Notes to Accounts of Igarashi Motors India Ltd.
Mar 31, 2022
Rights, preferences and restrictions attached to equity shares
The Company has a single class of equity shares of par value of '' 10/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees and all shares issued carry equal rights for dividend declared. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Terms attached to stock options granted are described in Note 19 regarding share-based payments.
g In the period of five years immediately preceding March 31, 2022
i) The Company has allotted 866,604 fully paid up equity shares of face value '' 10/- each during the year ended 31 March 2019 pursuant to a bonus issue approved by the shareholders through postal ballot. Record date fixed by the Board of Directors was 28 September 2018. The bonus shares were issued by utilization of securities premium.
ii) The Company has not allotted any other equity shares as fully paid up without payment being received in cash.
17 OTHER EQUITYA.i Securities premium
Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies Act, 2013
The general reserve is a free reserve which is used from time to time to transfer profits from retained earnings for appropriation purposes.
a Equity investments through OCI
The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the FVOCI equity investments within equity. The Company transfers amounts therefrom to retained earnings when the relevant equity securities are derecognised.
b Effective portion of cash flow hedges
This comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred.
c Remeasurement of defined benefit liability
Remeasurements of defined benefit liability (asset) comprises actuarial gains and losses and return on plan assets (excluding interest income).
The Company''s policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. Management monitors the return on capital, as well as the level of dividends to equity shareholders.
19 SHARE-BASED PAYMENTSA. Description of share-based payment arrangements
At 31 March 2022, the Company has the following share-based payment arrangements:
Employees Stock Option Scheme - 2017 (equity settled)
The scheme was approved by a resolution of the Board of Directors of Igarashi Motors India Limited duly passed on 11 May 2017 and by a special resolution of shareholders on 2 August 2017. The scheme provides for issuance of 600,000 options, convertible to equivalent number of equity shares of Face Value of ?10 each, to the eligible employees (key management personnel, employees of the Holding Company and other employees of the Company). The exercise price shall be '' 650 per option or such other price as may be fixed by the Board or Committee. The options will vest over a period of 2 years, with 50% vesting each year. The key terms and conditions related to the grants under these plans are as follows; all options are to be settled by the delivery of shares.
There are no options outstanding at 31 March 2022 (31 March 2021: exercise price ? 650 per share and weighted average remaining contractual life of 0.5 years).
D. Expense recognised in statement of profit and loss
The Company has granted 507,600 options (468,700 options to its employees and 38,900 stock options to the employees of the Holding Company) under its stock option plan during the year ended 31 March 2019. Accordingly, the Company has recorded net employee benefit expenses amounting to Nil for the year ended 31 March 2022 (? 40.54 lakhs for the year ended 31 March 2021) based on the fair value of the options granted. Also see Note 30.
Term loan from banks are secured by first pari passu charge on the entire moveable and immoveable fixed assets of the Company, both present and future; and pari passu second charge on the current assets of the Company, both present and future.
Working capital facilities (Packing credit - I and packing credit - II) are secured by first pari passu charge on the entire current assets of the Company, both present and future; and pari passu second charge on the movable fixed assets of the Company, both present and future.
For details about the related employee benefit expenses, see Note 30 The Company operates the following post-employment defined benefit plans:
The Company has a defined benefit gratuity plan in India (the Plan), governed by the Payment of Gratuity Act, 1972. The Plan entitles an employee, who has rendered at least five years of continuous service, to gratuity at the rate of fifteen days wages for every completed year of service or part thereof in excess of six months, based on the rate of wages last drawn by the employee at the time of retirement, death or termination of employment. Liabilities for the same are determined through an actuarial valuation as at the reporting dates using the âprojected unit cost methodâ.
These defined benefit plans expose the Company to actuarial risks, such as longevity risk, interest rate risk and market (investment) risk.
The Company provides the gratuity benefit through annual contribution to Life Insurance Corporation of India (LIC)
25 OPERATING SEGMENTS A Basis for segmentation
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments'' operating results are reviewed regularly by the Company''s Managing Director (MD) to make decisions about resources to be allocated to the segments and assess their performance.
The Company has determined two reporting segments viz. automotive and non-automotive based on the nature of products, risk and returns and information reviewed by the Company''s Chief Operating Decision Maker. The Company''s operations are entirely domiciled in India and as such all its non-current assets are located in India.
B Information about reportable segments
Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit (before tax), as included in the internal management reports that are reviewed by the Company''s MD. Segment profit is used to measure performance as managament believes that such information is most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on an arm''s length basis.
The Company has exposure to the following risks arising from financial instruments:
- credit risk (see C.ii);
- liquidity risk (see C.iii); and
- market risk (see C.iv)
i. Risk management framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors along with the top management are responsible for developing and monitoring the Company''s risk management policies.
The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers; loans and investments.
The carrying amounts of financial assets represent the maximum credit risk exposure.
Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of the Company''s trade receivables, certain loans and advances and other financial assets.
a. Trade receivables
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Given that the macro economic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue. Further, management believes that the unimpaired amounts that are past due by more than 90 days are still collectible in full except to the extent already provided, based on historical payment behavior and extensive analysis of customer credit risk. The impairment loss at the reporting dates related to several customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances, mainly due to economic circumstances.
The Company determines credit risk based on a variety of factors including but not limited to the age of the receivables, cash flow projections and available press information about customers. In order to calculate the loss allowance, loss rates are calculated using a ''roll rate'' method based on the probability of a receivable progressing through successive stages of delinquency through write-off. Roll rates are calculated separately for exposures in different stages of delinquency primarily determined based on the time period for which they are past due.
More than 57% of the Company''s customers are related parties who have been transacting with the Company for over five years, and none of these customers'' balances have been credit-impaired in the past. In monitoring customer credit risk, customers are grouped according to their credit characteristics, and their geographic location and existence of previous financial difficulties.
b. Cash and bank balances (includes amounts classified under other bank balances and deposits and other receivable)
The Company holds cash and bank balances of '' 662.97 lakhs as at 31 March 2022 (31 March 2021: '' 1,347.52 lakhs). The credit worthiness of such banks and financial institutions are evaluated by the management on an ongoing basis and is considered to be good.
c. Security deposits
This balance is primarily constituted by deposit given in relation to leasehold premises occupied by the Company for carrying out its operations. The Company does not expect any losses from non-performance by these counter-parties.
d. Advance to employees
This balance is primarily constituted by advances given to the employees. The Company does not expect any losses from non-performance by these counter-parties as the amounts are recoverable by salary deductions.
e. MEIS receivable from Government
This balance is primarily constituted by MEIS scrips and applications pending with authorities. The Company does not expect any losses from non-performance by these counter-parties as the amounts are due from Government.
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation. The Company uses activity-based costing to cost its products and services, which assists it in monitoring cash flow requirements and optimising its cash return on investments.
The Company aims to maintain the level of its cash and cash equivalents and other highly marketable debt investments at an amount in excess of expected cash outflows on financial liabilities (excluding trade payables).
Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates will affect the Companies income or the value of holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters and optimising the return.
The Company is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated.
Company''s risk management policy is to hedge using forward contracts. Hedge exposure is calculated based on highly probable forecast transactions received from each customer. Hedging Strategy on the net exposure is limited to the 75%, 50%, 25% rule as below:
⢠75% coverage of hedge exposure of current year
⢠50% coverage of hedge exposure of next year
⢠25% coverage of hedge exposure of third year
Also, the income tax authorities have disallowed carry forward losses in AY 2013-14, but no demand orders have been raised in the subsequent years. Hence, the Company is unable to determine the amount of obligation with sufficient reliability. Management is of the view that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Company''s financial position and results of operations.
In addition to the above, there are certain claims which the Company receives from time to time in the ordinary course of business for which the amount of obligation cannot be measured with sufficient reliability. Management is of the view that such claims will not have any material adverse effect on the Company''s financial position and result of operations.
Compensation of the Company''s key managerial personnel includes salaries, non-cash benefits and contributions to post-employment defined benefit plan (see Note 30).
* Amount attributable to post employment benefits and compensated absences have not been disclosed as the same cannot be identified distinctly in the actuarial valuation.
All transactions with these related parties are priced on an arm''s length basis and resulting outstanding balances are to be settled in cash within six months of the reporting date. None of the balances are secured.
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.
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.
The above disclosures are provided based on the information available with the Company in respect of the registration status of its vendors/suppliers. (Also refer Note 22)
The Company has entered into transactions with certain related parties during the year ended 31 March 2022. The management believes that all such transactions are in compliance with the provisions of Income-tax Act, 1961 and also confirms that it maintains documentation as prescribed, to prove that the transactions are at arm''s length. Further, management also believes the aforesaid legislation will not have any impact on the standalone financial statements, particularly on the amount of tax expense and that of provision for taxation.
41 The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released the draft rules for the code on 13 November 2020 and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact once the subject rules are notified and will give appropriate impact in the financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
42 EVENTS AFTER THE REPORTING PERIOD
There are no subsequent events that have occurred after the reporting period till the date of approval of these financial statements other than dividend recommended by the Board. (Refer Note 17).
Mar 31, 2018
1. Recent accounting pronouncements
Ministry of Corporate Affairs (âMCAâ) through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new standard and amendments to existing Ind AS standards which the Company has not applied as they are effective for annual periods beginning on or after 1 April 2018:
New Standard Ind AS 115 - Revenue from Contracts with Customers
Ind AS 115, establishes a comprehensive framework for determining whether, how much and when revenue should be recognised. It replaces existing revenue recognition guidance, including Ind AS 18 Revenue, Ind AS 11 Construction Contracts and Guidance Note on Accounting for Real Estate Transactions. Ind AS 115 is effective for annual periods beginning on or after 1 April 2018 and will be applied accordingly.
Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when âcontrolâ of the goods or services underlying the particular performance obligation is transferred to the customer.
The Company plans to apply Ind AS 115 using the cumulative effect method, with the effect of initially applying this standard recognised at the date of initial application (i.e. 1 April 2018) in retained earnings. As a result, the Company will not present relevant individual line items appearing under comparative period presentation.
The Company is in the process of assessing the potential impact of the adoption of Ind AS 115 on accounting policies followed in its financial statements. Accordingly, the quantitative impact of adoption of Ind AS 115 on the financial statements in the period of initial application is not reasonably estimable as at present.
Amendments to the existing standards
Ind AS 21 - The effect of changes in Foreign Exchange rates
The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The Appendix B inserted in Ind AS 21 as an amendment explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The Company has evaluated the effect of this on the financial statements and the impact is expected to be insignificant.
Rights, preferences and restrictions attached to equity shares
The Company has a single class of equity shares of par value of ''10/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees and all shares issued carry equal rights for dividend declared. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Employee stock options
Terms attached to stock options granted to employees are described in note 19 regarding share based payments.
The Company has not issued any shares for consideration other than cash during the period of five years immediately preceding the current year and previous year.
2. Other equity
a. Securities Premium
Securities Premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies Act, 2013.
b. Dividends
The following dividends were paid by the Company.
After the reporting dates the following dividends (excluding dividend distribution tax) were proposed by the directors subject to the approval at the annual general meeting; the dividends have not been recognised as liabilities. Dividends would attract dividend distribution tax when declared or paid.
d. Capital management
The Companyâs policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. Management monitors the return on capital, as well as the level of dividends to equity shareholders.
3. Earnings per share
Basic and diluted earnings per share
The calculations of profit attributable to equity shareholders and weighted average number of equity shares outstanding for purposes of basic and diluted earnings per share calculation are as follows:
4. Share-based payments
At 31 March 2018, the Company has the following share-based payment arrangements:
Employees Stock Option Scheme - 2017
The scheme was approved by a resolution of the Board of Directors of Igarashi Motors India Limited duly passed on May 11, 2017 and by a special resolution of shareholders on August 02, 2017. The scheme provides for issuance of 600,000 options, convertible to equivalent number of equity shares of Face Value of ?10 each, to the eligible employees. The exercise price shall be '' 650 per option or such other price as may be fixed by the Board or Committee. The options will vest over a period of 2 years, with 50% vesting each year. No options have been granted during the year.
B. Secured bank loans
External commercial borrowings are secured by first pari passu charge on the fixed assets of the Company, both present and future; and pari passu second charge on the current assets of the Company, both present and future.
Buyer''s credit are secured by first pari passu charge on the entire fixed assets of the Company, both present and future; and pari passu second charge on the current assets of the Company, both present and future.
Foreign Currency Term Loan was secured by first ranking pari-passu charge on all movable fixed assets of the Company, both present and future, an equitable mortgage over the superstructures constructed by the Company and second ranking pari-passu charge on all the current assets of the Company, both present and future.
For details about the related employee benefit expenses, see Note 30 The Company operates the following post-employment defined benefit plans:
The Company has a defined benefit gratuity plan in India (the Plan), governed by the Payment of Gratuity Act, 1972. The Plan entitles an employee, who has rendered at least five years of continuous service, to gratuity at the rate of fifteen days wages for every completed year of service or part thereof in excess of six months, based on the rate of wages last drawn by the employee at the time of retirement, death or termination of employment. Liabilities for the same are determined through an actuarial valuation as at the reporting dates using the âprojected unit cost methodâ.
These defined benefit plans expose the Company to actuarial risks, such as longevity risk, interest rate risk and market (investment) risk.
A. Reconciliation of the net defined benefit (asset)/ liability
The following table shows a reconciliation from the opening balances to the closing balances for the net defined benefit (asset) liability and its components.
All other financial liabilities are âcurrentâ
The Companyâs exposure to currency and liquidity risk related to above financial liabilities is disclosed in note 35.
25 Operating segments
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses including revenues and expenses that relate to transactions with any of the Companyâs other components, and for which discrete financial information is available. All operating segmentsâ operating results are reviewed regularly by the Companyâs Managing Director (MD) to make decisions about resources to be allocated to the segments and assess the performance.
The Company is engaged in only one business namely manufacture of micro motors and its accessories mainly for the automotive sector. The entityâs chief operating decision maker considers the Company as a whole to make decisions about resources to be allocated to the segment and assess its performance. Accordingly, the Company does not have multiple segments and these financial statements are reflective of the information required by the Ind AS 108 for micro motors segment. The Companyâs operations are entirely domiciled in India and as such all its noncurrent assets are located in India.
A. Geographic information :
The geographic information analyses the Companyâs revenue by the Companyâs country of domicile and other countries. In presenting the geographical information, segment revenue has been determined based on the geographic location of the customers.
The Companyâs operations are entirely carried out of India and as such all its non-current assets are located in India.
5 Financial instruments - Fair values and risk management (contd.)
C. Measurement of fair values
i. Valuation techniques and significant unobservable inputs
The following table shows the valuation techniques used in measuring Level 2 and Level 3 fair values for financial instruments measured at fair value in the balance sheet, as well as the significant unobservable inputs used. Related valuation process are described in Note 2.5
Sensitivity analysis
For the fair values of FVOCI equity securities, reasonably possible changes at the reporting date to one of the significant unobservable inputs, holding other inputs constant, would have the following effects.
6 Financial instruments - Fair values and risk management (contd.)
C. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- credit risk (see C.ii);
- liquidity risk (see C.iii); and
- market risk (see C.iv)
i. Risk management framework
The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The board of directors along with the top management are responsible for developing and monitoring the Companyâs risk management policies.
The Companyâs risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companyâs receivables from customers; loans and investments.
The carrying amounts of financial assets represent the maximum credit risk exposure.
Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of the Companyâs trade receivables, certain loans and advances and other financial assets.
a. Trade receivables
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Given that the macroeconomic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue. Further, management believes that the unimpaired amounts that are past due by more than 90 days are still collectible in full except to the extent already provided, based on historical payment behaviour and extensive analysis of customer credit risk. The impairment loss at the reporting dates related to several customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances, mainly due to economic circumstances.
C. Financial risk management (contd.)
The Company determines credit risk based on a variety of factors including but not limited to the age of the receivables, cash flow projections and available press information about customers. In order to calculate the loss allowance, loss rates are calculated using a âroll rateâ method based on the probability of a receivable progressing through successive stages of delinquency through write-off. Roll rates are calculated separately for exposures in different stages of delinquency primarily determined based on the time period for which they are past due.
More than 85% of the Companyâs customers are related parties who have been transacting with the Company for over five years, and none of these customersâ balances have been credit-impaired in the past. In monitoring customer credit risk, customers are grouped according to their credit characteristics, and their geographic location and existence of previous financial difficulties.
b. Cash and bank balances (includes amounts classified under other bank balances and deposits and other receivable)
The Company holds cash and bank balances of INR 10,638.13 lakhs at 31 March 2018 (31 March 2017: INR 1,025.58 lakhs; 1 April 2016: 12,603.32 lakhs). The credit worthiness of such banks and financial institutions are evaluated by the management on an ongoing basis and is considered to be good.
c. Security deposits
This balance is primarily constituted by deposit given in relation to leasehold premises occupied by the Company for carrying out its operations. The Company does not expect any losses from non-performance by these counter-parties.
d. Advance to employees
This balance is primarily constituted by advances given to the employees. The Company does not expect any losses from non-performance by these counter-parties as the amounts are recoverable by salary deductions.
e. Receivable from forward exchange contracts used for hedging
This balance is primarily constituted by mark to market gains on forward contracts. The Company does not expect any losses from non-performance by these counter-parties as the amounts are due from a scheduled bank which is rated AA , based on CRISIL ratings.
iii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Companyâs reputation. The Company uses activity-based costing to cost its products and services, which assists it in monitoring cash flow requirements and optimising its cash return on investments.
The Company aims to maintain the level of its cash and cash equivalents and other highly marketable debt investments at an amount in excess of expected cash outflows on financial liabilities (excluding trade payables).
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments and exclude the impact of netting agreements:
As disclosed in Note 20, the Company has a secured bank loan that contains a loan covenant. A future breach of covenant may require the Company to repay the loan earlier than indicated in the above table.
7. Financial instruments - Fair values and risk management (contd.)
C. Financial risk management (contd.)
Sensitivity analysis
A reasonably possible strengthening (weakening) of the US dollar against INR at 31 March would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.
b. Hedge accounting
The Company is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated.
â Companyâs risk management policy is to hedge using forward contracts. Hedge exposure is calculated based on highly probable forecast transactions received from each customer. Hedging Strategy on the net exposure is limited to the 75%, 50%, 25% rule as below:"
- 75% coverage of hedge exposure of current year
- 50% coverage of hedge exposure of next year
- 25% coverage of hedge exposure of third year
At 31 March 2018, the Company holds the following instruments to hedge exposures to changes in foreign currency:
At 31 March 2017, the Company holds the following instruments to hedge exposures to changes in foreign currency:
The following table provides a reconciliation by risk category of components of equity and analysis of OCI items, net of tax, resulting from cash flow hedge accounting:
c. Interest rate risk
The Company has only variable rate instruments i.e. external commercial borrowings and buyerâs credit. Exposure to interest rate risk
Cash flow sensitivity analysis for variable rate instruments
A reasonable possible change of 100 basis points (bp) in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
8. Operating leases A. Leases as lessee
The Company has taken factory premises under cancellable operating leases. The leases are for varied periods, which are renewable at the option of the Company.
Finance leases
The company had acquired certain plant and equipment on finance lease which were fully repaid in Oct, 2016. Minimum lease payments and present value of minimum lease payable as on 1 April 2016 in respect of the above finance lease were '' 129.71 lakhs and '' 128.23 lakhs respectively, due within one year.
â n addition to the above, there are certain claims which the Company receives from time to time in the ordinary course of business for with the amount of obligation cannot be measured with sufficient reliability. Management is of the view that such claims will not have any material adverse effect on the Companyâs financial position and result of operations.
38 Related parties
A. Names of related parties and description of relationship
Nature of Relationship Name of the Party
Ultimate Holding Company Igarashi Electric Works Limited, Japan
Holding Company Agile Electric Sub Assembly Private Limited
Fellow subsidiaries Igarashi Electric Works International Limited, Hong Kong
Igarashi Motoren Gmbh, Germany Igarashi Motor Sales USA LLC, USA
Key Managerial Personnel__Mr. P. Mukund, Managing Director_
__Mr. R. Chandrasekaran, Chief financial officer_
Mr. P. Dinakara Babu, Company Secretary
9. Board of Directors of the Company at its meeting held on 27 May 2017 approved the scheme of arrangement (âSchemeâ) facilitating the amalgamation of Agile Electric Sub Assembly Private Limited (âAESPLâ) with the Company under Section 230 read with section 232 and other applicable provisions of the Companies Act, 2013 with the appointed date of 1 April 2017 and/or such date as the National Company Law Tribunal modifies. The Company has received no objection certificate from the stock exchanges on 9 May 2018. The scheme is subject to the approval of the Shareholders, creditors, the National Company Law Tribunal and all other regulatory and necessary approvals.
10 Transfer pricing
The Company has entered into transactions with certain related parties during the year ended 31 March 2018. The management believes that all such transactions are in compliance with the provisions of Income-tax Act, 1961 and also confirms that it maintains documentation as prescribed, to prove that the transactions are at armâs length. Further, management also believes the aforesaid legislation will not have any impact on the standalone financial statements, particularly on the amount of tax expense and that of provision for taxation.
11. Explanation of transition to Ind AS
As stated in Note 2, these are the Companyâs first financial statements prepared in accordance with Ind AS. For the year ended 31 March 2017, the Company had prepared its 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 3 have been applied in preparing these financial statements for the year ended 31 March 2018 including the comparative information for the year ended 31 March 2017 and the opening Ind AS balance sheet on the date of transition i.e. 1 April 2016.
In preparing its Ind AS balance sheet as at 1 April 2016 and in presenting the comparative information for the year ended 31 March 2017, 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 its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
Optional exemptions availed and mandatory exceptions
In preparing these financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions.
12. Explanation of transition to Ind AS (contd.)
A. Optional exemptions availed
a. Property plant and equipment and intangible assets
As per Ind AS 101 an entity may elect to:
(i) measure an item of property, plant and equipment at the date of transition at its fair value and use that fair value as its deemed cost at that date
(ii) use a previous GAAP revaluation of an item of property, plant and equipment at or before the date of transition as deemed cost at the date of the revaluation, provided the revaluation was, at the date of the revaluation, broadly comparable to:
- fair value;
- or cost or depreciated cost under Ind AS adjusted to reflect, for example, changes in a general or specific price index.
The elections under (i) and (ii) above are also available for intangible assets that meets the recognition criteria in Ind AS 38, Intangible Assets, (including reliable measurement of original cost); and criteria in Ind AS 38 for revaluation (including the existence of an active market).
(iii) use carrying values of property, plant and equipment and intangible assets as on the date of transition to Ind AS (which are measured in accordance with previous GAAP and after making adjustments relating to decommissioning liabilities prescribed under Ind AS 101) if there has been no change in its functional currency on the date of transition.
As permitted by Ind AS 101 and as mentioned in (iii) above, the Company has elected to continue with the carrying values under previous GAAP for all the items of property, plant and equipment and intangible assets.
b. Designation of previously recognised financial instruments
â nd AS 101 permits an entity to designate particular equity investments (other than equity investments in subsidiaries, associates and joint arrangements) as at fair value through other comprehensive income (FVOCI) based on facts and circumstances at the date of transition to Ind AS (rather than at initial recognition). Other equity investments are classified at fair value through profit or loss (FVTPL).
The Company has opted to avail this exemption to designate certain equity investments as FVOCI on the date of transition.
B. Mandatory exceptions
a. Estimates
As per Ind AS 101, an entityâs estimates in accordance with Ind AS at the date of transition to Ind AS at the end of the comparative period presented in the entityâs first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any differences in accounting policies.
As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS balance sheet) or at the end of the comparative period (for presenting comparative information as per Ind AS).
The Companyâs estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statements that were not required under the previous GAAP are listed below:
â- Fair valuation of financial instruments carried at FVTOCI
- Impairment of financial assets based on the expected credit loss model
- Determination of discount value for financial instruments carried at amortized costâ
b. Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.
Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortized cost has been done retrospectively except where the same is impracticable.
c. Hedge accounting
Hedge accounting can only be applied prospectively from the transition date to transactions that satisfy the hedge accounting criteria in Ind AS 109, Financial Instruments, at the date of transition. Hedging relationships cannot be designated retrospectively, and the supporting documentation cannot be created retrospectively. As a result, only hedging relationships that satisfied the hedge accounting criteria as on the date of transition are reflected as hedges in the financial statements under Ind AS.
C. Reconciliations
The following reconciliations provides the effect of transition to Ind AS from previous GAAP in accordance with Ind AS 101 - First-time adoption of Ind AS
b. Measurement of financial liabilities
Under previous GAAP, transactions costs relating to borrowings were charged off to the statement of profit and loss as when those were paid. Under Ind AS, at initial recognition, an entity shall measure a financial liability at its fair value after adjusting the transaction costs that are directly attributable to the financial liability. Subsequently the financial liabilities would be measured at amortised cost using the effective interest rate (EIR) method.
c. Remeasurement of the defined benefit liability
Under Ind AS, remeasurement of the defined benefit liability/ (asset) are recognised in other comprehensive income. Under previous GAAP the Company recognised such remeasurements in profit or loss. However, this has no impact on the total comprehensive income and total equity as on 1 April 2016 or as on 31 March 2017.
d. Fair valuation of investments
In accordance with Ind AS, financial assets representing investment in equity shares of entities other than subsidiaries, associates and joint ventures as well as mutual funds have been fair valued. The Company has designated certain investments classified as fair value through profit or loss with certain others designated as at fair value through other comprehensive income as permitted by Ind AS 109. Under the previous GAAP, the application of the relevant accounting standard resulted in all these investments being carried at cost.
e. Hedge accounting
Under the previous GAAP, the Company had adopted the 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. The effective portion of the cost of hedging was taken to hedge reserves directly. Under Ind AS 109, costs relating to hedging are accounted as a part of the other comprehensive income to the extent considered as effective and are aligned to the hedging strategy.
f. Income-tax
Represents (decrease) / increase of deferred tax liability with respect to the above and adjustments for earlier years.
13. There are no subsequent events that have occurred after the reporting period till the date of approval of these financial statements.
Mar 31, 2017
1. Terms / rights / restrictions attached to equity shares
2. The Company has only one class of equity shares having a face value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share.
3. All shares issued carry equal rights for dividend declared by the Company. There are no restrictions attached to any of the shares.
4. The Company has not issued any securities with the right / option to convert the same into equity shares at a later date.
5. The Company has not bought back any shares or issued shares for consideration other than cash or issued bonus shares during the five years immediately preceding 31 March 2017 (Five years immediately preceding 31 March 2016 - Nil)
6. There are no shares reserved for issue under options and contract / commitments for sale of share or disinvestment.
7. The Directors recommend payment of dividend of Rs. 6.61/- (Previous year Rs. 5.50/-) per equity share of Rs. 10/- each on the number of shares outstanding as on the record date.
Terms and conditions of long-term borrowings
8. Secured loans
Terms of repayment
9. External Commercial Borrowing (ECB-I) is repayable in two unequal quarterly installments ending in August 2017.
10. External Commercial Borrowing (ECB-III) is repayable in eleven equal quarterly installments ending in November 2019.
11. Foreign Currency term loan was fully repaid in April 2016.
Nature of security
12. External Commercial Borrowing (ECB-I) is secured by first exclusive charge on the fixed assets of the Company created out of the ECB facility funded by the bank, both present and future, an equitable mortgage over the superstructures constructed by the Company and second ranking pari-passu charge on all the current assets of the Company, both present and future.
13. External Commercial Borrowing (ECB-III) is secured by first ranking pari-passu charge on the entire fixed assets, all right, title, interest, benefit, claims and demand of the Company, both present and future, an equitable mortgage over the superstructures constructed by the Company and second ranking pari-passu charge on all the current assets of the Company, both present and future.
14. Foreign Currency Term Loan was secured by first ranking pari-passu charge on all movable fixed assets of the Company, both present and future, an equitable mortgage over the superstructures constructed by the Company and second ranking pari-passu charge on all the current assets of the Company, both present and future.
15. Unsecured loan
16. Finance lease obligations were fully repaid in September 2016.
17. Impairment of assets
The Company has reviewed the future cash flows on the basis of value-in-use of its assets and has satisfied that the estimated recoverable amount of fixed assets is more than the carrying amount as per the books. Accordingly, no provision for impairment loss is required to be made in these financial statements.
18. Expenditure towards Corporate Social Responsibility (CSR) activities:
19. Amount required to be spent by the Company on CSR related activities for 2016-17 is Rs. 14,607,716/-(Rs. 10,074,350 for 2015-16)
20. The amount recognized as expense in the Statement of Profit & Loss on CSR related activities is Rs. 24,683,731/-, which comprises of:
21. EMPLOYEE BENEFITS
Disclosure of employee benefits pursuant to Accounting Standard (AS) 15 âEmployee Benefitsâ
22. Defined benefit plans and long-term employee benefits
Provision for Gratuity (defined benefit plan) and Leave encashment (Long-term employee benefit) represents provision made as per Actuarial valuation report.
23. General description of the defined benefit plan
The Company operates a funded defined benefit gratuity plan wherein every employee is entitled to a benefit equivalent to fifteen days last drawn salary for each completed year of service, subject to the maximum limit specified under the Payment of Gratuity Act, 1972, as amended from time to time. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.
24. Defined contribution plans
Contribution to provident funds are made to the Regional Provident Fund office. Expenses recognized in the Statement of Profit and Loss is Rs. 7,800,476/- (previous year Rs. 6,921,061/-) Contribution to Employee State Insurance is made to the Employeesâ State Insurance Corporation. Expense recognized in the Statement of Profit and Loss is Rs. 2,930,179/- (previous year Rs. 2,176,616/-)
25. SEGMENT REPORTING PURSUANT TO ACCOUNTING STANDARD (AS) 17
26. The Company is engaged in single segment of production of Micro motors and its accessories mainly for the Automotive sector. Hence disclosure of primary segment under Accounting Standard (AS) 17 âSegment Reportingâ does not arise. The details of secondary segment being âgeographical segmentsâ are given below.
27. DISCLOSURE PURSUANTTOACCOUNTING STANDARD (AS)18 âRELATED PARTYDISCLOSURES
28. Names of related parties and related party relationship
29. Related parties where control exists
30. Igarashi Electric Works Limited, Japan - Ultimate Holding Company
31. Agile Electric Sub Assembly Private Limited - Holding Company
32. Related parties with whom transactions have taken place during the year
33. Igarashi Electric Works Limited, Japan - Ultimate Holding Company
34. Agile Electric Sub Assembly Private Limited - Holding Company
35. Mr P. Mukund, Managing Director - Key Management Personnel
36. Igarashi Electric Works International Ltd, Hong Kong - Fellow Subsidiary
37. Igarashi Motor Sales USA LLC, USA - Fellow Subsidiary
38. Igarashi Motoren Gmbh, Germany - Fellow Subsidiary
39.. DISCLOSURES PURSUANT TO ACCOUNTING STANDARD (AS) 19 âLEASESâ
40. Finance Lease
41. The Company has acquired certain plant and equipment on finance lease. The lease has a primary period which is fixed and non-cancellable. There are no exceptional / restrictive covenants in the lease agreement.
42. Operating Lease
43. The Company has taken certain premises and cars on cancellable operating lease. These lease agreements are normally renewed on expiry. There are no exceptional / restrictive covenants in these lease agreements.
44. The Company had taken certain plant and equipment on non-cancellable operating lease.
During the current year, the operating lease was pre - closed on mutually agreed terms with no further financial liability for the Company. There were no exceptional/ restrictive covenants in the lease agreement.
45. âLease payments recognized as expenses in the Statement of Profit and Loss for the year is Rs. 16,411,976/- (Previous year Rs. 22,619,605/-)â
46. Contingent rent recognized in the Statement of Profit and Loss Rs. Nil (Previous year Rs. Nil)
47. âThe Company had sub-leased the plant and equipment mentioned in (ii) (a) above on non-cancellable operating lease. The sub-lease rental income for the year is Rs. 18,633,830/-(Previous year Rs. 22,360,596/-). There were no exceptional / restrictive covenants in the lease agreement.â
48. Total of future minimum sub-lease rent expected to be received under non-cancellable sub-lease as on 31 March 2017 is Rs. Nil (As at 31 March 2016 is Rs.46,120,704/-).
49. DERIVATIVE CONTRACTS
50. âThe Company is exposed to foreign currency risk principally out of INR appreciating against USD as the majority of its sales and purchases are in USD
In line with the Companyâs risk management policy, the financial risks mainly relating to changes in the exchange rates are hedged by using forward contracts, besides natural hedges. Hedge exposure is calculated based on highly probable forecast transactions received from each customer. Hedging Strategy on the net exposure is limited to the 40%, 30%, 20% rule as below:
- 40% coverage of hedge exposure of current year
- 30% coverage of hedge exposure of next year
- 20% coverage of hedge exposure of third year
Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 âThe Effects of Changes in Foreign Exchange Ratesââ.
All the other derivative contracts, including forward contracts entered into to hedge foreign currency risks on unexecuted firm commitments and highly probable forecast transactions, are recognized in the financial statements at fair value as on the Balance Sheet date. This is as per the cash flow hedge accounting model prescribed in the Guidance Note on Accounting for Derivative Contracts (Issued 2015).
This treatment has resulted in a net gain of Rs. 21,682,163/- arising out of fair valuation of outstanding derivative contracts which has been recognized in Hedging reserve.
The Company has designated the highly probable forecast transactions with respect to sales as hedging instrument and their fair value as at 31 March 2017 is Rs. 344,505,942/-. These transactions are expected to affect the Statement of Profit and Loss in the financial years 2017-18 and 2018-19.
51. The particulars of exposure in foreign currency and derivative contracts entered into for hedging foreign currency exchange risks, which are outstanding as at 31 March 2017 are as under :
52. Figures for the previous year have been regrouped / reclassified wherever necessary.
Mar 31, 2016
1 EMPLOYEE BENEFITS
Disclosure of employee benefits pursuant to Accounting Standard (AS) 15
"Employee Benefits"
(i) Defined benefit plans
Provision for Gratuity (defined benefit plan) and Leave encashment
(Long-term employee benefit) represents provision made as per Actuarial
valuation report.
2 RELATED PARTY DISCLOSURES PURSUANT TO ACCOUNTING STANDARD (AS) 18
(i) Names of related parties and related party relationship
(a) Related parties where control exists
1. Blackstone Capital Partners (Singapore)
VI FDI Three Pte.Limited -
Ultimate Holding Company upto July 29, 2015
2. Igarashi Electric Works Limited, Japan - Ultimate Holding Company
from July 30, 2015
3. Agile Electric Sub Assembly Private Limited - Holding Company
(b) Related parties with whom transactions have taken place during the
year
1. Agile Electric Sub Assembly Private Limited - Holding Company
2. Mr. P. Mukund, Managing Director - Key Management Personnel
3. Igarashi Electric Works Limited, Japan - Ultimate Holding Company
from July 30, 2015
4. Igarashi Electric Works (HK) Ltd, Hong Kong - Fellow Subsidiary
from July 30, 2015
5. Igarashi Electric Works International Ltd, Hong Kong - Fellow
Subsidiary from July 30, 2015
6. Igarashi Motor Sales USA LLC, USA - Fellow Subsidiary from July 30,
2015
7. Igarashi Motoren Gmbh, Germany - Fellow Subsidiary from July 30,
2015
3 DISCLOSURES PURSUANT TO ACCOUNTING STANDARD (AS) 19 "LEASES"
(a) Finance Lease
(i) The Company has acquired certain plant and equipment on finance
lease. The lease has a primary period which is fixed and
non-cancellable. There are no exceptional / restrictive covenants in
the lease agreement.
(ii) The minimum lease payments and the present value of minimum lease
payments in respect of assets acquired under finance lease as at March
31, 2016 is as follows:
(iii) Lease payments recognised as expenses in the Statement of Profit
and Loss for the year is Rs. 22,619,605/- (Previous year Rs.
22,741,067/-)
(iv) Contingent rent recognised in the Statement of Profit and Loss Rs
Nil (Previous year Rs Nil)
(v) The Company has sub-leased the plant and equipment mentioned in
(ii) (a) above on non-cancellable operating lease. The sub-lease rental
income for the year is Rs. 22,360,596 /- (Previous year Rs.
22,360,596/-). There are no exceptional / restrictive covenants in the
lease agreement.
(vi) Total of future minimum sub-lease rent expected to be received
under non-cancellable sub-lease as on March 31, 2016 is Rs.
46,120,704/- (As at March 31, 2015 is Rs. 68,481,300/-)
4 DERIVATIVE CONTRACTS
(a) "In line with the Company''s risk management policy, the financial
risks mainly relating to changes in the exchange rates are hedged by
using forward contracts, besides natural hedges.
The Company follows the principles of hedge accounting as per the
Accounting Standard (AS) 30 "Financial Instruments: Recognition and
Measurement" in respect of those derivative transactions which are not
covered by Accounting Standard (AS) 11. Accordingly, the Company has
recognised a net gain of Rs 31,407,868/- (previous year net gain of Rs
1,270,000/-) arising out of fair valuation of outstanding derivative
contracts in Statement of Profit and Loss for the year ended March 31,
2016."
(b) The particulars of derivative contracts entered into for hedging
foreign currency exchange risks, which are outstanding as at March 31,
2016 are as under :
5 Figures for the previous year have been regrouped / reclassified
wherever necessary.
Mar 31, 2015
A) Terms / rights / restrictions attached to equity shares
(i) The Company has only one class of equity shares having a face value
of Rs.10/- each. Each holder of equity share is entitled to one vote per
share.
(ii) All shares issued carry equal rights for dividend declared by the
Company. There are no restrictions attached to any of the shares.
(iii) The Company has not issued any securities with the right / option
to convert the same into equity shares at a later date.
b) The Company has not bought back any shares or issued shares for
consideration other than cash or issued
NOTES ACCOMPANYING THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH
31, 2015 bonus shares during the five years immediately preceding the
date of Balance Sheet.
Employee Stock Option Plan [ESOP]:
(I) Terms
(i) The Company has obtained approval of share holders through postal
ballot on January 08, 2011 for grant of 1,250,000 options under the
Employees Stock Option Plan, 2006 to its employees and Directors. The
options have a vesting period of one year from the date of grant of the
option. The exercise period is five years from the date of grant of
option.
(ii) The grant of options to the employees under the employee stock
option scheme is on the basis of their performance and other
eligibility criteria. The options are vested equally over a period of
one year, subject to the discretion of the management and fulfillment
of certain conditions.
(III) During the year, the Company has amortised proportionate employee
stock based compensation expense amounting to '' 90,466/- (previous year
Rs. 544,534/-) which has been included in Note 21 "Employee benefits
expense".
h) There are no other shares reserved for issue under options and
contract / commitments for sale of share or disinvestment.
i) The Directors recommend payment of dividend of Rs. 4.44 per equity
share of Rs. 10/- each on the number of shares outstanding as on the
record date. Provision for dividend has been made in the books of
account for 30,608,444 equity shares outstanding as at March 31,2015
amounting to Rs. 135,901,491/-
Terms and conditions of long-term borrowings
(a) Secured loans
Terms of repayment as at March 31,2015
(i) External commercial borrowing (ECB-I) is repayable in ten unequal
quarterly installments ending in August 2017.
(ii) External commercial borrowing (ECB-III) is repayable in sixteen
equal quarterly installments ending in November 2019.
(iii) Foreign currency term loan is repayable in five equal quarterly
installments ending in April 2016.
Nature of security
(i) External commercial borrowing (ECB-I) is secured by first exclusive
charge on the fixed assets of the Company created out of the ECB
facility funded by the bank, both present and future, an equitable
mortgage over the superstructures constructed by the Company and second
ranking pari-passu charge on all the current assets of the Company,
both present and future.
(ii) External commercial borrowing (ECB-III) is secured by first
ranking pari-passu charge on the entire fixed assets, all right, title,
interest, benefit, claims and demand of the Company, both present and
future, an equitable mortgage over the superstructures constructed by
the Company and a second ranking pari-passu charge on all the current
assets of the Company, both present and future.
(iii) Foreign currency term loan is secured by first ranking pari-passu
charge on all moveable fixed assets of the Company, both present and
future, an equitable mortgage over the superstructures constructed by
the Company and second ranking pari-passu charge on all the current
assets of the Company, both present and future.
(b) Unsecured loan
(i) Finance lease obligations are repayable in sixty equated monthly
installments from the date of respective lease finance.
(a) Working capital loans in the nature of packing credit and buyers''
credit are repayable within one year. They are secured by first ranking
pari-passu charge on all current assets of the Company, both present
and future, and a second ranking pari-passu on all fixed assets of the
Company, both present and future after term loans from banks. The
charge also extends to bills discounted amounting to Rs. 72,638,834/-
(Previous year Rs. 38,330,811/-)
2 CONTINGENT LIABILITIES AND COMMITMENTS
a) Contingent liabilities
As at As at
31.03.2015 31.03.2014
i) Bills discounted with banks 72,638,834 38,330,811
ii) Income tax liability that may arise in
respect of matters for which the 11,829,833 10,164,183
Company is under appeal
iii) Employees State Insurance demand on
dues for trainees 2,434,404 2,434,404
3 EMPLOYEE BENEFITS
Disclosure of employee benefits pursuant to Accounting Standard (AS) 15
"Employee Benefits"
(i) Defined benefit plans
Provision for Gratuity (defined benefit plan) and Leave encashment
(Long-term employee benefit) represents provision made as per Actuarial
valuation report.
e) All Investments in plan assets are managed by the Life Insurance
Corporation of India.
f) Principal actuarial assumptions at the balance sheet date (expressed
as weighted averages):
Attrition rate: 1-3% per annum, assumed to be independent of age and
service.
Mortality rate : IALM (2006-08) Ultimate Table.
The estimates of future salary increases considered in actuarial
valuation, take into account inflation, seniority promotion and other
relevant factors such as supply and demand in the employment market.
(h) General description of the defined benefit plan
The Company operates a funded defined benefit gratuity plan wherein
every employee is entitled to a benefit equivalent to fifteen days last
drawn salary for each completed year of sevice, subject to the maximum
limit specified under the Payment of Gratuity Act, 1972, as amended
from time to time. The same is payable on termination of service or
retirement whichever is earlier. The benefit vests after five years of
continuous service.
(ii) Defined contribution plans
Contribution to provident funds are made to the Regional Provident Fund
office. Expenses recognised in the Statement of Profit and Loss is Rs.
6,290,139/- (previous year Rs. 5,228,801/-) Contribution to Employee
State Insurance is made to the Employees'' State Insurance
Corporation. Expense recognised in the Statement of Profit and Loss is
Rs. 2,025,648/- (previous year Rs. 2,172,269/-)
4 DERIVATIVE CONTRACTS
(a) "In line with the Company''s risk management policy, the
financial risks mainly relating to changes in the exchange rates are
hedged by using forward contracts, besides natural hedges. The Company
has adopted, during the year under review, the principles of hedge
accounting as per the Accounting Standard (AS) 30 "Financial
Instruments: Recognition and Measurement" in respect of those
derivative transactions which are not covered by the existing
Accounting Standard (AS) 11. This treatment has resulted in a net gain
of Rs. 1,270,000/- arising out of fair valuation of outstanding
derivative contracts which has been recognised in Statement of Profit
and Loss. Consequently, profit before tax is higher by the same
amount."
(b) The particulars of derivative contracts entered into for hedging
foreign currency exchange risks, which are outstanding as at March
31,2015 are as under :
1 Cash flow statement has been prepared under the indirect method as
set out in Accounting Standard (AS) -3
"Cash Flow Statements" as specified in section 133 of the Companies
Act, 2013 read with Rule 7 of Companies (Accounts) Rules, 2014.
2. Purchase of fixed assets includes movement of capital
work-in-progress, capital advances and liability for capital goods
during the year.
3. Cash and cash equivalents comprise cash on hand and balance with
banks on current accounts and fixed deposit accounts with maturity of
less than 3 months and exclude unpaid dividend accounts, fixed deposits
with more than 3 months maturity and margin money deposits. Refer Note
15 (i) for components of cash and cash equivalents.
4. Figures for the previous year have been regrouped/reclassified
wherever applicable.
Mar 31, 2013
1 CONTINGENT LIABILITIES AND COMMITMENTS
a) Contingent Liabilities
As at As at
31.03.2013 31.03.2012
Rupees Rupees
1 Bills discounted 60,126,244 94,787,190
2 Income tax liability that may arise
in respect of matters on appeal 49,325,883 10,164,183
3 Employees State Insurance demand
on dues for trainees 2,434,404 2,434,404
4 Guarantees given on behalf
of holding company 1,100,100,000
b) Other details regarding contingent liabilities
The Company does not expect any reimbursement in respect of the above
contingent liabilities except bills discounted. It is not practicable
to estimate the timing of outfl ows, if any, in respect of matters
pertaining to (2) and (3) above, pending resolution of the appellate
proceedings.
2 EMPLOYEE BENEFITS
Disclosure of employee benefi ts pursuant to Accounting Standard (AS)
15 "Employee Benefi ts"
(i) Defi ned benefi t plans
Provision for Gratuity and Leave encashment represents provision made
as per Actuarial valuation report dated April 29, 2013
3 RELATED PARTY DISCLOSURES PURSUANT TO ACCOUNTING STANDARD (AS) 18
(i) Names of related parties and related party relationship
(a) Related parties where control exists
1. HBL Power Systems Limited - Ultimate Holding Company
2. Agile Electric Sub Assembly Private Limited - Holding Company [Refer
Note 2 (c)]
(b) Related parties with whom transactions have taken place during the
year
1. HBL Power Systems Limited - Ultimate Holding Company
2. Agile Electric Sub Assembly Private Limited - Holding Company [Refer
Note 2 (c)]
3. Bosch Electrical Drives India Private Limited - Associate Company
till 29.03.2012
4. Mr. P. Mukund, Managing Director - Key Management Personnel
4 LEASES
(a) Finance Lease:
i) The company has acquired certain plant and machinery on fi nance
lease. The lease has a primary period which is fi xed and
non-cancellable. There are no exceptional /restrictive covenants in the
lease agreements.
ii) The minimum lease payments and the present value of minimum lease
payments in respect of assets acquired under fi nance lease as at March
31, 2013 is as follows:
(b) Operating Lease:
i) The Company has taken certain premises and cars on cancellable
operating lease. These leases agreements are normally renewed on
expiry. Amount paid toward these leases are included in selling,
administration and other expenses. There are no exceptional /
restrictive covenants in these lease agreements.
ii) Lease rentals charged to the Statement of Profi t and Loss for the
year is Rs.1,851,026/- (previous year Rs.1,717,324/-).
iii) Contingent rent recognised Rs. Nil (previous year Rs.Nil).
5 Figures for the previous year have been regrouped / reclassifi ed
wherever necessary.
Mar 31, 2012
A) Employee Stock Option Scheme:
i) The Company has obtained approval of share holders through postal
ballot on 08th January, 2011 for grant of 1,250,000 options under the
Employees Stock Option Plan, 2006 to its employees and Directors. The
Company had granted 235,700 options during the year (previous year
750,000 options), with a vesting period of one year from the date of
grant of the option. The exercise period is five years from the date of
issue.
ii) The grant of options to the employees under the employee stock
option schemes is on the basis of their performance and other
eligibility criteria. The options are vest equally over a period of one
year, subject to the discretion of the management and fulfillment of
certain conditions.
Terms and conditions of Long term borrowings Secured loans
(i) Term loans from banks are repayable in sixteen quarterly
installments from March 31, 2012.
(ii) Working capital term loans from banks are repayable in twenty
quarterly installments from March 31, 2012.
Term loan and Working capital term loan from banks are secured by,
first pari-passu charge on all fixed assets of the Company, both
present and future, excluding leasehold land and second pari- passu
charge on all current assets of the Company, both present and future.
Unsecured loans
(i) Finance lease obligations are repayable in sixty equated monthly
installments from the date of respective lease finance.
(ii) Vehicle loans are repayable in sixty equated monthly installments
from the date of respective vehicle loan and are secured by charge of
the related vehicles.
Note : Refer note no.4 supra for terms and conditions of the above
borrowings.
(e) Working capital loans in the nature of packing credit and buyer's
credit are repayable within one year. They are secured by first
pari-passu charge on all current assets of the Company, both present
and future and second pari-passu charge on all fixed assets of the
Company both present and future, excluding leasehold land, after term
loans. The charge also extends to bills discounted amounting to Rs.
94,787,190/- (Previous Year Rs. 83,406,368/-).
(f) The Company does not have any transaction with Micro and Small
Enterprises covered under the Micro, Small and Medium Enterprises
Development Act, 2006, identified on the basis of information available
with the Company. Accordingly, disclosing details of overdue principal
and interest thereon does not arise.
(g) The Company does not have taxable income under the conventional
method of computation of income. Provision for Current tax represents
Minimum Alternate Tax under section 115JB of the income tax Act, 1961.
(h) The Company does not have taxable wealth and hence no provision has
been made for wealth tax under the provisions of Wealth Tax Act, 1957.
v) Factory building has been constructed on land taken on lease from
May 1, 1991 for a period of fifteen years from Madras Export Processing
Zone (MEPZ) and monthly rent paid has been recognized as an expense in
the statement of Profit and Loss. The said lease has since been renewed
for a further period of five years from May 2, 2011 and is renewable
further thereafter at the option of the Company on mutually agreed
terms with MEPZ. In the event of the Company deciding to vacate the
premises, the less or (MEPZ) will compensate the Company a mutually
agreed consideration for the sale of the factory building. Accordingly,
depreciation has been provided at the rates prescribed in Schedule XIV
of the Companies Act, 1956.
vi) Deduction of Intangible assets under development represents amounts
written off as obsolescence on account of discontinuance of the product
development.
vii) Impairment of assets
The Company has reviewed the future cash flows on the basis of value in
use of its assets and has satisfied that the estimated recoverable
amount of fixed assets is more than the amount carried in the books.
Accordingly, no provision for impairment loss is required to be made in
these financial statements.
Note : Bosch Electric Drives India Private Limited ceased to be an
Associate Company during the year 2011-12.
1 Contingent liabilities and commitments
a) Contingent Liabilities :
1 Bills discounted 94,787,190 83,406,368
2 income tax liability that may arise
in respect of 10164183 10 164 183
matters on appeal
Employees State insurance demand on
dues for n .n. 32,434,404 2,434,404
trainees
Guarantees given on behalf of fellow
subsidiary 41,100,100,000 1,060,100,000
company
b) other details regarding contingent liabilities
The Company does not expect any reimbursement in respect of the above
contingent liabilities except bills discounted.
it is not practicable to estimate the timing of outflows, if any, in
respect of matters at (a) (2) and (3) above, pending resolution of the
appellate proceedings.
Note: Others represents sale of Drawn parts, stamping and sub assembly
and trading sales.
Note: others represents work in progress of drawn parts, stamping and
sub assembly.
Note: The above expenses include Auditor's remuneration and expenses
charged to the statement of profit and loss as detailed below:
(i) Defined benefit plans
Provision for Gratuity and Leave encashment represents provision made
as per Actuarial valuation report dated April 10, 2012
c) The changes in the present value of defined benefit obligation
representing reconciliation of opening and closing balances thereof as
follows:
e) All investments in plan assets are managed by the Life insurance
Corporation of India.
f) Principal actuarial assumptions at the balance sheet date (expressed
as weighted averages):
Attrition rate: 1-3% per annum, assumed to be independent of age and
service.
Mortality rate : LiC 94 -96 rates
The estimates of future salary increases, considered in actuarial
valuation, take into account inflation, seniority promotion and other
relevant factors, such as supply and demand in the employment market.
(ii) Defined contribution plans
Contribution to provident funds are made to the Regional Provident Fund
office. Expenses recognized in the statement of Profit and Loss is Rs.
3,390,271/- (previous year Rs. 2,726,994/-)
(ii) Segment identification, reportable segments and definition of each
reportable segment:
(a) secondary segment reporting format:
in respect of secondary segment information, the company has identified
its geographical segments as (a) Domestic and (b) overseas. The
secondary segment information has been disclosed accordingly.
(b) Reportable segments:
Reportable segments have been identified as per the criteria specified
in Accounting Standard (AS) 17 - "Segment Reporting"
(iii) All tangible assets of the Company are located within India.
(iv) in view of inadequacy of profits, the Company has applied to the
Central Government for approval of additional remuneration to the
Managing Director. Pending approval from Central Government, the
Company has not paid additional remuneration to the Managing Director.
( ) The Company has not written off or written back any amounts due
from or due to related parties during ( ) the current financial year.
(Previous year Nil)
2 Leases:
(a) Finance Lease:
i) The Company has acquired certain plant and machinery on finance
lease. The lease is having a primary period of five years which is
fixed and non cancellable. There are no exceptional /restrictive
covenants in the lease agreement.
ii) The minimum lease rentals as at March 31,2012 and the present value
as at March 31, 2012 of minimum lease payments in respect of assets
acquired under Finance Lease is as follows:
(b) Operating Lease:
The Company has taken certain premises and cars on cancellable
operating lease. These lease agreements are normally renewed on expiry.
Amount paid towards these leases are included in selling,
administration and other expenses. There are no exceptional/restrictive
covenants in these lease agreements. Lease rentals charged to the
Statement of Profit and Loss for the year is Rs.1,717,324/- (previous
year Rs. 2,888,035/-). Contingent rent recognized Rs. Nil (previous
year Rs.Nil).
3 Hitherto, the Company had adopted the Schedule Vi to the Companies
Act, 1956 for the preparation and presentation of financial statements.
However, from the current year, the Company has adopted the Revised
Schedule Vi to comply with the notification made under the Companies
Act, 1956. Accordingly, the Company has reclassified / regrouped the
previous year figures to conform to current year's classification.
Notes :
1. Cash flow statement has been prepared under the indirect method as
set out in Accounting Standard -3 as specified in Companies (Accounting
Standards) Rules, 2006.
2. Purchase of fixed assets includes movements of Capital
Work-in-progress between the beginning and end of the year.
3. Cash and cash equivalents represents cash and bank balances. Since
unpaid dividend in bank is a restricted amount, the same has not been
included in cash and cash equivalents.
4. Previous year's figures have been regrouped/reclassified wherever
applicable.
The accompanying notes form an integral part of the financial
statements
The Company has only one class of equity shares having a par value of
Rs. 10/- each. Each holder of equity share is entitled to one vote per
share. All shares issued carry equal rights for dividend declared by
the company and there are no restrictions attached for any specific
shareholder.
a) Employee Stock Option Scheme:
i) the company has obtained approval of share holders through postal
ballot on 08th January, 2011 for grant of 1,250,000 options under the
employees stock option Plan, 2006 to its employees and Directors. the
company had granted 235,700 options during the year (previous year
750,000 options), with a vesting period of one year from the date of
grant of the option. the exercise period is five years from the date of
issue.
ii) the grant of options to the employees under the employee stock
option schemes is on the basis of their performance and other
eligibility criteria. the options are vest equally over a period of one
year, subject to the discretion of the management and fulfillment of
certain conditions.
iv) During the year, the company has amortized proportionate employee
stock based compensation expense amounting to Rs. 12,154,530/-
(previous year Rs. 8,189,671/-) which has been included in employee
benefit expenses.
Terms and conditions of Long term borrowings Secured loans
(i) term loans from banks are repayable in sixteen quarterly
installments from March 31, 2012.
(ii) working capital term loans from banks are repayable in twenty
quarterly installments from march 31, 2012.
term loan and working capital term loan from banks are secured by,
first pari-passu charge on all fixed assets of the company, both
present and future, excluding leasehold land and second pari- passu
charge on all current assets of the company, both present and future.
unsecured loans
(i) Finance lease obligations are repayable in sixty equated monthly
installments from the date of respective lease finance.
(ii) vehicle loans are repayable in sixty equated monthly installments
from the date of respective vehicle loan and are secured by charge of
the related vehicles.
Note : refer note no.4 supra for terms and conditions of the above
borrowings.
(e) working capital loans in the nature of packing credit and buyer's
credit are repayable within one year. they are secured by first
pari-passu charge on all current assets of the Company, both present
and future and second pari-passu charge on all fixed assets of the
Company both present and future, excluding leasehold land, after term
loans. the charge also extends to bills discounted amounting to Rs.
94,787,190/- (Previous Year Rs. 83,406,368/-).
(f) the Company does not have any transaction with Micro and Small
Enterprises covered under the Micro, Small and Medium Enterprises
Development Act, 2006, identified on the basis of information available
with the Company. Accordingly, disclosing details of overdue principal
and interest thereon does not arise.
(g) the Company does not have taxable income under the conventional
method of computation of income. Provision for Current tax represents
Minimum Alternate tax under section 115JB of the income tax Act, 1961.
(h) the Company does not have taxable wealth and hence no provision has
been made for wealth tax under the provisions of Wealth tax Act, 1957.
v) Factory building has been constructed on land taken on lease from
May 1, 1991 for a period of fifteen years from Madras Export Processing
Zone (MEPZ) and monthly rent paid has been recognized as an expense in
the statement of Profit and Loss. The said lease has since been renewed
for a further period of five years from May 2, 2011 and is renewable
further thereafter at the option of the Company on mutually agreed
terms with MEPZ. In the event of the Company deciding to vacate the
premises, the lessor (MEPZ) will compensate the Company a mutually
agreed consideration for the sale of the factory building. Accordingly,
depreciation has been provided at the rates prescribed in Schedule XIV
of the Companies Act, 1956.
vi) Deduction of Intangible assets under development represents amounts
written off as obsolescence on account of discontinuance of the product
development.
vii) Impairment of assets
The Company has reviewed the future cash flows on the basis of value in
use of its assets and has satisfied that the estimated recoverable
amount of fixed assets is more than the amount carried in the books.
Accordingly, no provision for impairment loss is required to be made in
these financial statements.
Note : Bosch Electric Drives India Private Limited ceased to be an
Associate Company during the year 2011-12.
b) other details regarding contingent liabilities
the Company does not expect any reimbursement in respect of the above
contingent liabilities except bills discounted.
it is not practicable to estimate the timing of outflows, if any, in
respect of matters at (a) (2) and (3) above, pending resolution of the
appellate proceedings.
Note: Others represents sale of Drawn parts, stamping and sub assembly
and trading sales.
Note: others represents work in progress of drawn parts, stamping and
sub assembly.
Note: the above expenses include Auditor's remuneration and expenses
charged to the statement of profit and loss as detailed below:
(i) Defined benefit plans
Provision for Gratuity and Leave encashment represents provision made
as per Actuarial valuation report dated April 10, 2012
e) All investments in plan assets are managed by the Life insurance
Corporation of India.
Attrition rate: 1-3% per annum, assumed to be independent of age and
service.
Mortality rate : LIC 94 -96 rates
the estimates of future salary increases, considered in actuarial
valuation, take into account inflation, seniority promotion and other
relevant factors, such as supply and demand in the employment market.
(ii) defined contribution plans
Contribution to provident funds are made to the Regional Provident Fund
office. Expenses recognized in the statement of Profit and Loss is Rs.
3,390,271/- (previous year Rs. 2,726,994/-)
(ii) Segment identification, reportable segments and definition of each
reportable segment:
(a) secondary segment reporting format:
in respect of secondary segment information, the company has identified
its geographical segments as (a) Domestic and (b) overseas. the
secondary segment information has been disclosed accordingly.
(b) Reportable segments:
Reportable segments have been identified as per the criteria specified
in Accounting Standard (AS) 17 - "Segment Reporting"
(iii) All tangible assets of the Company are located within India.
(Note: Figures in brackets represent corresponding amounts of the
previous year)
(iv) in view of inadequacy of profits, the Company has applied to the
Central Government for approval of additional remuneration to the
Managing Director. Pending approval from Central Government, the
Company has not paid additional remuneration to the Managing Director.
( ) the Company has not written off or written back any amounts due
from or due to related parties during ( ) the current financial year.
(Previous year Nil)
Finance Lease:
i) the Company has acquired certain plant and machinery on finance
lease. the lease is having a primary period of five years which is
fixed and non cancellable. there are no exceptional /restrictive
covenants in the lease agreement.
(b) operating Lease:
the Company has taken certain premises and cars on cancellable
operating lease. these lease agreements are normally renewed on expiry.
Amount paid towards these leases are included in selling,
administration and other expenses. there are no exceptional/restrictive
covenants in these lease agreements. Lease rentals charged to the
Statement of Profit and Loss for the year is Rs.1,717,324/- (previous
year Rs. 2,888,035/-). Contingent rent recognized Rs. Nil (previous
year Rs.Nil).
4 Hitherto, the Company had adopted the Schedule Vi to the Companies
Act, 1956 for the preparation and presentation of financial statements.
However, from the current year, the Company has adopted the Revised
Schedule Vi to comply with the notification made under the Companies
Act, 1956. Accordingly, the Company has reclassified / regrouped the
previous year figures to conform to current year's classification.
Notes :
1. Cash flow statement has been prepared under the indirect method as
set out in Accounting Standard -3 as specified in Companies (Accounting
Standards) Rules, 2006.
2. Purchase of fixed assets includes movements of Capital
Work-in-progress between the beginning and end of the year.
3. Cash and cash equivalents represents cash and bank balances. Since
unpaid dividend in bank is a restricted amount, the same has not been
included in cash and cash equivalents.]
Mar 31, 2011
As at As at
31.03.2011 31.03.2010
(Rupees) (Rupees)
1. Contingent Liabilities :
a) Bills discounted 83,406,368 104,376,085
b) Income Tax liability that may
arise in respect of matters on appeal 10,164,183 8,360,134
c) Guarantees given on behalf of
fellow subsidiary company 409,244,243 348,001,343
d) ESI Demand on dues for trainees 2,434,404 -
2. Deposit accounts with banks under cash and bank balances in
Schedule G includes margin money deposit of Rs. 26,065,340/-(previous
year Rs. 15,882,115/-), fixed deposit of Rs. 12,07,183/-(previous year
Rs.11,33,747/-) and Rs.6,021/-(previous year Rs.6,021/-) pledged as
security with sales tax department.
3. (a). In respect of Inter corporate deposit of Rs. 900,00,000 the
Company has not obtained prior approval of the Central Government as
required under section 295 of the Companies Act, 1956. The Company is
taking necessary steps to regularise the matter and application is also
being made to the Central Government.
(b). The Company has not obtained prior approval of the Central
Government for transactions entered into with another company covered
under Sec. 297 of the Companies Act, 1956. The Company is taking
necessary steps to regularise the matter and application is also being
made to the Central Government.
4. The Company does not have any transaction with Micro and small
enterprises covered under the Micro, Small and Medium Enterprises
Development Act, 2006, identified on the basis of information available
with the Company.
5. Segment reporting :
(ii) Segment identification, reportable segments and definition of each
reportable segment
(a) Secondary Segment reporting format
In respect of secondary segment information, the company has identified
its geographical segments as (a) Domestic and (b) Overseas. The
secondary segment information has been disclosed accordingly
(b) Reportable segments
Reportable segments have been identified as per the criteria specified
in Accounting Standard (AS) 17 - "Segment Reporting"
(iii) All tangible assets of the Company are located within India.
6. Related party disclosures :
(i) The following enterprises are related to the company.
1. HBL Power Systems Ltd. - Ultimate Holding Company from 31.03.2011
2. Igarashi Electric
Works Ltd, Japan - Holding Company till 24.01.2011
(through management control)
- Significant share holder from
25.01.2011 to 30.03.2011
3. Igarashi Electric
Works (H K) Ltd. - Fellow Subsidiary Company till 24.01.2011
4. Igarashi Motor Sales
LLC, USA - Fellow Subsidiary Company till 24.01.2011
5. Igarashi Motoren GMBH - Fellow Subsidiary Company till 24.01.2011
6. Agile Electric Drives
Technologies and Holdings
Pvt. Ltd. - Fellow Subsidiary Company till 24.01.2011
- Significant share holder from 25.01.2011
to 30.03.2011
- Holding Company from 31.03.2011
7. Agile Electric Sub
Assembly Pvt. Ltd. - Associate Company till 30.03.2011
- Fellow Subsidiary Company from 31.03.2011
8. Bosch Electrical Drives
India Pvt. Ltd. - Associate Company from 03.01.2011 (
ii) Key Management
Personnel (KMP):
Mr. P. Mukund - Managing Director.
(v) No amount outstanding has been written off or written back during
the year.
7. Factory building has been constructed on land taken on lease from
1st May 1991 for a period of fifteen years from Madras Export
Processing Zone (MEPZ) and monthly rent paid has been charged in the
accounts. The said lease has since been renewed for a further period of
five years w.e.f 2nd May 2006 and is renewable further thereafter at
the option of the Company on mutually agreed terms with MEPZ. In the
event of the Company deciding to vacate the premises, the lessor (MEPZ)
will compensate the company a mutually agreed consideration for the
sale of the factory building. Accordingly depreciation has been
provided at the rates prescribed in Schedule XIV of the Companies Act,
1956.
8. Leases:
(a) Finance Lease
i) During the year, the company has acquired certain plant & machinery
on finance lease. The lease is having a primary period which is fixed
and non cancellable. There are no exceptional /restrictive covenants in
the lease agreement.
(b) Operating Lease:
The Company has taken certain premises on cancellable operating lease.
These lease agreements are normally renewed on expiry. The company has
taken cars on cancellable operating lease. Amount paid towards these
leases are included in selling & administrative expenses. There are no
exceptional / restrictive covenants in these lease agreements. Lease
rentals charged to Profit and Loss account for the year is
Rs.22,01,435/- (previous year Rs.29,08,488/-). Contingent rent
recognised Rs. Nil (previous year Rs.Nil).
9 a) The Company does not have taxable income under the conventional
method of computation of income and further is covered by the
provisions of the Special Economic Zone Act, 2005 and accordingly not
liable for Minimum Alternate Tax under section 115JB of the Income tax
Act, 1961. Hence, no provision for Current tax has been made for the
year.
b) The Company does not have taxable wealth and hence no provision has
been made for wealth tax under the provisions of Wealth Tax Act, 1957.
10 Employee Stock Option Scheme:
a) The Company has granted 750,000 options under the Employees Stock
Option Plan, 2006 to its employees and Directors on 27th August 2010,
with a vesting period of one year from the date of grant of the option.
The exercise period is five years from the date of issue.
b) The grant of options to the employees under the employees stock
option scheme is on the basis of their performance and other eligibilty
criteria. The options are vested equally over a period of one year,
subject to the discretion of the management and fulfillment of certain
conditions.
d) During the year, the Company has amortised proportionate employee
stock based compensation expense amounting to Rs. 8,189,671/-, which
has been included in staff expenses.
11 The Company has reviewed the future cash flows on the basis of value
in use of its assets and has satisfied that the estimated recoverable
amount is more than the amount carried in the books. Accordingly, no
provision for impairment loss is required to be made in these accounts.
12 Employee Benefits
Provision for Gratuity and Leave encashment represents provision made
as per Actuarial valuation report dated 14th May 2011.
e) All Investments in Plan Assets are managed by the LIC.
f) Principal actuarial assumptions at the balance sheet date (expressed
as weighted averages):
Attrition rate: 1-3% per annum, assumed to be independent of age and
service. The estimates of future salary increases, considered in
actuarial valuation, take into account inflation, seniority promotion
and other relevant factors, such as supply and demand in the employment
market.
g) Contribution to provident funds are made to the Regional Provident
Fund office.
13 (a) During the year, the Company has made preferential allotment of
6,500,000 equity shares of face value of Rs. 10/- each to Agile
Electric Drives Technologies and Holdings Private Limited at a premium
of Rs. 66.30/- with a lock-in period of one year from 25th January 2011
to 24th January 2012.
14 (a) The Investments in IJT Plastics & Tools Private Limited ("
IJTPL") consisting of 7,430,000 equity shares of face value of Rs. 10/-
each fully paid was replaced with 2,451,900 shares of Rs. 10/- each
fully paid of Agile Electric Sub Assembly Private Limited (" AESPL")
pursuant to merger of IJTPL with AESPL vide Order of the Honorable High
Court of Madras Judicature CP No. 312/2010 dated 2nd March 2011, swap
ratio being 33 equity shares of Rs. 10/- each fully paid up of AESPL
for every 100 equity shares of Rs. 10/- each fully paid up of IJTPL.
(b) During the previous year 2009-10, the Company had pledged its
investments in IJT Plastics & Tools Private Limited with bank as
security for the credit facilities availed from bank by IJT Plastics &
Tools Private Limited. Further to amalgamation mentioned in Note 26(a),
the Company is in the process of creating a pledge on the investment in
Agile Electric Sub Assembly Private Limited with the banker
(c) The Company has increased its investment in Bosch Electrical Drives
India Private Limited ("Investee Company") on 3rd January 2011 to 26 %,
thereby making the Investee Company, an Associate.
15 (a) Deduction of product development expenses under capital work in
progress - intangible assets includes development expenditure amounting
to Rs.2,840,537/- for a project in progress transferred at cost to a
Fellow subsidiary during the year and Rs.2,862,425/- recovered from a
customer towards product development.
(b) During the year, the Company has written off product development
expenditure under Intangible asset amounting to Rs.7,872,278/-(net) as
the same has been obsoleted due to discontinuance of the product
development.
16 Subsequent events
The Company has obtained Central Government approval for payment of
increased remuneration of Rs.9,600,000/-per annum to Mr. P.Mukund,
Managing Director of the Company, for a period of one year from
01.04.2010 to 31.03.2011 vide letter no. B5040407/5/2011 -CL-VII dated
18.04.2011.
17 Figures for the previous year have been regrouped/ reclassified
wherever necessary.
Mar 31, 2010
1. Deposit accounts with banks under cash and bank balances in
schedule G includes Margin Money Deposit of Rs.15,882,115/-, Fixed
deposit of Rs.1,133,747/- and Rs. 6,000/- pledged as security with
sales tax department.
2. The Company has pledged its investments of Rs. 74,300,000 in the
equity shares of IJT Plastics & Tools Private Limited as security for
the credit facility availed from bank by IJT Plastics & Tools Private
Limited, an associate company.
3. There are no Micro and Small Enterprises, to whom the Company owes
dues, which are outstanding as at 31st March 2010. The information
required to be disclosed under the Micro, Small and Medium Enterprises
Development Act, 2006 has been determined to the extent such parties
have been identified on the basis of information available with the
Company on which the auditors have placed reliance.
4. Segment reporting :
(i) The Company is engaged in single segment of production of Micro
motors and its accessories mainly for the Automotive sector. Hence
giving of primary segment under Accounting Standard -17 segment
reporting does not arise.
(ii) Segment identification, reportable segments and definition of each
reportable segment
(a) Secondary Segment reporting format:
In respect of secondary segment information, the company has identified
its geographical segments as (a) Domestic and (b) Overseas. The
secondary segment information has been disclosed accordingly
(b) Reportable segments :
Reportable segments have been identified as per the criteria specified
in Accounting Standard (AS) 17 - "Segment Reporting".
5. Related party disclosures :
(i) The following enterprises are related to the company
1. Igarashi Electric Works Ltd, Japan - Holding Company
(through management control)
2. Igarashi Electric Works (H K) Ltd - Fellow Subsidiary Company.
3. Igarashi Motor Sales LLC, USA. - Fellow Subsidiary Company.
4. Igarashi Motoren GMBH - Fellow Subsidiary Company.
5. Agile Electric Drives Technologies
and Holdings Pvt Ltd - Fellow
Subsidiary Company.
6.IJT Plastics & Tools Pvt. Ltd. - Associate
Company.
7. Agile Electric Sub Assembly Pvt,
Ltd. - Associate Company.
8. Agile Electric Technologies Pvt,
Ltd. - Associate Company. (ii)
Key Management Personnel (KMP) :
Mr. P Mukund - Managing Director.
6. Factory building has been constructed on land taken on lease from
01-05-1991 for a period of fifteen years from Madras Export Processing
Zone (MEPZ) and monthly rent paid has been charged in the accounts.The
said lease has since been renewed for a further period of five years
w.e.f 2nd May 2006 and is renewable further thereafter at the option of
the Company on mutually agreed terms with MEPZ. In the event of the
Company deciding to vacate the premises, the lessor (MEPZ) will
compensate the company a mutually agreed consideration for the sale of
the factory building. Accordingly depreciation has been provided at the
rates prescribed in Schedule XIV of the Companies Act, 1956.
7. The Company has taken certain premises on cancellable operating
lease. These lease agreements are normally renewed on expiry. The
company has taken cars on cancellable operating lease. Amount paid
towards these leases are included in selling & administration
expenses.There are no exceptional / restrictive convenants in these
lease agreements.
8.a) The Company does not have taxable income under the conventional
method of computation of income and further is covered by the
provisions of the Special Economic Zones Act, 2005 and accordingly
not liable for Minimum Alternate Tax under section 115JB of the
Income tax Act, 1961. Hence, no provision for Current tax has been
made during the year
b) The Company does not have taxable wealth and hence no provision has
been made for wealth tax under the provisions of Wealth Tax Act, 1957.
9. The Company has reviewed the future cash flows on the basis of
value in use of its assets and has satisfied that the estimated
recoverable amount is more than the amount carried in the books.
Accordingly, no provision for impairment loss is required to be made in
these accounts.
10. Employee Benefits :
Provision for Gratuity and Leave encashment represents provision made
as per LIC Group Gratuity renewal valuation report dated 6th March 2010
and Group Leave renewal valuation report dated 20th March 2010 under
the LIC Group Gratuity Scheme and Group Leave Encashment Scheme which
will be paid along with interest as per the scheme.
11. The Company has made investment of Rs. 19,000,000/- in Bosch
Electrical Drives India Pvt Ltd during the year before obtaining prior
approval of the share holders as required under section 72A of the
Companies Act, 1956. However the Company has since obtained approval of
the shareholders through postal ballot on 19th September 2009. Further,
the Company is taking necessay steps to regularise the matter by making
an application to the central government for its post-facto
ratification.
12. Deductions / adjustments in Intangible Assets represents
development program transferred to an Associate company during the year
13. The company does not have transactions covered under provisions of
Accounting Standard (AS) 29 "Provisions, Contigent Liablities and
Contingent Assets" and hence no reporting has been made.
14. Figures for the previous year have been regrouped/ reclassified
wherever necessary
Mar 31, 2000
1. Estimated amount of contracts remaining to be executed in capital
account net of advances is Rs. 40,041,829/- (Previous year: Rs.
2,016,483/-).
2. Capital work-in-progress includes advances of Rs. 2,477,238/-
(Previous year: Rs. 1,895,702/-).
3. Contingent Liability in respect of Bills discounted Rs.
71,184,126/- (Previous year Rs. 27,032,435/-).
4. The exchange difference arising on foreign currency transactions
amounting to Rs. 31,74,188/- (net loss) (Previous year Rs.68,74,378)
(net loss) has been adjusted in the carrying cost of fixed assets.
5. Current liabilities include Rsli,82,030/- representing excess
share application money received from promoters.
6. Provision for Income tax represents tax on other income earned.
The Income from operations are exempted under Sec 10(B) of the Income
Tax Act 1961. No provision for wealth tax has been made for the year as
there is no taxable wealth.
7. The Company hitherto, valued its loose tools under base stock
method, During the year, to comply with the mandatory. Accounting
Standards on Inventory (AS2), the opening balance of Rs.5,06,507/- has
been charged off in the accounts and the company does not have any
stock of loose tools as at 31st March 2000. The impact on the profit
for the year is not material.
8. Amounts due to small scale industrial undertakings in excess of
Rs.1 lac and outstanding for more than 30 days beyond the agreed credit
period as on 31st March 2000 is Rs.Nil. Further overdue amounts to
small scale industrial undertaking remaining unclaimed as on 31st March
2000 is Rs. Nil (Including interest of Rs.Nil).
9. Factory building has been constructed on land taken on lease from
01-05-1991 for a period of 15 years from Madras Export Processing Zone
(MEPZ) and monthly rental charges paid has been charged in the
accounts. The said lease is renewable for a further period of 15years
and further thereafter at the option of the Company on a mutually
agreed terms with MEPZ. In the event of the Company deciding to vacate
the said premises the lessor (MEPZ) will compensate the Company a
mutually agreed consideration for the sale of said factory building.
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