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Notes to Accounts of Sharda Motor Industries Ltd.

Mar 31, 2015

1 CORPORATE INFORMATION

Sharda Motor Industries Limited ("the Company") is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The company serves as a 'Tier I' vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a 'State of Art' manufacturing facilities across thirteen locations in seven states of India. Their production range includes Exhaust Systems, Catalytic Convectors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries

2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP), and mandatory Accounting Standards as prescribed under section 133 of the Companies Act 2013 read with rule 7 of companies ( Accounts) Rules, 2014 issued by the Ministry of Corporate Affairs. The company has complied in all material respects with the Accounting Standards notified under the Companies Act 2013.The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

3 Terms/rights attached to Equity shares

The company has only one class of Equity shares having a par value of Rs. 10 per share. Each shareholder is entitled to one vote per share.The company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim Dividend.

During the year ended 31st March, 2015, the amount of per share dividend recognized as distributions to Equity Shareholders was Rs. 10/- (31st March, 2014: Rs. 10/-)

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

4 a) Term Loan (External Commercial Borrowing) - I Loan

First Exclusive charge over immovable assets at C-506 & 526, Pioneer Industrial Park, Patherdi, Bilaspur Chowk Manesar, Distt : Gurgaon and first exclusive charge on plant & machinery and other movable fixed assets purchased out of the proceeds of the loan.

b) Term Loan (External Commercial Borrowing) - II Loan

First Exclusive charge over immovable assets at G-20, Sipcot Industrial Park, Irungattu Kottai, Sriperumbudur, Kancheepuram Dist. Tamilnadu and first exclusive charge on plant & machinery and other movable fixed assets purchased out of the proceeds of the loan. The Borrower shall maintain a minimum security cover of 1.25 times during the entire tenor of the facility.

c) Rupee Term Loan (Previous year)

Mortgage in favour of bank in respect of Plot No. C - 8 , TML Vendor Park, Sanand Road, Kotepura, Sanand, Ahemdabad. The loan was taken in financial year 2010-11 and repayable in 16 Instalments of Rs. 81.06 Lacs beginning from 10.08.2010.

a) Cash Credit/Buyer's Credit

(i) Secured by charge on inventories and books debts

(ii) Equitable mortgage of leasehold land and building, situated at Plot No.4, Sector 31, Greater Noida Industrial Development Area, U.P., and plant & Machinery and other assets

(iii) Rate of Interest

Cash Credit : 11.0% - 12.5%

Buyer's Credit : 3.0% - 3.5%

b) Bills Discounted

First hypothecation charge on pre-accepted hundies by Tata Motors Ltd. And bill discounting under the bill discounting/ Express vendor disccounting schemes and receivables of Tata Motors Ltd. both present and future hemes and receivables of Tata Motors Ltd. Both present and future

c) Directors Loan

Payable on demand. The loan is taken on an interest rate of 10% - 12%.

(ii) Defined Benefit plans

Gratuity Scheme: The employee's gratuity fund scheme managed by Life Insurance Corporation is a defined benefit funded plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employees benefit entitlement and measures each unit separately to built up the final obligation. The obligation for leave encashment is a defined unfunded benefit plan, which is recognized in the same manner as gratuity.

Leave Encashment/Compensated Absences: This is an unfunded defined benefit plan.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on 31st March, 2015).

5 SEGMENT WISE REPORTING (a) Composition of Business Segments:

The Company's business segments are organized on product lines as under:

i) Automotive components

ii) White Goods

(Rupees in Lacs)

6 CONTINGENT LIABILITIES AND COMMITMENTS

For the For the year ended year ended March 31, 2015 March 31, 2014

1. Contingent liabilities

(a) Claims against the company not acknowledged as debts

i) Disputed State Tax Matters 0.90 2.27

ii) Disputed Excise Matters 2.24 2.24

iii) Disputed Service Tax Matters 11.07 11.07

iv) Disputed Central Sales Tax Matters 10.74 -

v) Disputed Income Tax Matters 102.33 -

vi) Disputed Central Excise Matters 440.00 -

vii) Dispute with vendor 4.42 -

(b) Other money for which the company is contingently liable* 1,351.33 1,784.98

2. Commitments

a) Estimated amount of contracts remaining to be executed on capital account and 990.62 1,669.88 not provided for in the Accounts, net of advance

Total 2,913.65 3,470.44

i) Entry Tax of Rs. 0.90 Lacs (31st March, 2014: Rs. 2.27 lacs) for Financial Year 2001-02 against which the company has filed an appeal before Appelate Authority UP Trade Tax.

ii) Matter related to Cenvat Credit of Rs. 2.24 Lacs (31st March, 2014: 2.24 Lacs) under Cenvat Credit Rules is pending before the Appelate Authority of LTU Delhi.

iii) Service Tax of Rs. 11.07 Lacs (31st March, 2014: Rs. 11.07 Lacs) under Service Tax Rules which is pending before the Custom, Excise and Service Tax Appelate Tribunal, Delhi

iv) Central Sales Tax of Rs.10.74 Lacs (31st March, 2014:Nil) for Financial Year 2008-09 which is pending before U.P. Sales Tax.

v) Income Tax of Rs. 24.04,Rs.39.26 &Rs.39.03Lacs (31st March, 2014: Nil) for Assessment Year 2004-05, 2009-10& 2011-12 respectively against which appeal has been filed before ITAT, New Delhi.

vi) Excise Tax of Rs.440 Lacs(31st March, 2014 :Nil) under Cenvat Credit Rules is pending before the Hon'ble Supreme Court of India.

vii) Claim of Rs.4.42 lacs (31st March, 2014:Nil) for Financial Year 2014-15 which is pending before District Court,Saket.

*Foreign Letters of Credit of Rs. 1,351.33 Lacs (31st March, 2014: Rs. 1,784.98 Lacs)

i) Figures in brackets () relate to previous year

ii) Share of Contingent liabilities incurred in relation to interests in joint ventures as at 31st March, 2015 : Rs. NIL (31st March, 2014 Rs. NIL)

iii) Share of Capital Commitments incurred in relation to interests in joint ventures as at 31st March, 2015 : Rs. NIL (31st March, 2014 Rs. NIL)

7 As per the requirements of sub section (5) of section 135 of the Companies Act, 2013 the Company was required to spend at least two per cent of its average net profits for the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility (CSR) Policy. Accordingly, the Company had to spend a minimum of Rs. 59.44 Lacs during the current financial year towards CSR activities. During the current year, the Company has adopted a strategy whereby certain long term programmes will be undertaken by the Company for the social and economic welfare. As the process of evaluating and identifying specific programme is in progress, no amount was incurred on CSR during the year ended 31 March 2015.

8 The Compnay has w.e.f. 01.04.2014, computed depreciation in accordance with the useful life of the fixed assets as per Schedule II of the Companies Act 2013. Consequantly Depreciation charged for the year is higher by Rs. 351.43 Lacs and carrying value of assets amounting to Rs. 137.96 Lacs ( Net of Deferred Tax Rs. 66.26 Lacs ) after retaining the residual value, whose remaining useful life is NIL has been adjusted from the opening balance of retained earnings.

9 In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realised in the ordinary course of business. The provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.

10 The balances of debtors, creditors and loans and advances are awaiting confirmation.

11 Figures are rounded off to nearest rupee in Lacs . Previous year figures has been re-grouped or re-classified where ever considered necessary.ary.


Mar 31, 2014

NOTE 1: CORPORATE INFORMATION

Sharda Motor Industries Limited ("the Company") is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The company serves as a ''Tier I'' vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a ''State of Art'' manufacturing facilities across thirteen locations in seven states of India. Their production range includes Exhaust Systems, Catalytic Convectors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries

NOTE 2: BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements of Sharda Motor Industries Limited ("the Company") have been prepared with generally accepted accounting principles in India ("GAAP"), and mandatory accounting standards issued by the Companies ( Accounting Standards) Rules, 2006, (as amended) and the provisions of the Companies Act, 1956 ("the Act") as adopted by the Company. The Company has complied inall material respects with Accounting Standards notifed under the Companies Act, 1956 read with General Circular 8/2014 dated 4 April 2014, issued by the Ministry of Corporate Affairs. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

NOTE 3: SEGMENT WISE REPORTING

(a) Composition of Business Segments:

The Company''s business segments are organized on product lines as under: i) Automotive components ii) White Goods

(b) Segment revenues, Results and Other Information

NOTE 4 : RELATED PARTY DISCLOSURES

List of related parties where control exists and related parties with whom transactions have taken place and relationships:

Name of the Related Party Relationship

Sharda Sejong Auto components (India) Limited Subsidiary Company #

a) Relan Industrial Finance Ltd.

Associate Companies

b) Bharat Seats Ltd.

a) Mr.N.D Relan (Co. Chairman)

b) Mr.Ajay Relan (Managing Director) Key Managerial Personnel

c) Mr.Udayan Banerjee (Executive Director)

a) Mr.Rohit Relan

b) Mrs.Sharda Relan

c) Mrs.Mala Relan

d) Mrs.Ritu Relan

e) Ms Aashita Relan Relatives of Key Managerial Personnel

f) Mr.Aashim Relan

g) Mr.Rishabh Relan h) Mr.Pranav Relan i) Mr.Ayush Relan

a) Sharda Enterprises

b) N.D.Relan (HUF)

c) Ajay Relan (HUF)

Enterprises over which Key Managerial Personnel are able to

d) Rohit Relan (HUF)

Exercise significant infuence (Associate Concern)

e) Sharda Auto Solutions Pvt. Ltd.

f) A.N.I Hospitality LLP

g) Progressive Engineering & Automation Pvt. Ltd.

# In persuance of the order dated 25th July, 2012 of the Honorable High Court of Delhi, subsidiary company, has been amalgamated with the holding company ( ''Sharda Motor Industries Limited'' )

NOTE 5 : CONTINGENT LIABILITIES AND COMMITMENTS For the year For the year ended ended March 31, 2014 March 31, 2013

1. Contingent liabilities

(a) Claims against the company not acknowledged as debts

- Disputed State Tax Matters* 2.27 2.27

- Disputed Excise Matters ** 2.24 442.24

- Disputed Service Tax Matters *** 11.07 11.07

--

(b) Other money for which the company is contingently liable 1,784.98 789.83

2. Commitments

(a) Estimated amount of contracts remaining to be executed on capital account 1,669.88 1,708.13 and not provided for in the Accounts, Net of Advances

Tot al 3,470.44 2,953.55

* Entry Tax of Rs. 2.27 Lacs (March 31, 2013: Rs. 2.27 lacs) for Financial Year 2000-01, 2001-02 and 2002-03 against which the company has fled an appeal before Appellate Authority UP Trade Tax.

Another matter related to Cenvat Credit of Rs. 2.24 Lacs (March 31, 2013: 442.24 Lacs) under Cenvat Credit Rules is pending before the Appellate Authority of LTU Delhi.

^ Service Tax of Rs. 11.07 Lacs (March 31, 2013: Rs. 11.07 Lacs) under Service Tax Rules which is pending before the Custom, Excise and Service Tax Appellate Tribunal, Delhi

^^ Foreign Letters of Credit of Rs. 1784.98 Lacs (March 31, 2013: Rs. 789.83 Lacs)

NOTE 6

In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realised in the ordinary course of business. The provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.

NOTE 7

The balances of debtors, creditors and loans and advances are awaiting confirmation.

NOTE 8

In pursuance of the order dated 25th July, 2012 of the Honorable High Court of Delhi, a scheme of amalgamation of the company with M/s Sharda Sejong Auto Components (India) Ltd., a wholly owned subsidiary of the company, has been approved. Hence, fgures pertaining to current year are merged fgures & are not comparable with that of the previous year.

NOTE 9

Figures are rounded off to nearest rupee in Lacs.


Mar 31, 2013

NOTE 1: CORPORATE INFORMATION

Sharda Motor Industries Limited ("the Company") is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The company serves as a Tier I'' vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a ''State of Art'' manufacturing facilities across thirteen locations in seven states of India. Their production range includes Exhaust Systems, Catalytic Convectors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries

NOTE 2: BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared under the historical cost convention in accordance with the Indian Generally Accepted Accounting Principles ("GAAP"), mandatory accounting standards as per the Company (Accounting Standards) Rules, 2006, other pronouncements of the Institute of Chartered Accountants of India (ICAI) and other relevant provisions of the Companies Act, 1956 and guidelines issued by the Security Exchange Board of India as adopted consistently by the Company. All income and expenditure having a material bearing on the financial statements are recognized on accrual basis.

NOTE 3.1: LEASES

Assets taken on operating lease:

The company has taken certain assets on non-cancelable operating lease and lease rent amounting to Rs. 132.00 Lacs(March 31, 2012: Rs. 132.00 Lacs) has been debited to the Statement of Profit & Loss. The future minimum lease payments as on 31st March, 2013

NOTE 4

In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realised in the ordinary course of business. The provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.

NOTE 5

The balances of debtors, creditors and loans and advances are awaiting confirmation.

NOTE 6

In pursuance of the order dated 25th July, 2012 of the Honurable High Court of Delhi, a scheme of amalgamation of the company with Sharda Sejong Auto Components (India) Ltd., a wholly owned subsidiary of the company, has been approved. Hence, figures pertaining to current year are merged figures and are not comparable with that of the previous year.

NOTE 7

Figures are rounded off to nearest rupee in lakhs.


Mar 31, 2012

NOTE 1: CORPORATE INFORMATION

Sharda Motor Industries Limited ("the Company") together with its subsidiary is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The company serves as a ''Tier I'' vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a ''State of Art'' manufacturing facilities across thirteen locations in seven states of India. Their production range includes Exhaust Systems, Catalytic Convectors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries

NOTE 2: BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared under the historical cost convention in accordance with the Indian Generally Accepted Accounting Principles ("GAAP"), mandatory accounting standards as per the Company (Accounting Standards) Rules, 2006, other pronouncements of the Institute of Chartered Accountants of India (ICAI) and other relevant provisions of the Companies Act, 1956 and guidelines issued by the Security Exchange Board of India as adopted consistently by the Company. All income and expenditure having a material bearing on the financial statements are recognized on accrual basis.

a) Terms/rights attached to Equity shares

The company has only one class of Equity shares having a par value of Rs. 10 per share. Each shareholder is entitled to one vote per share.The company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim Dividend.

During the year ended 31st March, 2012, the amount of per share dividend recognized as distributions to Equity Shareholders was Rs. 10/- (March 31, 2011: Rs. 10.00/-).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholders.

Note: Particulars of Security/Guarantees/Terms of Repayment/Default

a) Term Loan (External Commercial Borrowing)

Mortgage in favour of the Security Trustee in a form satisfactory to the Security Trustee of the Borrower''s immovable properties pertaining to the Project Situated at:

i) Mahindra World City, Changalpattu Taluk, Kanchepuram Dist. Industrial Park, Tamilnadu-603002,

ii) An exclusive charge by way of hypothecation in favour of the Security Trustee of the Borrower''s movables pertaining to the Projects Situated at:

- Mahindra World City, Changalpattu Taluk, Kanchepuram Dist. Industrial Park, Tamilnadu-603002,

- Plot No. 52/1,52/2,53/2A,54A,54B,54C & 54D, Behind Ceat Company, Satpur, Nashik-422007

- Plot No. C-8, TML Vendor Park, Sanand Road, North Cotepura, Sanand, Ahmedabad

- 58 KM, Delhi - Jaipur Highway, P.O. Binola, Haryana. being financed out of the proceeds of the Facility (save and except book debts), including movable machinery, machinery spares, tools and accessories, both Present & future

The ECB loan consists of 2 loans:

i) First loan was taken in July 2008 and repayable in 10 instalments of Rs.7,857,000/- each commencing from 14.07.2009. The loan carries an interest rate of 10.25% p.a.

ii) Second loan was taken in September, 2008 and repayable in 10 instalments of Rs.16,038,000/- each commencing from 30.09.2009. The loan carries an interest rate of 7.5% p.a.

b) Rupee Term Loan

Mortgage in favour of bank in respect of Plot No. C - 8 , TML VENDER PARK, Sanand Road, Kotepura, Sanand, Ahemdabad The loan was taken in financial year 2010-11 and repayable in 16 Instalments of Rs.8,106,250/- beginning from 10.08.2010.

* Amount of Rs.212,988,868 (March 31, 2011: 212,988,868) payable to Subsidiary company, Sharda Sejong Auto Components India Ltd. on account of transfer of business unit at G-20, Sipcot, Chennai. This amount has been shown in the current portion (March 31, 2011: Long Term).

a) Cash Credit/Buyer''s Credit

(i) Secured by charge on inventories and books debts

(ii) Equitable mortgage of leasehold land and building, situated at Plot No.4, Sector 31, Greater Noida Industrial Development Area, U.P., and plant & Machinery and other assets

(iii) Rate of Interest

Cash Credit : 11.5% - 13.5%

Buyer''s Credit: 3.5% - 4.5%

b) Bills Discounted

First hypothecation charge on pre-accepted hundies by Tata Motors Ltd. And bill discounting under the bill discounting/ Express vendor disccounting schemes and receivables of Tata Motors Ltd. both present and future

c) Directors Loan

Payable on demand. The loan is taken on an interest rate of 10% - 12%.

a) The above does not includes any amount due to be transferred to investor education & protection fund

b) Pursuant to amendments to Schedule VI to Companies Act, 1956 vide notification number GSR 719 (E) dated November 16, 2007, there are no amount due as of March 31, 2012 due to micro, small & medium enterprises as defined in Industries (Development and Regulation) Act, 1951, hence it has not been disclosed in the books of the company (March 31, 2011: Nil). Further no interest during the year have been paid or payable under the terms of MSMED Act'' 2006

** in the earlier years the company had invested in the shares with the intention of holding it for more than 1 year from the date on which Investment was made. Thus, it was classified as Long term Investment as per AS 13 "Accounting for Investments". However, since the subsidiary company is getting merged with Sharda Motors Industries Limited in next financial year, the said investment no more remains Long term Investment. Hence, it is shown under Current Investments.

(ii) Defined Benefit plans

Gratuity Scheme:The employee''s gratuity fund scheme managed by Life Insurance Corporation is a defined benefit funded plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employees benefit entitlement and measures each unit separately to built up the final obligation. The obligation for leave encashment is a defined unfunded benefit plan, which is recognized in the same manner as gratuity.

Leave Encashment/Compensated Absences: This is an unfunded defined benefit plan.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on March 31, 2012).

NOTE 3: SEGMENT WISE REPORTING

(a) Composition of Business Segments:

The Company''s business segments are organized on product lines as under:

i) Automotive components

ii) White Goods

iii) Others

* Entry Tax of Rs. 227,265/- (March 31, 2011: Rs. 227,265/-)for Financial Year 2000-01, 2001-02 and 2002-03 against which the company has filed an appeal before Appelate Authority UP Trade Tax.

** Excise duty of Rs. 44,000,000/- (March 31, 2011: Rs. 44,000,000/-) under the Central Excise Rules, which is pending before the Custom, Central Excise & Service Tax Appelate Tribunal, Delhi. However, the company has filed the Writ petition against this issue before Bombay High Court which has been decided in favour of the company.

Another matter related to Cenvat Credit of Rs. 224,378/- (March 31, 2011: NIL) under Cenvat Credit Rules is pending before the Appelate Authority of LTU Delhi.

*** Service Tax of Rs. 1,106,897/- (March 31, 2011: Rs. 1,106,897/-) under Service Tax Rules which is pending before the Custom, Excise and Service Tax Appelate Tribunal, Delhi

**** Income Tax demand of Rs. 5,432,553/- (March 31, 2011: NIL) for Asst. year 2009-10 and Rs. 3,772,302/- (March 31, 2011: Nil) for Asst. year 2004-05 under the Income Tax Act, is pending before the Commissioner of Income Tax LTU (Appeals), Delhi.

***** Foreign Letters of Credit of Rs. 120,440,953/- (March 31, 2011: Rs. 135,124,476/-)

NOTE 4

In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realised in the ordinary course of business. The provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.

NOTE 5

The balances of debtors, creditors and loans and advances are awaiting confirmation.

NOTE 6

Till the year ended 31 March, 2011, the company was using pre-revised schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 31 March, 2012, the revised schedule VI notified under the Companies Act, 1956, has become applicable to the company. The company has reclassified previous year figures to conform to this year''s classification.


Mar 31, 2011

1. Background

Sharda Motor Industries Limited ("the Company") together with its subsidiary is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The company serves as a ''Tier I'' vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a ''State of Art'' manufacturing facilities across eight locations in India. Their production range includes Exhaust Systems, Catalytic Convertors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries.

2 (a) Contingent Liabilities

(i) Foreign Letters of Credit Rs. 135,124,476/- (Previous year Rs. 86,334,633/-).

(ii) Entry tax of Rs 227,265/- (Previous year Rs. 227,265/-) for the financial year 2000-01, 2001 -02 & 2002-03 against which the company has filed an appeal before Appellate Authority UP Trade Tax.

(iii) Excise duty of Rs. 97,461/- (Previous year Rs. 97,461/-) under Central Excise Rules, which is pending before the Adjucating Authority. The company has executed a bank guarantee of Rs 175,000 against such liability.

(iv) Excise duty of Rs. 44,000,000/- (Previous year Rs. 44,000,000/-) under the Central Excise Rules, which is pending before the Custom, Central Excise & Service Tax Appellate Tribunal, Delhi, however, the Company has filed the special leave petition against this issue before Bombay high court which has been decided in favour of the Company.

(v) Excise duty of Rs. 4,072,313/- (Previous year Rs. 4,072,313/-) under Central Excise Rules, which is pending before ''The Additional Commissioner, Central Excise Large Tax Payer Unit.

(vi) Service Tax of Rs. 1,106,897/- (Previous Year Rs. Nil) under Service Tax Rules which is pending before the Additional Commissioner of Service Tax, Delhi.

(b) Estimated value of contracts remaining to be executed on capital account not provided for in the Accounts, net of advance is Rs. 86,828,717/- (Previous Year Rs. 177,458,667/-).

3. The balances of debtors, creditors and loans and advances are awaiting confirmation.

4. In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realized in the ordinary course of business. The provision for all the known liabilities are adequate and not in excess of the amount reasonably necessary.

5. Pre-Operative Expenses and Capital Work in Progress (including capital advances)

(a) Pre Operative expenses (directly allocable) amounting to Rs. 36,713,204/- (previous year Rs. 36,507,924) as under:

(b) Capital Work in Progress includes an amount of Rs. 129,712,547/- (Previous Year Rs. 128,904,958/-) paid as Capital Advances.

6 (a) Amounts due from/ to Subsidiary Company:

The maximum aggregate amount due to Sharda Sejong Auto Components (India) Limited, a subsidiary company, during the year as well as closing balance as on 31st March, 2011 was Rs. 212,988,,868/-. In the previous year the amount due from Sharda Sejong Auto Components (India) Limited as well as closing balance was Rs.569,193,665/-.

(b) Debtors include amounts due from Companies under the same management:

(i) The maximum aggregate amount due from Bharat Seats Limited, during the year was Rs 140,518,449/- (Previous year Rs.101,641,949/-) and closing balance as on 31st March, 2011 was Rs. 39,732,600/- (Previous year Rs. 86,541,030).

(ii) The maximum aggregate amount due from Progressive Engineering & Automation Pvt Ltd, during the year was Rs 21,174,352/- (Previous year Rs. 1,635,125) and closing balance as on 31st March, 2011 was Rs. 14,379,769/- (Previous year Rs. 1,635,125/-).

7 Employee Benefits Defined Contribution Plan

The Company makes contribution towards Employees Provident Fund and Employee''s State Insurance scheme. Under the rules of these schemes, the company is required to contribute a specified percentage of payroll costs. The Company during the year recognized the following amounts in the Profit and Loss Account under company''s contribution to Defined contribution plan.

Note:

The above amount includes Rs 128,204and Rs 6,779 as Employer''s Contribution to Provident Fund and Employer''s Contribution to ESI respectively transferred to Capital Work in Progress.

Defined Benefit Plans:

Gratuity Scheme: This is a funded defined benefit plan for qualifying employees. The employees gratuity fund scheme managed by Life Insurance Corporation of India. The present value of obligation is determine based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligations. The obligation for leave encashment is recognized in the same manner as gratuity

Leave Encashment/Compensated Absences: This is an unfunded defined benefit plan.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on March 31,2011).

In accordance with the Accounting Standard (revised 2005), an actuarial valuation was carried out in respect of the aforesaid defined benefit plans based on following assumptions:

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

8. Pursuant to amendments to Schedule VI to Companies Act, 1956 vide Notification No. GSR 719 (E) dated 16th November, 2007. The company has not received any intimation from suppliers regarding the status under the Micro, Small and Medium Enterprises Development Act, 2006. Hence, disclosure, if any was concerning the amount unpaid as at the year end together with interest paid/payable as required under the said act has not been given.

Note: -

1. Managerial Remuneration to Directors does not include incremental liability for gratuity and leave encashment unless paid/ payable as per company rules.

2. The Managerial Remuneration paid to the Directors is well within the limits specified in Companies Act, 1956.

9. Additional Information:

a) Capacity, Production, Turnover & Stocks:

(i) Licensed & Installed Capacity :

As certified by the Management and as per the norms laid down by the Central Government, no licence is required for the class of goods manufactured by the Company; hence information pertaining to the licensed capacity is not given. The Company is of the view that the installed capacity of its machinery in terms of measurable units cannot be determined as it varies, based on the design / process of its heterogeneous range of products.

10. Segment wise Reporting

(a) Composition of Business Segments:

The Company''s business segments are organized on product lines as under:

i) Automotive components

ii) White Goods

iii) Others

11. Leases

Assets taken on operating Lease

a) The company has taken certain assets on non-cancelable operating lease and lease rent amounting to Rs. Nil (Previous Year Rs. 12,287,903/-) has been debited to the Profit & Loss account. The future minimum lease payments as on 31st March, 2011 are as under:

General Description of Lease Terms:

- Lease Rentals are charged on the basis of agreed terms.

- Assets are taken on lease over a period of 1 to 9 years.

b) Assets given on Operating Lease

The Company has given the premises on cancellable operating lease on or after 2001, and lease rental amounting to Rs. Nil (Previous Year: Rs. 1,500,000/-) has been credited to the Profit and Loss Account. The details for the assets given of operating lease are as under:

12. Financial and Derivative Instruments

Derivative contracts entered into by the company and outstanding as on 31st March, 2011.

- Foreign currency exposure hedged by derivative instruments amounts to Rs. 55,225,000/- (P.Y.Rs. 112,187,500 /- ).

- Foreign currency exposure that are not hedged by derivative instruments as on 31st March, 2011 amounts to Rs.373,015,636/- (P.Y.Rs. 74,041,900)

13. Previous year''s figures have been reclassified/regrouped, wherever considered necessary.

14. The current year results include the figure pertaining to Sipcot Unit situated at G-20, Sipcot Industrial Park, Kancheepuram, Chennai due to cancellation of transfer of business vide cancellation deed dated November 20, 2009. All assets and liabilities pertaining to Sipcot Unit hitherto hived off to wholly owned subsidiary M/s Sharda Sejong Auto Components India Ltd. have returned back to the company at their respective book values as on commencement of business on 1st April, 2010. Hence current year''s figures are not comparable with previous year''s figures


Mar 31, 2010

Note : The above Loans are secured against :

1) Cash Credit

(a) Secured by charge on Inventories and Book Debts at Company''s Godowns, yards and Premises situated at Noida, Greater Noida, Haridwar, Gurgaon, Nasik and Chennai (Mahindra World City).

(b) Equitable mortgage of Leasehold Land and Building and Plant & Machinery and other assets situated at Plot No.4, Sector 31, Kasna Industrial Area, Greater Noida, U.P

2) Bill Discounted

First hypothecation charge on pre-accepted hundies by Tata Motors Ltd. and bill discounting under the bill discounting / Express vendor discounting scheme and recievables of Tata Motors Ltd. both present and future.

3) Term Loan (External Commercial Borrowing)

Company is in the process of creating Mortgage/Hypothecation on the respective assets as stipulated in the Facility Agreement signed between ICICI Bank and the company.The brief description on such securities are given vide Note No.22 of Schedule 12 (B).

4) Short Term Loan

First charge on current assets (both present and future) and first charge on all movable fixed assets (except those which are exclusively charged to existing lenders)

5) Vehicle Loan

Secured against hypothecation of respective assets.

1. Background

Sharda Motor Industries Limited ("the Company") together with its subsidiary is primarily engaged in the manufacturing and assembly of Auto Components and White Goods Components. The company serves as a ''Tier I'' vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs). It has got a ''State of Art'' manufacturing facilities across eight locations in India. Their production range includes Exhaust Systems, Catalytic Convertors, Suspension Systems, Sheet Metal Components and Plastic parts for the Automotive and White Goods Industries.

2. (a) Contingent Liabilities

(i) Foreign Letters of Credit Rs. 86,334,633/- (Previous year Rs. 13,292,850/-).

(ii) Entry tax of Rs 227,265/- (Previous year Rs. 227,265/-) for the financial year 2000-01, 2001-02 & 2002-03 against which the company has filed an appeal before Appellate Authority UP Trade Tax.

(iii) Excise duty of Rs. 97,461/- (Previous year Rs. 97,461/-) under Central Excise Rules, which is pending before the Adjucating Authority. The company has executed a bank guarantee of Rs 175,000 against such liability.

(iv) Excise duty of Rs. 44,000,000/- (Previous year Rs. Nil) under Central Excise Rules, which is pending before ''The Commissioner, Central Excise Large Tax Payer Unit''.

(v) Excise duty of Rs. 4,072,313/- (Previous year Rs. Nil) under Central Excise Rules, which is pending before ''The Additional Commissioner, Central Excise Large Tax Payer Unit.''.

(b) Estimated value of contracts remaining to be executed on capital account not provided for in the accounts, net of advance is Rs 177,458,667/- (Previous Year Rs. 24,730,279/-).

3. The balances of debtors, creditors and loans and advances are awaiting confirmation.

4. In the opinion of the Board, the current assets, loans and advances are approximate of the value stated if realized in the ordinary course of business. The provision for all the known liabilities are adequate and not in excess of the amount reasonably necessary.

5. Employee Benefits

Defined Contribution Plan

The Company makes contribution towards Employees Provident Fund and Employee''s State Insurance scheme. Under the rules of these schemes, the company is required to contribute a specified percentage of payroll costs. The Company during the year recognised the following amounts in the Profit and Loss Account under company''s contribution to Defined contribution plan.

Note:

The above amount includes Rs 106,899 and Rs 5,195 as Employer''s Contribution to Provident Fund and Employer''s Contribution to ESI respectively transferred to Capital Work in Progress.

Defined Benefit Plans:

Gratuity Scheme: This is a funded defined benefit plan for qualifying employees. The employees gratuity fund scheme managed by Life Insurance Corporation of India. The present value of obligation is determine based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligations. The obligation for leave encashment is recognized in the same manner as gratuity

Leave Encashment/Compensated Absences : This is an unfunded defined benefit plan.

The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on March 31,2010).

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

6. Pursuant to amendments to Schedule VI to Companies Act, 1956 vide Notification No. GSR 719 (E) dated 16th November, 2007. The company has not received any intimation from suppliers regarding the status under the Micro, small and Medium Enterprises Development Act, 2006. Hence, disclosure, if any was concerning the amount unpaid as at the year end together with interest paid/payable as required under the said act has not been given.

Note: -

1. Managerial Remuneration to Directors does not include incremental liability for gratuity and leave encashment unless paid/payable as per company rules.

2. The Managerial Remuneration paid to the Directors is well within the limits specified in Companies Act, 1956.

7. Additional Information:

a) Capacity, Production, Turnover & Stocks:

(i) Licensed & Installed Capacity :

As certified by the Management and as per the norms laid down by the Central Government, no licence is required for the class of goods manufactured by the Company; hence information pertaining to the licensed capacity is not given. The Company is of the view that the installed capacity of its machinery in terms of measurable units cannot be determined as it varies, based on the design / process of its heterogeneous range of products.

8. Segment wise Reporting

(a) Composition of Business Segments:

The Company''s business segments are organized on product lines as under:

i) Automotive components

ii) White Goods

iii) Others

(b) Assets given on Operating Lease

The Company has given the premises on cancellable operating lease on or after 2001, and lease rental amounting to Rs. 1,500,000/- (Previous Year: Rs. 1,500,000/-) has been credited to the Profit and Loss Account. The details for the assets given of operating lease are as under:

9. Financial and Derivative Instruments

Derivative contracts entered into by the company and outstanding as on 31st March'' 2010.

- Foreign currency exposure hedged by derivative instruments amounts to Rs.112,187,500 (P.Y.Rs. 173,737,500 /- ).

- Foreign currency exposure that are not hedged by derivative instruments as on 31st March'' 2010 amounts to Rs.74,041,900(P.Y.Rs. 315,009,376)

10. Previous year''s figures have been reclassified/regrouped, wherever necessary, to make them comparable.

11. Security creation arrangement with regard to External Commercial Borrowings.

i) Mortgage in favour of the Security Trustee in a form satisfactory to the Security Trustee of the Borrower''s immovable properties pertaining to the Project Situated at :

a) Mahindra World City, Changalpattu Taluk, Kanchepuram Dist. Industrial Park, Tamilnadu-603002,

b) Plot No. C-8, TML Vendor Park, Sanand Road, North Cotepura, Sanand, Ahmedabad* being financed out of the proceeds of the Facility, both present and future*

* Charge yet to be created, Since Lease deed pertaining to the land of this property is under execution.

ii) An exclusive charge by way of hypothecation in favour of the Security Trustee of the Borrower''s movables pertaining to the Projects Situated at:

a) Mahindra World City, Changalpattu Taluk, Kanchepuram Dist. Industrial Park, Tamilnadu-603002,

b) Plot No. 52/1,52/2,53/2A,54A,54B,54C & 54D, Behind Ceat Company, Satpur, Nashik-422007

c) Plot No. C-8, TML Vendor Park, Sanand Road, North Cotepura, Sanand, Ahmedabad

d) 58 KM, Delhi - Jaipur Highway, P.O. Binola, Haryana. being financed out of the proceeds of the Facility (save and except book debts), including movable machinery, machinery spares, tools and accessories, both present and future.

 
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