reinstatement of
service / recovery of salary 96.8 54.5
(ii) Applicability of provident
fund on certain benefits to employees 276.0 230.0
(iii) Demand for discontinuing of
contract system and for differential
wages 72.7 63.9
(iv) Applicability of Employees State
Insurance on certain benefits
paid to the employees 9.3 8.0
454.8 356.4
3 Research and Development expenses under the respective heads
aggregate to Rs.97.7 million (Previous year Rs.126.5 million) including
of capital nature Rs.0.2 million (Previous year Rs.1.7 million).
4 The tax year for the Company being the year ending March 31, 2015,
the provision for taxation for the year is the aggregate of the
provision made for the three months ended March 31, 2014 and the
provision based on the figures for the remaining nine months up to
December 31, 2014, the ultimate tax liability of which will be
determined on the basis of the figures for the period April 1, 2014 to
March 31, 2015.
The Company''s international and domestic transactions with associated
enterprises are at arm''s length as per the independent accountant''s
report for the year ended March 31, 2014. The Company is in the process
of updating the documentation for the international and domestic
transactions entered into with the associated enterprises during the
period subsequent to March 31, 2014. Management believes that the
Company''s international and domestic transactions with associated
enterprises post March 31, 2014 continue to be at arm''s length and that
the transfer pricing legislation will not have any impact on the
financial statements particularly on the amount of the tax expense for
the year and the amount of the provision for taxation at the year end.
5 SEGMENT REPORTING
The business of the Company falls under a primary single segment i.e.
manufacture and sale of "Ball / Roller Bearings and related components"
for the purpose ofAccounting Standard (AS)-17.
6 (A) DISCLOSURE IN RESPECT OF ASSETS TAKEN ON LEASE
Operating Leases
The Company has entered into rent agreement for equipment, vehicles and
leave & license agreements for certain premises (along with furniture
and fixtures in certain cases). The lease typically run for a period
ranging between 12 months to 48 months. These leasing arrangements are
cancellable, and are renewable on a periodic basis by mutual consent on
mutually accepted terms including escalation of lease rent. The
agreements contain clause for restriction on sub leasing.
(B) DISCLOSURE IN RESPECT OF ASSETS GIVEN ON OPERATING LEASE
The Company has entered into lease agreement for certain portion of its
factory and office premises. The said agreement does not provide for
increase in rent during the tenure of the agreement and contains
renewal clause. The lessee is entitled to terminate the lease by giving
3 months notice without assigning any reason. The Company may terminate
the lease by giving 3 months notice only on the grounds specified in
the agreement:
7 RELATED PARTY DISCLOSURES AS REQUIRED UNDER AS-18 ARE GIVEN BELOW
(1) Name and nature of relationship of the Related Party where Control
exists:
FAG Kugelfischer GmbH, Germany: Holding Company holds 8,529,183 equity
shares i.e. 51.33% of the equity share capital as at the year end. The
ultimate control lies with INA Holding Schaeffler GmbH & Co. KG -
Schaeffler Group.
(2) Names of the Related Parties having transactions with the Company
during the year 2014
(a) Holding Company
FAG Kugelfischer GmbH, Germany
(b) Fellow Subsidiary / Associate Companies
Schaeffler Australia Pty. Ltd., Australia
Schaeffler Brasil Ltda., Brazil
Schaeffler (China) Co. Ltd., China
Schaeffler (Ningxia) Co. Ltd., China
Schaeffler Holding (China) Co. Ltd., China
Schaeffler Trading (Shanghai) Co. Ltd., China
Schaeffler (Nanjing) Co. Ltd., China
Schaeffler Middle East FZE, Dubai
Schaeffler France S.A.S., France
Schaeffler Technologies GmbH & Co. KG, Germany
(Formerly known as Schaeffler Technologies AG & Co. KG.)
Schaeffler AG, Germany
Schaeffler Automotive Aftermarket
GmbH & Co. KG, Germany
FAG Industrial Services GmbH, Germany
LuK Truckparts GmbH & Co. KG, Germany
Schaeffler Verwaltung Zwei GmbH, Germany
Schaeffler Hong Kong Company Ltd., Hong Kong
INA Bearings India Pvt. Ltd., India
FAG Roller Bearings Pvt. Ltd., India
LuK India Pvt. Ltd., India
Schaeffler Bearings Indonesia, PT, Indonesia
Schaeffler Japan Co. Ltd., Japan
Schaeffler Korea Corporation, Korea
Schaeffler Mexico, S. de R.L. de C.V., Mexico
Schaeffler Portugal S.A., Portugal
Schaeffler Philippines Inc., Philippines
(c) Key Management Personnel
Mr. Rajendra Anandpara, Managing Director
2013
(a) Holding Company
FAG Kugelfischer GmbH, Germany
(b) Fellow Subsidiary / Associate Companies
Schaeffler Australia Pty. Ltd., Australia
Schaeffler Iberia S.L.U., Barcelona
Schaeffler Brasil Ltda., Brazil
Schaeffler (China) Co. Ltd., China
Schaeffler (Ningxia) Co. Ltd., China
Schaeffler Holding (China) Co. Ltd., China
Schaeffler Trading (Shanghai) Co. Ltd., China
Schaeffler Middle East FZE, Dubai
Schaeffler Finland Oy, Finland
Schaeffler France S.A.S., France
Schaeffler Technologies AG & Co. KG, Germany
Schaeffler AG, Germany
Schaeffler Automotive Aftermarket
GmbH & Co. KG, Germany
FAG Industrial Services GmbH, Germany
WPB Water Pump Bearing GmbH & Co. KG, Germany
LuK Truckparts GmbH & Co. KG, Germany
Schaeffler Holding GmbH & Co. KG, Germany
FAG Magyarorszag Ipary KFT, Hungary
Schaeffler Hong Kong Company Ltd., Hong Kong
INA Bearings India Pvt. Ltd., India
FAG Roller Bearings Pvt. Ltd., India
LuK India Pvt. Ltd., India
Schaeffler Bearings Indonesia, PT, Indonesia
Schaeffler Japan Co. Ltd., Japan
Schaeffler Korea Corporation, Korea
Schaeffler Mexico, S. de R.L. de C.V., Mexico
SC Schaeffler Romania S.R.L., Romania
Schaeffler (Singapore) Pte. Ltd., Singapore
INA Kysuce, spol. s r.o, Slovakia
Schaeffler (Thailand) Co. Ltd., Thailand
The Barden Corporation (UK) Ltd., UK
The Barden Corporation, USA
Schaeffler Group USA Inc., USA
Schaeffler Vietnam Co. Ltd., Vietnam
Schaeffler Nederland B.V., Nederland
Schaeffler Portugal S.A., Portugal
Schaeffler Philippines Inc., Philippines
SC Schaeffler Romania S.R.L., Romania
Schaeffler (Singapore) Pte. Ltd., Singapore
INA Kysuce, spol. s r.o, Slovakia
Schaeffler South Africa (Pty.) Ltd., South Africa
Schaeffler (Thailand) Co. Ltd., Thailand
The Barden Corporation (UK) Ltd., UK
The Barden Corporation, USA
Schaeffler Group USA Inc., USA
Schaeffler Vietnam Co. Ltd., Vietnam
(c) Key Management Personnel
Mr. Rajendra Anandpara, Managing Director
5 DERIVATIVE INSTRUMENTS
The Company has entered into foreign currency forward contracts to
hedge its risks associated with foreign currency fluctuations relating
to firm commitments and highly probable transactions.
During the year the Company has adopted and applied the principles of
hedge accounting as set out in Accounting Standard (AS)-30,
''Financial Instruments: Recognition and measurement'' issued by the
Institute of Chartered Accountants of India with effect from August 1,
2014 to forward contracts in respect of highly probable transactions or
firm commitments which were previously accounted following the
principles of prudence as per AS-1, ''Disclosure of Accounting
Policies'':
(a) Loss representing the loss on fair valuation of foreign currency
forward covers, determined on the date of designation, amounting to Rs.
63.2 million has been debited to Statement of Profit and Loss.
(b) Loss on the fair valuation of forward covers, which qualify as
effective cash flow hedge amounting to Rs.203.0 million, on the Balance
Sheet date, has been recognised in the hedging reserves account.
6 EMPLOYEE BENEFITS: POST-EMPLOYMENT BENEFIT PLANS
Defined contribution plans
The Company makes contributions, determined as a specified percentage
of employee salaries, in respect of qualifying employees towards
Provident Fund, which is a defined contribution plan. The Company has
no obligations other than to make the specified contributions. The
contributions are charged to the Statement of Profit and Loss as they
accrue. The amount recognised as an expense towards contribution to
Provident Fund for the year aggregated to Rs.49.5 million (Previous
year: Rs.41.3 million) and contribution to superannuation fund for the
year aggregated to M 22.0 million (Previous year: Rs.19.2 million).
Defined benefit plans
The Company has defined benefit plans that provide gratuity benefit and
provident fund for certain employees. The gratuity plan entitles an
employee who has rendered at least five years of continuous service, to
receive one-half month''s salary for each year of completed service at
the time of retirement / exit. The scheme is funded by the plan assets.
The Company makes contributions, determined as a specified percentage
of employee salaries, in respect of certain employees towards Provident
Fund to a Company managed PF Trust. The contributions are charged to
Statement of Profit and Loss as they accrue. Based on actuarial
valuation report there is no shortfall in the Trust fund as at December
31, 2014.
The following table summarises the position of assets and obligations
relating to the two plans.
7 DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES
Under the Micro, Small and Medium Enterprises Development Act, 2006,
(MSMED) which came into force from October 2, 2006, certain disclosures
are required to be made relating to Micro, Small and Medium
enterprises. On the basis of the information and records available with
the management, there are no outstanding dues to the Micro and Small
enterprises as defined in the Micro, Small and Medium Enterprises
Development Act, 2006.
8 PREVIOUS YEAR FIGURES
Details of regrouping / reclassification for the previous year
Dec 31, 2013
1 Research and Development expenses under the respective heads
aggregate to Rs. 126.5 million (Previous year: Rs. 107.8 million) including
of Capital nature Rs. 1.7 million (Previous year: Rs. 5.0 million).
The tax year for the Company being the year ending March 31, 2014, the
provision for taxation for the year is the aggregate of the provision
made for the three months ended March 31, 2013 and the provision based
on the figures for the remaining nine months up to December 31, 2013
the ultimate tax liability of which will be determined on the basis of
the figures for the period April 1, 2013 to March 31, 2014.
The Company''s international transactions with associated enterprises
are at arm''s length as per the independent accountant''s report for the
year ended March 31, 2013. The Company is in the process of updating
the documentation for the international and domestic transactions
entered into with the associated enterprises during the period
subsequent to March 31, 2013. Management believes that the Company''s
international and domestic transactions with associated enterprises
post March 31, 2013 continue to be at arm''s length and that the
transfer pricing legislation will not have any impact on the financial
statements particularly on the amount of the tax expense for the year
and the amount of the provision for taxation at the year end.
2 (A) DISCLOSURE IN RESPECT OF ASSETS TAKEN ON LEASE
Operating Leases
The Company has entered into rent agreement for equipment, vehicles and
leave and license agreements for certain premises (along with furniture
and fixtures in certain cases). The lease typically run for period
ranging between 12 months to 48 months. These leasing arrangements are
cancellable, and are renewable on a periodic basis by mutual consent on
mutually accepted terms including escalation of lease rent. The
agreements contain clause for restriction on subleasing.
3 RELATED PARTY DISCLOSURES AS REQUIRED UNDER AS-18 ARE GIVEN BELOW
(1) Name and nature of relationship of the Related Party where Control
exists:
FAG Kugelfischer GmbH, Germany: Holding Company holds 8,529,183 equity
shares i.e. 51.33% of the equity share capital as at the year end. The
ultimate control lies with INA Holding Schaeffler GmbH & Co. KG -
Schaeffler Group.
4 EMPLOYEE BENEFITS: POST-EMPLOYMENT BENEFIT PLANS
Defined contribution plans
The Company makes contributions, determined as a specified percentage
of employee salaries, in respect of qualifying employees towards
Provident Fund, which is a defined contribution plan. The Company has
no obligations other than to make the specified contributions. The
contributions are charged to the Statement of Profit and Loss as they
accrue. The amount recognised as an expense towards contribution to
Provident Fund for the year aggregated to Rs. 41.3 million (Previous
year: Rs. 39.5 million) and contribution to Superannuation Fund for the
year aggregated to Rs. 19.2 million (Previous year: Rs. 18.4 million).
Defined benefit plans
The Company has defined benefit plans that provide Gratuity benefit and
Provident Fund for certain employees. The Gratuity plan entitles an
employee, who has rendered atleast five years of continuous service, to
receive one-half month''s salary for each year of completed service at
the time of retirement / exit. The Scheme is funded by the plan assets.
The Company makes contributions, determined as a specified percentage
of employee salaries, in respect of certain employees towards Provident
Fund to a Company managed PF Trust. The contributions are charged to
Statement of Profit and Loss as they accrue. Based on actuarial
valuation report there is no shortfall in the Trust Fund as at December
31, 2013.
5 DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES
Under the Micro, Small and Medium Enterprises Development Act, 2006,
(MSMED) which came into force from October 2, 2006, certain disclosures
are required to be made relating to Micro, Small and Medium
enterprises. On the basis of the information and records available with
the management, there are no outstanding dues to the Micro and Small
enterprises as defined in the Micro, Small and Medium Enterprises
Development Act, 2006.
Dec 31, 2012
Rights, preferences and restrictions attached to equity shares
(i) The Company has a single class of equity shares. Accordingly, all
equity shares rank equally with regard to dividends and share in the
Company''s residual assets. The equity shares are entitled to receive
dividend was declared from time to time. The voting rights of
shareholders are in proportion to its share of paid up equity capital
of the Company.
(ii) On winding up of the Company, the holders of equity shares will be
entitled to receive the residual assets of the Company.
Capital advances are given to FAG Roller Bearings Private Limited, an
associate company Rs.Nil (2011: 115.9 million). Other loans and advances
comprise of loan given to INA Bearings India Private Limited, an
associate company Rs.450.0 million (2011: Rs.450.0 million), secured by
way of hypothecation of plant and machinery.
(ii) Depreciation on the increase in the value of fixed assets due to
revaluation is charged to the Revaluation Reserve. Consequently, the
depreciation charge for the year shown in the Statement of Profit and
Loss is after deducting an amount of Rs.0.6 million (2011: Rs.0.6
million), representing depreciation on the increase due to revaluation
of buildings and roads transferred from the Revaluation Reserve.
(b) Buildings and roads include Rs.250, being cost of five ordinary
shares of Rs.50 each of Nariman Bhavan Premises Co-operative Society
Limited and Rs.500 being cost of ten ordinary shares of Rs.50 each of
Parekh Market Premises Co-operative Society Limited, which entitle the
Company to real estate.
(c) Capital work-in-progress includes fees for technical services for
Capital project Rs.21.8 million (2011: Rs.26.1 million) and allocation
of manufacturing and other expenses Rs.39.0 million (2011: 28.7
million).
1. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:
Claims against the Company not acknowledged as debts:
(a) Employees and ex-employees related matters:
- Matters pending in labour court / civil court / high court for
reinstatement of service / recovery of salary Rs.116.0 million (2011:
Rs. 96.2 million);
- Applicability of Provident Fund on certain benefits to employees Rs.
190.4 million (2011: Rs.155.9 million);
- Demand for discontinuing of contract system and for differential
wages Rs.102.6 million (2011: Rs. 83.0 million);
- Applicability of Employees State Insurance on certain benefits paid
to the employees Rs.6.9 million (2011: Rs. 6.0 million).
(b) Sales Tax:
For non receipt of C Forms and rejection of Company''s claim of certain
sales as exempt sales in respect of assessment years 2003-04, 2004-05,
2005-06, 2006-07, 2007-08 and 2008-09 Rs.36.3 million (2011: Rs. 22.8
million).
(c) Excise & Service Tax:
Excise
(i) In respect of matters decided against the Company, for which the
Company is in appeal with higher authorities Rs.Nil (2011: Rs.0.6
million).
Service Tax
(ii) In respect of matters where the Company has received favorable
orders / partial relief from the First Appellate authorities but the
Central Excise and Customs Department is pursuing further with higher
Appellate authorities (excluding the matters if not ultimately allowed,
would be allowed in the following assessment years) Rs.1.9 million
(2011: Rs.1.8 million).
(d) Income Tax:
(i) In respect of matters decided against the Company, for which the
Company is in appeal with higher authorities Rs. 82.8 million (2011: Rs.
96.8 million).
(ii) In respect of matters where the Company has received favorable
orders / partial relief from the First Appellate authorities but the
Income Tax Department is pursuing further with higher Appellate
authorities (excluding the matters if not ultimately allowed, would be
allowed in the following assessment years) Rs.159.3 million (2011: Rs.
151.8 million).
Research and Development expenses under the respective heads aggregate
to M 107.8 million (2011: M 61.5 million) including of capital nature
Rs. 5.0 million (2011: Rs.2.9 million).
The tax year for the Company being the year ending March 31, 2013, the
provision for taxation for the year is the aggregate of the provision
made for the three months ended March 31, 2012 and the provision based
on the figures for the remaining nine months up to December 31, 2012
the ultimate tax liability of which will be determined on the basis of
the figures for the period April 1, 2012 to March 31, 2013.
The Company''s international transactions with associated enterprises
are at arm''s length as per the independent accountant''s report for the
year ended March 31, 2012. The Company is in the process of updating
the documentation for the international and domestic transactions
entered into with the associated enterprises during the period
subsequent to March 31, 2012. Management believes that the Company''s
international and domestic transactions with associated enterprises
post March 31, 2012 continue to be at arm''s length and that the
transfer pricing legislation will not have any impact on the financial
statements particularly on the amount of the tax expense for the year
and the amount of the provision for taxation at the year end.
2 SEGMENT REPORTING:
The business of the Company falls under a primary single segment i.e.
manufacture and sale of "Ball / Roller Bearings and related components"
for the purpose of Accounting Standard (AS-17).
Assets and additions to tangible and intangible fixed assets by
geographical area:
The following table shows the carrying amount of segment assets and
capital expenditure during the year by geographical area in which the
assets are located:
(i) Under certain agreements, refundable interest free deposits have
been given.
(ii) The agreements
- contain renewal clause
- contain clause for restrictions on subleasing
Finance Lease
No asset has been taken on finance lease.
(B) DISCLOSURE IN RESPECT OF ASSETS GIVEN ON OPERATING LEASE:
The Company has entered into lease agreement for certain portion of its
factory and office premises. The said agreement does not provide for
increase in rent during the tenure of the agreement and contains
renewal clause. The lessee is entitled to terminate the lease by giving
3 months notice without assigning any reason. The Company may terminate
the lease by giving 3 months notice only on the grounds specified in
the agreement.
RELATED PARTY DISCLOSURES AS REQUIRED UNDER AS-18 ARE GIVEN BELOW:
(1) Name and nature of relationship of the related party where control
exists:
FAG Kugelfischer GmbH, Germany: Holding Company holds 8,529,183 equity
shares i.e. 51.33% of the equity share capital as at the year end. The
ultimate control lies with INA Holding GmbH & Co. KG, Germany (formerly
INA Holding Schaeffler KG, Germany) - Schaeffler Group.
3 (a) Excise duty paid and collected from customers is shown
separately and deducted from the Sales turnover (Gross) in the
Statement of Profit and Loss.
(b) Excise duty appearing under other expenses represents (i) the
difference between excise duty included in the closing stock and that
in opening stock of manufactured finished goods Rs.2.8 million net
credit (2011: Rs.7.4 million net debit) and (ii) the excise duty on the
free sample, scrap etc. Rs.2.1 million (2011: Rs. 8.7 million).
4.DERIVATIVE INSTRUMENTS:
The Company has entered into foreign currency forward contracts to
hedge its risks associated with foreign currency fluctuations relating
to firm commitments and highly probable forecast transactions. The
outstanding forward exchange contracts entered against the same and
other future probable commitments and the foreign currency exposures as
at December 31, 2012 are as follows:
5.EMPLOYEE BENEFITS: POST-EMPLOYMENT BENEFIT PLANS
Defined contribution plans
The Company makes contributions, determined as a specified percentage
of employee salaries, in respect of qualifying employees towards
Provident Fund, which is a defined contribution plan. The Company has
no obligations other than to make the specified contributions. The
contributions are charged to the Statement of Profit and Loss as they
accrue. The amount recognized as an expense towards contribution to
Provident Fund for the year aggregated to Rs.39.5 million (December
2011: Rs.35.9 million) and contribution to Superannuation Fund for the
year aggregated to Rs.18.4 million (December 2011: Rs.14.2 million).
Defined benefit plans
The Company has defined benefit plans that provide gratuity benefit.
The gratuity plan entitles an employee, who has rendered atleast five
years of continuous service, to receive one-half month''s salary for
each year of completed service at the time of retirement/exit. The
scheme is funded by the plan assets.
6.dues to micro, small and medium enterprises
Under the Micro, Small and Medium Enterprises Development Act, 2006,
(MSMED) which came into force from October 2, 2006, certain disclosures
are required to be made relating to Micro, Small and Medium
enterprises. On the basis of the information and records available with
the management, there are no outstanding dues to the Micro and Small
enterprises as defined in the Micro, Small and Medium Enterprises
Development Act, 2006.
7 Consequent to the notification of Revised Schedule VI under the Act,
the financial statements for the year ended December 31, 2012 are
prepared as per Revised Schedule VI. Accordingly, the previous year
figures have also been reclassified to conform to this year''s
classification. The adoption of Revised Schedule VI for previous year
figures does not impact recognition and measurement principles followed
for preparation of financial statements.
Dec 31, 2011
1 Share Capital:
(a) Out of the total subscribed and paid-up capital,
(i) 71,250 Equity Shares of Rs. 10 each are allotted as fully paid-up
pursuant to contracts without payment having been received in cash.
(ii) 4,523,590 Equity Shares of Rs. 10 each were allotted as fully
paid-up by way of bonus shares by Capitalisation from Securities
Premium Account.
(b) The total number of shares held by the Holding Company FAG
Kugelfischer GmbH, Germany are 8,529,183.
2 Fixed Assets:
(a) (i) Land, Buildings and Roads were revalued as at December 31,1985
at depreciated market value on the basis of valuation made by a
Government Registered Valuer. The revalued amounts were revised during
the year ended December 31,1987 by the said Valuer based on certain
information provided by the Company. The indices, if any, used are not
stated in the valuation. The amounts added on revaluation after the
aforesaid revision are as under:
(ii) Depreciation on the increase in the value of fixed assets due to
revaluation is charged to the Revaluation Reserve. Consequently, the
depreciation charge for the year shown in the Profit and Loss Account
is after deducting an amount of Rs. 0.6 million (2010: Rs. 0.6
million), representing depreciation on the increase due to revaluation
of Buildings and Roads transferred from the Revaluation Reserve.
(b) Buildings and Roads include Rs. 250, being cost of five ordinary
shares of Rs. 50 each of Nariman Bhavan Premises Co-operative Society
Limited and Rs. 500 being cost of ten ordinary shares of Rs. 50 each of
Parekh Market Premises Co-operative Society Limited, which entitle the
Company to real estate.
(c) Capital work-in-progress includes fees for technical services for
Capital project Rs. 26.1 million (2010: Rs. 10.8 million) and
allocation of manufacturing & other expenses Rs. 28.7 million (2010:
Rs. Nil).
3 Loans and Advances include:
(i) Unsecured Loan Rs. 38.5 million to FAG Roller Bearings Pvt. Ltd.
(2010: Rs. 38.5 million), an Associate Company.
(ii) Secured Loan Rs. 450.0 million to INA Bearings India Pvt. Ltd. an
Associate Company (2010: Rs. 450.0 million). Secured by way of
hypothecation of plant & machinery.
(iii) Amount due from Directors of the Company Rs. 1.0 million (2010:
Rs. Nil). Maximum amount due from Directors of the Company at any time
during the year Rs. 1.0 million (2010: Rs. 0.4 million).
b) Consultancy Fee and Professional Charges for the services rendered
by the Chairman and Independent Director Rs. 1.6 million (2010: Rs. 1.1
million).
c) Pursuant to provisions of Section 309(2) of the Companies Act, 1956
Director's sitting fee was paid in 2011 Rs. 0.6 million (2010: Rs. 0.3
million).
** Excludes the accrual for gratuity as it is funded to FAG Bearings
India Ltd. Employees' Gratuity Fund on the basis of an actuarial
valuation for the Company as a whole.
4 Contingent liabilities not provided for in respect of:
Claims against the Company not acknowledged as debts:
a) Employees and ex-employees related matters:
- Matters pending in Labour Court / Civil Court / High Court for
reinstatement of service / recovery of salary Rs. 96.2 million (2010:
Rs. 85.9 million);
- Applicability of provident fund on certain benefits to employees Rs.
155.9 million (2010: Rs. 125.8 million);
- Demand for discontinuing of contract system and for differential
wages Rs. 83.0 million (2010: Rs. 73.4 million);
- Applicability of Employees State Insurance on certain benefits to
employees etc. Rs. 6.0 million (2010: Rs. 5.2 million).
b) Letters of credit discounted Rs. Nil (2010: Rs. 25.5 million).
c) Sales Tax:
For non receipt of C Forms and rejection of Company's claim of certain
sales as exempt sales in respect of assessment years 2003, 2004,
2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 Rs. 22.8 million (2010:
Rs. 16.1 million).
d) Excise & Service Tax:
Excise
i) In respect of matters decided against the Company, for which the
Company is in appeal with higher authorities Rs. 0.6 million (2010: Rs.
11.9 million).
Service Tax
ii) In respect of matters where the Company has received favourable
orders / partial relief from the First Appellate authorities but the
Central Excise and Customs Department is pursuing further with higher
Appellate authorities (excluding the matters if not ultimately allowed,
would be allowed in the following assessment years) Rs. 1.8 million
(2010: Rs. 2.4 million).
e) Income Tax:
i) In respect of matters decided against the Company, for which the
Company is in appeal with higher authorities Rs. 96.8 million (2010:
Rs. 137.7 million).
ii) In respect of matters where the Company has received favourable
orders / partial relief from the First Appellate authorities but the
Income Tax Department is pursuing further with higher Appellate
authorities (excluding the matters if not ultimately allowed, would be
allowed in the following assessment years) Rs. 151.8 million (2010: Rs.
202.2 million).
Brackets denote previous year's figures.
* Closing stock is net of scrapped / reworked items and shortages /
excesses.
$$ For some of these items purchased for sale, assembly/ minor
processing by outside parties is carried out. These items are
considered as traded items. As the components involved are dissimilar
in nature it is not practicable to disclose quantitative information in
respect of these products.
Brackets denote previous year's figures.
** Installed capacity is as certified by the management on which the
auditors have placed reliance without verification, being a technical
matter.
# Includes bearings partially processed in house are considered
manufactured products in accordance with The Central Excise Act, 1944.
*** Under a notification dated July 25, 1991 issued by the Ministry of
Industry, the Company's industrial undertaking is exempt from the
licensing provisions of the Industries (Development and Regulation) Act,
1951. Accordingly, the requirement concerning disclosure of licensed
capacity is not applicable.
$$ For some of these items purchased for sale, assembly/minor
processing by outside parties is carried out. These items are
considered as traded items. /As the components involved are dissimilar
in nature it is not practicable to disclose quantitative information in
respect of these products.
The consumption figures shown above have been ascertained on the basis
of materials consumed and after considering excesses and shortages
ascertained on physical count.
* Excludes raw materials supplied by the Company to the outside parties
for manufacture of components. Such components are considered as
consumed when issued for production.
5 Spare parts and components consumed:
Spare parts and components consumed referred to in para4-D (c) Part II
of Schedule VI to the Companies Act, 1956, are assumed to be those
incorporated in goods produced and not those used for the maintenance of
plant and machinery.
15 Research and Development expenses under the respective heads
aggregate to Rs. 61.5 million (2010: Rs. 37.6 million) including of
capital nature Rs. 2.9 million (2010: Rs. 2.7 million).
6 Exchange differences of Rs. 1.3 million (Net credit) [2010: Rs.
112.1 million (Net debit)] on revenue account have been
appropriately recognised in the Profit and Loss Account.
7 The tax year for the Company being the year ending March 31, 2012,
the provision for taxation for the year is the aggregate of the provision
made for the three months ended March 31,2011 and the provision based
on the figures for the remaining nine months up to December 31, 2011 the
ultimate tax liability of which will be determined on the basis of the
figures for the period April 1,2011 to March 31,2012.
The Company's international transactions with associated enterprises
are at arm's length as per the independent accountant's report for the
year ended March 31, 2011. The Company is in the process of updating
the documentation for the international transactions entered into with
the associated enterprises during the period subsequent to March 31,
2011. Management believes that the Company's international transactions
with associated enterprises post March 31, 2011 continue to be at arm's
length and that the transfer pricing legislation will not have any
impact on the financial statements particularly on the amount of the
tax expense for the year and the amount of the provision for taxation at
the year end.
Domestic geographical segment includes certain assets which are common
to both the geographical segment (i.e. Domestic and Export).
Un-allocable Corporate Assets include Investments and other
un-allocable assets.
8 A) Disclosure in respect of assets taken on lease:
Operating Leases
The Company has entered into rent agreement for equipment and leave and
license agreements for certain premises (along with furniture and
fixtures in certain cases) including godowns.
1. (i) Linder certain agreements, refundable interest free deposits
have been given.
(ii) The agreements
- contain renewal clause
- contain clause for restrictions on sub leasing.
Finance Lease
No asset has been taken on finance lease.
B) Disclosure in respect of assets given on lease:
Operating Leases
The Company has entered into lease agreement for certain portion of its
factory and office premises. The said agreement does not provide for
increase in rent during the tenure of the agreement and contains renewal
clause. The lessee is entitled to terminate the lease by giving 3
months notice without assigning any reason. The Company may terminate
the lease by giving 3 months notice only on the grounds specified in
the agreement.
9 Related Party disclosures as required under AS-18 are given below:
1. Name and nature of relationship of the related party where control
exists:
FAG Kugelfischer GmbH, Germany: Holding Company holds 8,529,183 equity
shares i.e. 51.33% of the equity share capital as at the year end. The
ultimate control lies with INA Holding GmbH & Co. KG, Germany
(formerly INA Holding Schaeffler KG, Germany) ÃSchaeffler Group.
2. Names of the Related Parties having transactions with the Company
during the year.
2011 2010
a) Holding Company a) Holding Company
FAG Kugelfischer GmbH, Germany FAG Kugelfischer GmbH, Germany
b) Fellow Subsidiary /
Associate Companies b) Fellow Subsidiary /
Associate Companies
Schaeffler Australia Pty. Ltd.,
Australia Schaeffler Australia Pty.Ltd.,
Australia
Schaeffler Brasil Ltda, Brazil
Schaeffler Brasil Ltda, Brazil
Schaeffler (China) Co. Ltd.,
China Schaeffler (China) Co. Ltd.,
China
Schaeffler Holding (China)
Co. Ltd., China Schaeffler Holding (China)
Co. Ltd., China
SchaefflerTrading (Shanghai)
Co. Ltd., China Schaeffler Trading
(Shanghai) Co. Ltd., China
Schaeffler Technologies GmbH
& Co. KG, Germany Schaeffler (Ningxia) Co.
Ltd., China
Schaeffler Tech. AG &Co. KG,
Germany Schaeffler KG and its successor
Schaeffler
Schaeffler AG, Germany
Technologies GmbH & Co. KG,
Germany
Schaeffler Automotive
Aftermarket GmbH &
Schaeffler Automotive
Aftermarket GmbH &
Co. oHG, Germany Co. oHG, Germany
FAG Industrial Services GmbH,
Germany FAG Industrial Services GmbH,
Germany
WPB Water Pump Bearing GmbH
& Co. KG, WPB Water Pump Bearing GmbH
& Co. KG,
Germany Germany
FAG Magyarorszag Ipary KPT,
Hungary FAG Magyarorszag Ipary KFT,
Hungary
Schaeffler Hong Kong
Company Ltd.,
Hong Kong Schaeffler Hong Kong
Company Ltd., Hong Kong
INA Bearings India
Private Ltd., India INA Bearings India
Private Ltd., India
FAG Roller Bearings
Private Ltd., India FAG Roller Bearings
Private Ltd., India
LuK India Private Ltd., India LuK India Private Ltd., India
Schaeffler Bearings Indonesia,
PT, Indonesia Schaeffler Bearings Indonesia,
PT, Indonesia
Schaeffler Japan Co. Ltd.,
Japan Schaeffler Japan Co. Ltd.,
Japan
Schaeffler Korea Corporation,
Korea Schaeffler Korea Corporation,
Korea
Schaeffler Mexico, S. de
R.L. de C.V., Mexico Schaeffler Nederland B.V.,
Nederland
Schaeffler Nederland B.V.,
Nederland Schaeffler Portugal S.A.,
Portugal
Schaeffler Portugal S.A.,
Portugal Schaeffler Philippines Inc.,
Philippines
Schaeffler Philippines Inc.,
Philippines SC Schaeffler Romania S.R.L.,
Romania
SC Schaeffler Romania S.R.L.,
Romania Schaeffler (Singapore) Pte.
Ltd.,Singapore
Schaeffler (Singapore) Pte.
Ltd., Singapore Schaeffler South Africa
(Pty.) Ltd., South Africa
Hydrel GmbH, Switzerland Schaeffler (Thailand) Co.
Ltd., Thailand
Schaeffler South Africa
(Pty.) Ltd. South Africa Schaeffler (UK) Limited
Schaeffler (Thailand) Co.
Ltd., Thailand The Barden Corporation, UK
The Barden Corporation, UK The Barden Corporation, USA
The Barden Corporation, USA Schaeffler Group USA Inc.
Schaeffler Group USA Inc. Schaeffler Vietnam Co. Ltd.,
Vietnam
Schaeffler Vietnam Co. Ltd.,
Vietnam
c) Key Management Personnel c) Key Management Personnel
Mr. Rajendra Anandpara, Managing Director Mr. Rajendra Anandpara,
Managing Director
10 Disclosure under Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006:
As per the information available with the Company and as certified by
the management, there are no dues outstanding including interest as on
December 31, 2011 to Small and Micro Enterprises as defined under
Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
11 a) Excise duty paid and collected from customers is shown
separately and deducted from the Sales turnover (Gross) in the Profit
and Loss Account.
b) Excise duty appearing under Manufacturing and Other expenses
(Schedule 13) represents (i) the difference between excise duty
included in the closing stock and that in opening stock of manufactured
finished goods Rs. 7.4 million Net Debit (2010: Rs. 10.7 million Net
debit) and (ii) the excise duty on the free sample, scrap etc. Rs. 8.7
million (2010: Rs. 1.7 million).
12 Prior period adjustments represent expenses arising on account of
Sales Tax / VAT liabilities for earlier years, Rs. Nil (2010: Rs. 25.6
million).
13 Provision for warranty:
Disclosures pursuant to Accounting Standard 29.
14 Previous year's figures have been audited by a firm of Chartered
Accountants other than B S R & Co.
Dec 31, 2010
1) Share capital:
(a) Out of the total subscribed and paid-up capital,
(i) 71,250 Equity Shares of Rs. 10 each are allotted as fully paid-up
pursuant to contracts without paymenthavingbeen received in cash.
(ii) 4,523,590 Equity Shares of Rs. 10 each were allotted as fully
paid-up by way of bonus shares by Capitalisation from Securities
Premium Account.
(b) The total numberof shares held by the HoldingCompany FAG
KugelfischerGmbH, Germany are 8,529,183.
(ii) Depreciation on the increase in the value of fixed assets due to
revaluation is charged to the Revaluation Reserve. Consequently, the
depreciation charge for the year shown in the Profit and Loss Account
is after deducting an amount of Rs. 0.6 million (2009: Rs. 0.6
million), representing depreciation on the increase due to revaluation
of Buildings and Roads transferred from the Revaluation Reserve.
(b) Buildings and Roads include Rs. 250, being cost of five ordinary
shares of Rs. 50 each of Nariman Bhavan Premises Co-operative Society
Limited and Rs. 500 being cost of ten ordinary shares of Rs. 50 each of
Parekh Market Premises Co-operative Society Limited, which entitle the
Company to real estate.
(c) Capital work-in-progress includes fees for technical services for
Capital project Rs. 10.8 million (2009: Rs. Nil).
2) Loans and advances include:
(i) Unsecured loan Rs. 38.5 million to FAG Roller Bearings Pvt. Ltd. an
associate Company (2009: Rs. 38.5 million).
(ii) Secured loan Rs. 450.0 million to INA Bearings India Pvt. Ltd. an
associate Company (2009: Rs. 450.0 million).
3) Manufacturingand other expenses:
(a) Outside processing charges incurred duringtheyearare included in:
(i) Raw materials and components consumed Rs. 257.3 million (2009: Rs.
246.9 million). (ii) Stores, spares and tools consumed Rs. 2.8 million
(2009: Rs. 2.2 million).
(b) Repairs to machinery exclude spares consumed Rs. 28.6 million
(2009: Rs. 22.4 million) and payments to and provisions for employees
Rs. 38.2 million (2009: Rs. 32.5 million) though related thereto.
(c) (i) Managerial remuneration fortheyear is Rs. 8.7 million (2009:
Rs. 8.7 million).
4) Contingent liabilities not provided for in respect of:
a) Claims against the Company not acknowledged as debts: i) Employees
and ex-employees related matters:
- Matters pending in Labour Court / Civil Court / High Court for
reinstatement of service / recovery of salary Rs. 85.9 million (2009:
Rs. 79.8 million);
- Applicability of provident fund on certain benefits to employees Rs.
125.8 million (2009: Rs. 100.1 million);
- Demand for discontinuing of contract system and for differential
wages Rs. 73.4 million (2009: Rs. 64.4 million);
- Applicability of Employees State Insurance on certain benefits to
employees etc. Rs. 5.2 million (2009: Rs. 4.5 million).
ii) Letters of Credit discounted Rs. 25.5 million (2009: Rs. 17.4
million).
b) Sales tax:
i) For interest on tax paid under the Amnesty Scheme and for non
receipt of C Forms in respect of assessment years 1995-96 to 2002 Rs.
Nil (2009: Rs. 10.3 million).
ii) For non receipt of C Forms and rejection of Companys claim of
certain sales as exempt sales in respect of assessment years 2003,
2004, 2005-06 and 2006-07 Rs. 16.1 million (2009: Rs. 105.2 million).
c) Excise & Service Tax:
Excise Duty
(i) In respect of matters decided against the Company, for which the
Company is in appeal with higher authorities Rs. 11.9 million (2009:
Rs. 29.2 million).
Service Tax
(ii) In respect of matters decided againstthe Company, for which the
Company is in appeal with higher authorities Rs. Nil (2009: Rs. 60.6
million).
(iii) In respect of matters where the Company has received favourable
orders / partial relief from the First Appellate authorities but the
Central Excise and Customs Department is pursuing further with higher
Appellate authorities (excluding the matters if not ultimately allowed,
would be allowed in the followingassessmentyears) Rs. 2.4 million
(2009: Rs. 0.9 million).
d) IncomeTax:
i) In respect of matters decided againstthe Company, for which the
Company is in appeal with higher authorities Rs. 137.7 million (2009:
Rs. 48.1 million).
ii) In respect of matters where the Company has received favourable
orders / partial relief from the First Appellate authorities but the
Income Tax Department is pursuing further with higher Appellate
authorities (excluding the matters if not ultimately allowed, would be
allowed in the following assessmentyears) Rs. 202.2 million (2009: Rs.
202.2 million).
Future ultimate outflow of resources embodying economic effect in
respect of matters stated above is uncertain as it depends on the final
outcome of judgements / decisions on the matters involved and no effect
has been taken of these matters in deciding the liabilities for the
subsequent years with similar facts.
5) Spare parts and components consumed:
Spare parts and components consumed referred to in para 4-D (c) Part II
of Schedule VI to the Companies Act, 1956, are assumed to be those
incorporated in goods produced and not those used for the maintenance
of plantand machinery.
6) Research and Development expenses under the respective heads
aggregate to Rs. 37.6 million (2009: Rs. 26.3 million) includingof
capital nature Rs. 2.7 million (2009: Rs. 0.1 million).
7) Exchange differences of Rs.112.1 million (Net debit) [2009: Rs. 120.7
million (Net credit)] on revenue account have been appropriately
recognised in the Profitand Loss Account.
8) The tax year for the Company being the year ending March 31, 2011,
the provision for taxation for the year is the aggregate of the
provision made for the three months ended March 31,2010 and the
provision based on the figures for the remaining nine months upto
December 31,2010 the ultimate tax liability of which will be determined
on the basis of the figures forthe period April 1,2010 to March
31,2011.
9) Segment reporting:
The business of the Company falls under a single segment i.e.
manufacture and sale of "Ball/Roller Bearings and related components"
forthe purpose of Accounting Standard (AS -17).
10) Related Party disclosures as required under AS-18 are given below:
1. Name and nature of relationship of the related party where control
exists:
FAG Kugelfischer GmbH, Germany. Holding Company holds 8,529,183 equity
shares i.e. 51.33% of the equity share capital as at the year end. The
ultimate control lies with INA Holding GmbH & Co. KG, Germany (formerly
INA Holding Schaeffler KG, Germany)-SchaefflerGroup.
11) Disclosure under Micro, Smalt and Medium Enterprises Development
(MSMED) Act, 2006:
As per the information available with the Company and as certified by
the management, there are no dues outstanding including interest as on
December 31, 2010 to Small and Micro enterprises as defined under
Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
12) (a) Excise duty paid and collected from customers is shown
separately and deducted from the sales turnover (Gross) in the
ProfitandLoss Account.
(b) Excise duty appearing under manufacturing and other expenses
(Schedule 13) represents (i) the difference between excise duty
included in the closing stock and that in opening stock of manufactured
finished goods Rs. 10.7 million Net debit (2009: Rs. 19.0 million Net
credit) and (ii) the excise duty on the free samples, scrap etc. Rs.
1.7 million (2009: Rs. 2.8 million).
13) Prior period adjustments represent expenses arising on account of
Sales Tax / VAT liabilities for earlieryears, Rs. 25.6 million (2009:
Reversal service Income Rs. 32.1 million and expense on market support
fees Rs. 83.1 million).
14) Previous years figures have been regrouped, wherever necessary, to
conform to the current years classifications.
Dec 31, 2009
1) Share capital:
(a) Out of the total subscribed and paid-up capital,
(b> 71,250 Equity Shares of Rs. 10 each are allotted as fully paid-up
pursuant to contracts without payment having been received in cash.
(ii) 4,5 23,590 Equity Shares of Rs. 10 each were allotted as fully
paid-up by way of bonus shares by Capitalization from Securities
Premium Account.
(b) The total number of shares held by the Holding Company FAG
Kugelfischer GmbH, Germany are 8,529,183.
2) Fixed assets:
(ii) Depreciation on the increase in the value of fixed assets due to
revaluation is charged to the Revaluation Reserve. Consequently, the
depreciation charge for the year shown in the Profit and Loss Account
is after deducting an amount of Rs. 0.6 million (2008: Rs.0.6 million),
representing depreciation on the increase due to revaluation of
buildings and roads transferred from the Revaluation Reserve.
(b) Buildings and roads include Rs. 250, being cost of five ordinary
shares of Rs. 50 each of Nariman Bhavan Premises Co-operative Society
Limited and Rs. 500 being cost of ten ordinary shares of Rs. 50 each of
Parekh Market Premises Co-operative Society Limited, which entitle the
Company to real estate.
3) Loans and advances include:
(i) Unsecured Loan Rs. 38.5 million to FAG Roller Bearings Pvt. Ltd.
(2008: Rs. 38.5 million) and INA Bearings India Pvt. Ltd. Rs. Nil
(2008:22.5 million), associate companies.
(ii) Secured Loan Rs. 450.0 million to INA Bearings India Pvt. Ltd. an
associate company (2008: Rs. Nil).
4) Manufacturing and other expenses:
(a) Outside processing charges incurred during the year are included
in:
(i) Raw materials and components consumed Rs. 246.9 million (2008: Rs.
282.6 million). (ii) Stores, spares and tools consumed Rs. 2.2 million
(2008: Rs. 2.6 million).
(b) Repairs to machinery exclude spares consumed Rs. 22.4 million
(2008: Rs. 26.4 million) and payments to and provisions for employees
Rs. 32.5 million (2008: Rs. 35.6 million) though related thereto.
(c) (i) Managerial remuneration for the year is Rs. 8.7 million* (2008:
Rs. 8.6 million).
6) Contingent liabilities not provided for in respect of:
a) Claims against the Company not acknowledged as debts: i) Employees
and ex-employees related matters:
- Matters pending in Labour Court/Civil Court/High Court for
reinstatement of service/recovery of salary Rs. 79.8 million (2008: Rs.
68.3 million),
- Applicability of provident fund on certain benefits to employees Rs.
100.1 million (2008:Rs. 78.6 million),
- Demand for discontinuing of contract system and for differential
wages Rs. 64.4 million (2008:Rs. 57.1 million),
- Applicability of Employees State Insurance on certain benefits to
employees etc. Rs. 4.5 million (2008: Rs. 3.9 million).
ii) Claims received from holding company Rs. Nil (2008: Rs. 164.2
million).
iii) Letters of Credit discounted Rs. 17.4 million (2008: Rs. 15.5
million).
iv) Others Rs. Nil (2008: Rs. 1.3 million).
b) Sales tax:
i) For interest on tax paid under the Amnesty Scheme and for non
receipt of C Forms in respect of assessment years 1995-96to 2002 Rs.
10.3 million (2008: Rs. 6.5 million).
ii) For non-receipt of C Forms and rejection of Companys claim of
certain sales as exempt sales in respect of assessment years 2003,2004
and 2005-06 Rs.105.2 million (2008: Rs. 106.7 million).
c) Excise & service tax:
Excise duty
i) In respect of matters decided against the Company, for which the
Company is in the process of filing an appeal with higher authorities
Rs. 29.2 million (2008: Rs. Nil).
Service tax
ii) In respect of matters decided against the Company, for which the
Company is in appeal with higher authorities Rs. 60.6 million (2008:
Rs. 54.8 million).
iii) In respect of matters where the Company has received favourable
orders/partial relief from the first appellate authorities but the
central excise and customs department is pursuing further with higher
appellate authorities (excluding the matters if not ultimately allowed,
would be allowed in the following assessment years) Rs. 0.9 million
(2008: Rs. 0.9 million).
d) Income tax:
i) In respect of matters decided against the Company, for which the
Company is in appeal with higher authorities Rs. 48.1 million (2008:
Rs. 34.9 million).
ii) In respect of matters where the Company has received favourable
orders/ partial relief from the first appellate authorities but the
income tax department is pursuing further with higher appellate
authorities (excluding the matters if not ultimately allowed, would be
allowed in the following assessment years) Rs. 202.2 million (2008: Rs.
176.7 million).
Future ultimate outflow of resources embodying economic effect in
respect of matters, stated above is uncertain as it depends on the
final outcome of judgements / decisions on the matters involved and no
effect has been taken of these matters in deciding the liabilities for
the subsequent years with similar facts.
10) Spare parts and components consumed:
Spare parts and components consumed referred to in para 4-D (c) Part II
of Schedule VI to the Companies Act, 1956, are assumed to be those
incorporated in goods produced and not those used for the maintenance
of plant and machinery.
11) Research and Development expenses under the respective heads
aggregate to Rs. 26.3 million (2008 Rs. 31.0 million) including of
capital nature Rs. 0.1 million (2008: Rs. 3.2 million).
12) Exchange differences of Rs. 120.7 million (net credit) [2008: Rs.
42.4 million (net credit)] on revenue account have been appropriately
recognized in the Profitand Loss Account.
13) The tax year for the Company being the year ending March 31, 2010,
the provision for taxation for the year is the aggregate of the
provision made for the three months ended March 31, 2009 and the
provision based on the figures for the remaining nine months upto
December 31, 2009 the ultimate tax liability of which will be
determined on the basis of the figures for the period April 1,2009 to
March 31,2010.
14) Segment reporting:
The business of the Company falls under a single segment i.e.
manufacture and sale of "Ball / Roller Bearings and related components"
forthe purpose of Accounting Standard AS-17.
(B) Disclosure in respect of assets given on lease: Operating leases
The Company has entered into lease agreement for certain portion of its
factory and office premises. The said agreement does not provide for
increase in rent during the tenure of the agreement and contains
renewal clause. The lessee is entitled to terminate the lease by
giving 3 months notice without assigning any reason. The Company may
terminate the lease by giving 3 months notice only on the grounds
specified in the agreement.
15) Related party disclosures as required under AS-18 are given below:
1. Name and nature of relationship of the related party where control
exists:
FAG Kugelfischer GmbH, Germany: Holding Company holds 8,529,183 equity
shares i.e. 51.33% of the equity share capital as at the year end. The
ultimate control lies with INA Holding Schaeffler KG, Germany
(Schaeffler Group).
2. Names of the Related Parties having transactions with the Company
during theyear:
2009 2008
a) Holding Company a) Holding Company
FAG Kugelfischer GmbH, Germany FAG Kugelfischer GmbH, Germany
b) Fellow subsidiary/associate
companies b) Fellow subsidiary/associate companies
Schaeffler Australia Pty.
Ltd., Australia Schaeffler Australia Pty. Ltd., Australia
Schaeffler Brasil Ltda,
Brazil Schaeffler Brasil Ltda, Brazil
Schaeffler Canada Inc.,
Canada Schaeffler Canada Inc., Canada
Schaeffler (China) Co.
Ltd., China Schaeffler (China) Co. Ltd., China
Schaeffler Holding China
Co. Ltd., China Schaeffler Holding China Co. Ltd., China
Schaeffler Trading (Shanghai)
Co. Ltd., China Schaeffler Trading (Shanghai) Co. Ltd.,
China
Schaeffler (Ningxia) Co.
Ltd., China FAG Railway Bearings (Ningxia) Co. Ltd.,
China
Schaeffler KG, Germany Schaeffler KG, Germany
Schaeffler Automotive After
market oHG, Germany Schaeffler Versicherungs-Vermittlungs
GmbH, Germany
FAG Industrial Services
GmbH, Germany HK Autoteile GmbH, Germany
WPB Water Pump Bearing
GmbH & Co. KG, Germany LuK Aftermarket Services oHG, Germany
FAG Magyarorszag Ipary
KFT, Hungary FAG Industrial Services GmbH, Germany
Schaeffler Hong Kong Company
Ltd, Hongkong WPB Water Pump Bearing GmbH & Co.
KG, Germany
INA Bearings India Private
Ltd., India FAG Magyarorszag Ipary KFT, Hungary
FAG Roller Bearings Private
Ltd., India Schaeffler Hong Kong Company Ltd.,
Hongkong
LuK India Private Ltd.,
India INA Bearings India Private Ltd., India
Schaeffler Japan Co. Ltd.,
Japan FAG Roller Bearings Private Ltd., India
Schaeffler Korea Corporation,
Korea LuK India Private Ltd., India
LuK Aftermarket Service,
S.A. de C.V., Mexico Schaeffler Japan Co. Ltd., Japan
Schaeffler Nederland B.V.,
Nederland Schaeffler Korea Corporation, Korea
Schaeffler Portugal S.A.,
Portugal LuK Aftermarket Service, S.A. de
C.V., Mexico
Schaeffler (Singapore) Pte.
Ltd., Singapore Schaeffler (Singapore) Pte. Ltd.,
Singapore
Schaeffler South Africa
(Pty.) Ltd., South Africa The Barden Corporation, UK
Schaeffler (Thailand) Co.
Ltd., Thailand The Barden Corporation, USA
The Barden Corporation, UK Schaeffler Group USA Inc.
The Barden Corporation, USA Schaeffler Vietnam Co. Ltd., Vietnam
Schaeffler Group USA Inc.
Schaeffler Vietnam Co. Ltd.,
Vietnam
c) Key management personnel c) Key management personnel
Mr. Biswarup Dhar, Managing
Director Mr. Biswarup Dhar, Managing Director
Mr. Rajendra Anandpara,
Managing Director
16) Disclosure under Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006:
As perthe information available with the Company and as certified by
the management, there are no dues outstanding including interest as on
December 31, 2009 to Small and Micro enterprises as defined under
Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
17) (a) Excise duty paid and collected from customers is shown
separately and deducted from the sales turnover (Gross) in the profit
and loss account.
(b) Excise duty appearing under manufacturing and other expenses
(Schedule 13) represents (i) the difference between excise duty
included in the closing stock and that in opening stock of manufactured
finished goods Rs. 19.0 million net credit (2008: Rs. 19.5 million) and
(ii) the excise duty on the free samples, scrap etc. Rs. 2.8 million
(2008: Rs. 0.3 million).
18) Prior period adjustments represent expenses arising on account of
reversal of service income Rs. 32.1 million (2008: Rs. 52.5 million)
and expenses on account of market support fees Rs. 83.1 million (2008:
Reversal of expenses for outside services Rs. 8.7 million)
19) Previous years figures have been regrouped, wherever necessary, to
conform to the current years classifications.
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Schaeffler India Ltd. Corporate Announcements
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