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Accounting Policies of Sundaram Clayton Ltd. Company

Mar 31, 2016

1 Accounting Standards

a) AS - 1 Disclosure of Accounting policies

The accounts are maintained on accrual basis as a going concern.

b) AS - 2 Valuation of Inventories

Inventories are valued in accordance with the method of valuation prescribed by The Institute of Chartered Accountants of India at lower of weighted average cost or net realisable value.

c) AS - 3 Cash flow statement

Cash flow statement is prepared under "Indirect Method" and the same is annexed.

d) AS - 4 Contingencies and events occurring after the balance sheet date

Disclosure of contingencies as required by the Accounting Standard is furnished in Note no - 3 (i)

e) AS - 5 Net profit or loss for the period, prior period items and changes in accounting policies

i) Exceptional Item - Profit on sale of land

ii) Prior period debits included in statement of profit and loss:

Employee benefits expense

Other expenses

iii) There is no change in accounting policies.

f) AS - 6 Depreciation accounting

This standard is withdrawn from 30.03.2016 and is clubbed with accounting standard - 10

g) AS - 7 Construction contracts

This accounting standard is not applicable.

h) AS - 8 Research and Development

This accounting standard is withdrawn.

i) AS - 9 Revenue recognition

The income of the company is derived from sale of gravity and pressure die-castings and from rendering of services.

(a) Sale of products is recognised when goods are dispatched through nominated logistics.

(b) Income from services are recognised on completion of services and when invoices are raised

(c) Export sales are recognised on the basis of LET export certificates

Interest income is recognised on a time proportion basis taking into account the amount outstanding and rate applicable.

Dividend from investments is recognised when the company in which they are held declares the dividend and when the right to receive is established.

The revenue and expenditure are accounted on a going concern basis.

j) AS - 10 Property, Plant and Equipment (Accounting for Fixed Assets and Depreciation)

All the fixed assets are valued at cost including expenditure incurred in bringing them to usable condition as reduced by depreciation.

Depreciation has been provided under the straight line method based on the useful life as per the requirements of Schedule II of the Companies Act, 2013 The Company has evaluated the useful life of all the assets through a Chartered Engineer and that useful life has been considered for providing depreciation charge.

In respect of assets sold during the year, pro-rata depreciation has been provided. Assets acquired during the year and whose cost is less than Rs.5,000/- are fully depreciated. Component Accounting - useful life of whole asset and part of the asset.

In respect of all depreciable assets it was noticed that useful life of part of the asset is not significantly different from the "whole of the asset". Accordingly, measurement of depreciation is same for component asset and whole of the asset.

Amortization of dies:

Till last year dies were amortised on the basis of shot each die has undergone over the estimated number of shots for which each such die will last. From 01.04.2015, the amortisation has been measured taking into account also the recovery from the customer and where full recovery of cost of die has been made from customer residual value is also amortised. This method has resulted in additional amortisation of Rs.2.50 Crores.

k) AS - 11 Effects of changes in Foreign Exchange rates Foreign currency transactions

Income and expenses in foreign currencies are converted at exchange rates prevailing on the date of the transaction.

Foreign currency monetary assets, liabilities and loans are translated at the exchange rate prevailing on the balance sheet date.

In terms of Companies (Accounting Standards) Amendment Rules, 2009, and Companies (Accounting Standards) Amendment Rules, 2011 on Accounting Standard-11 (AS-11), notified by the Government of India, the Company has opted to add or deduct the effect of the changes in foreign exchange rates relating to long term foreign currency monetary items to the carrying cost of fixed asset and to Foreign Currency Monetary Item Translation Difference Account. The impact is set out below:

Gain / (Loss) arising from changes in foreign exchange rates relating to depreciable capital assets reduced / added to carrying cost of such assets

a) Derivative instruments:

Derivative contracts are entered into by the company only based on underlying exposures. The company has not entered into any derivative contracts of a speculative nature.

b) Currency Option:

The Company has entered into a principal only swap in respect of the FCNR(B) loan of USD-10 Million availed.

Net gain / (loss) on foreign exchange fluctuation credited / debited to statement of profit and loss - under Other income / expenses

l) AS - 12 Accounting for Government grants

The company has not received any grants from the Government.

m) AS - 13 Accounting for Investments

Investments that are intended to be held for more than a year are classified as Non- current investments.

Long term investments are carried at cost. Provision for diminution in value, if any, is made to recognise a decline other than temporary in the value of investments.

Investment in equity shares of Sai Regency Power Corporation Private Limited, Chennai- 3,75,000 equity shares

The shares are acquired subject to the Memorandum and Articles of Association of the Investee Company and is further subject to restrictions on transfer as per the said Articles of Association.

Refer note no IX for aggregate value of quoted and unquoted investments n) AS - 14 Accounting for Amalgamation

During the year there was no amalgamation.

o) AS - 15 Employee benefits

Disclosure is made as per the requirements of the standard and the same is furnished below:

A Defined contribution plans

Contribution to provident fund is in the nature of defined contribution plan and are made to a recognised trust. The Company''s Provident Fund is exempted under section 17 of the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952:

Exemption was granted subject to the condition that the employer shall make good deficiency, if any, in the interest rate declared by the Trust vis-a-vis statutory rate. If any such deficiency is determined, the same will be made good by the employer.

B Defined benefit plan

(a) The company extends defined benefit plans in the form of leave salary to employees. In addition, the company also extends pension to senior managers of the company. Provision for leave salary and pension is made on actuarial valuation basis.

(b) The company also extends defined benefit plan in the form of gratuity to employees. Contribution to gratuity is made to Life Insurance Corporation of India in accordance with the scheme framed by the Corporation.

p) AS - 16 Borrowing costs

The borrowing cost has been treated in accordance with Accounting Standard on borrowing cost (AS 16) issued by the Institute of Chartered Accountants of India. During the year, a sum of Rs.0.43 crores (last year Rs 0.10 crores) being interest on borrowings attributable to qualifying assets have been capitalised under the various heads.

q) AS - 17 Segment reporting

''The company operates in only one segment viz., Automotive Components and there are no separate reportable segments.

r) AS - 18 Related party disclosure

Disclosures are made as per the requirements of the standard and clarifications issued by The Institute of Chartered Accountants of India.

s) AS - 19 Accounting for leases

The company has taken the following assets under operating lease

1. Vehicle

The lease period is for 60 months.

The details of maturity profile of future operating lease payments are furnished below:

a. The total of future minimum lease payments under non-cancellable operating lease for each of the following periods:

- Not later than one year

- Later than one year and not later than five years

- Later than five years

b. Total of minimum sub-lease payments expected to be received under non-cancellable sub-leases at the Balance Sheet date

c. Lease payments recognised in the Statement of Profit and Loss for the period under the head rent paid

2. Plant & Equipment, Electrical Equipments and other Equipments

The lease period is for 10 years.

The details of maturity profile of future operating lease payments are furnished below:

a. The total of future minimum lease payments under non-cancellable operating lease for each of the following periods:

- Not later than one year

- Later than one year and not later than five years

- Later than five years

b. Total of minimum sub-lease payments expected to be received under non-cancellable sub-leases at the Balance Sheet date

c. Lease payments recognised in the Statement of Profit and Loss for the period under the head rent paid

t) AS - 20 Earnings Per Share (EPS)

Earnings per share is calculated by dividing the profit attributable to the shareholders by the number of equity shares outstanding as at the close of the year :

Profit after tax

Number of equity shares

Face value of the share (in rupees)

Weighted average number of equity shares Basic and diluted Earnings per share (in rupees)

u) AS - 21 Consolidated financial statements

Consolidated financial statements of the company and its subsidiaries are enclosed.

w) AS - 23 Accounting for Investments in Associates in Consolidated Financial Statements

I) The Company holds 23.53% of the paid up equity share capital of Sundram Non-Conventional Energy Systems Limited, Chennai (SNES). Hence, SNES is an associate of the Company.

II) Emerald Haven Realty Limited, Chennai (EHRL) (formerly known as Green Earth Homes Limited) is an associate of TVS Motor Company Limited which is a subsidiary of the company. The company indirectly holds 28% of the paid-up equity share capital of EHRL. Hence, EHRL is an associate of the Company.

III) The Company holds 30.53% of the paid up Equity Capital of TVS Training & Services Limited, Chennai (TVSTS) Hence, TVSTS is an associate of the Company.

x) AS - 24 Discontinuing operations

The Company has not discontinued any operation during the year.

y) AS - 25 Interim Financial Reporting

The Company has elected to publish quarterly financial results which were subject to limited review by the statutory auditors.

z) AS - 26 Intangible Assets

During the year, the Company acquired the following assets falling under the definition of intangible assets as per the Accounting Standard and the following disclosure is made in respect of those assets:

aa) AS - 27 Financial reporting of interest in joint ventures

There is no joint venture.

ab) AS - 28 Impairment of Assets

No asset is impaired during the year as the carrying amount of all assets are more than the recoverable value.

ac) AS - 29 Provisions, contingent liabilities and contingent assets

(i) Provisions

a. The management has made an estimated warranty provision of Rs.4.25 crores (previous year - Rs. 4.06 crores)

b. The retrospective amendment to the payment of Bonus Act, 1965 (effective from 01-04-2014) enhancing the ceiling limit to Rs.7,000/- per month per employee or aggregate of minimum wages per month which ever is higher, is contested by the Company through a writ before High Court of Judicature at Madras. Hence, the bonus payable with retrospective effect of approximately Rs.2.28 Crores is not provided in the accounts. The prospective effect of amendment effective from 01.04.2015 is provided for.

(ii) Contingent liabilities

Amount for which the company is contingently liable is disclosed in Note No. XXII (3).

(iii) Contingent assets

Contingent assets which are likely to give rise to possibility of inflow of economic benefits - NIL

(iv) Contested liabilities are detailed in Note No. XXII (7).

15 Previous year''s figures have been regrouped wherever necessary to conform to the current year''s classification.


Mar 31, 2014

(A) i) Rights and preferences attached to equity share:

Every shareholder is entitled to such rights as to attend the meeting of the shareholders, to receive dividends distributed and also has a right in the residual interest of the assets of the company. Every shareholder is also entitled to right of inspection of documents as provided in the Companies Act, 1956.

ii) There are no restrictions attached to equity shares.

III. LONG-TERM BORROWINGS – (continued) Details of securities created (i) Rupee Term Loans:

Secured by first and exclusive charge on specific plant and equipment situated at the Company’s factories.

(ii) Buyer’s credit

Secured by exclusive charge on specific plant and equipment. (iii) Soft loan is repayable in 5 yearly instalments “from the start of commercial sale of the product produced in the commercial plant, or a new producing plant installed on the basis of result of the Technology Development and Demonstration Programme (TDDP) project, whichever is earlier”.


Mar 31, 2013

1 Accounting Standards

a) AS - 1 Disclosure of Accounting policies

The accounts are maintained on accrual basis as a going concern.

b) AS - 2 Valuation of Inventories

Inventories are valued in accordance with the method of valuation prescribed by The Institute of Chartered Accountants of India at lower of weighted average cost or net realisable value.

c) AS - 3 Cash flow statement

Cash flow statement is prepared under "Indirect Method" and the same is annexed.

d) AS - 4 Contingencies and events occurring after the balance sheet date

Disclosure of contingencies as required by the Accounting Standard is furnished in Note no - 6.

e) AS - 5 Net profit or loss for the period, prior period items and changes in accounting policies

i) Prior period debits included in statement of profit and loss:

Salaries & wages Other expenses

ii) There are no changes in accounting policies.

f) AS - 6 Depreciation accounting

Depreciation has been provided under the straight line method at the rates prescribed under Schedule XIV of the Companies Act, 1956 with applicable shift allowance. In respect of the assets added/sold during the year, pro-rata depreciation has been provided.

Depreciation in respect of computers and vehicles has been provided @ 30% and 18% respectively which are higher than the rate prescribed in schedule XIV of the Companies Act, 1956.

Depreciation in respect of assets acquired during the year whose actual cost does not exceed Rs. 5,000/- has been provided at 100%.

g) AS - 7 Construction contracts

This accounting standard is not applicable.

h) AS - 8 Research and Development

This accounting standard is withdrawn.

i) AS - 9 Revenue recognition

The income of the company is derived from sale of gravity and pressure die-castings and from sale of services.

(a) Sale of products is recognised when goods are despatched through nominated logistics.

(b) Income from services are recognised on completion of services and when invoices are raised

(c) Export sales are recognised on the basis of net export certificates

Interest income is recognised on a time proportion basis taking into account the amount outstanding and rate applicable.

Dividend from investments is recognised when the company in which they are held declares the dividend and when the right to receive is established.

The revenue and expenditure are accounted on a going concern basis.

j) AS - 10 Accounting for fixed assets

All the fixed assets are valued at cost including expenditure incurred in bringing them to usable condition as reduced by depreciation.

k) AS - 11 Effects of changes in Foreign Exchange rates Foreign currency transactions

Income and expenses in foreign currencies are converted at exchange rates prevailing on the date of the transaction. Foreign currency monetary assets, liabilities and loans are translated at the exchange rate prevailing on the balance sheet date.

In terms of Companies (Accounting Standards) Amendment Rules, 2009, and Companies (Accounting Standards) Amendment Rules, 2011 on Accounting Standard-11 (AS-11), notified by the Government of India, the Company has opted to adjust the changes in foreign exchange rates relating to long term foreign currency monetary items to the carrying cost of fixed asset and to Foreign Currency Monetary Item Translation Difference Account. The impact is set out below:

Gain / (Loss) arising from changes in foreign exchange rates relating to depreciable capital assets reduced / added to carrying cost of such assets

Gain / (Loss) arising from changes in foreign exchange rates relating to other long term foreign currency monetary items (not relating to acquisition of depreciable assets) credited / debited to "Foreign Currency Monetary Item Translation Difference Account".

Amortisation of "Foreign Currency Monetary Item Translation Difference Account" by crediting / (debiting) the Statement of Profit & Loss.

a) Derivative instruments:

Derivative contracts are entered into by the Company only based on underlying exposures. The Company has not entered into any derivative contracts of a speculative nature.

b) Currency Option:

The company has entered into European Currency options contract to limit the foreign exchange risk covering the total trade credit availed for USD 5.22 Million. The cost of option is apportioned over the period of the loan under the head Finance Cost.

Net gain / (loss) on foreign exchange fluctuation credited / debited to statement of profit and loss - under Other expenses in Note no XXII (p).

l) AS - 12 Accounting for Government grants

The Company has not received any grants from the Government.

m) AS - 13 Accounting for Investments

Investments that are intended to be held for more than a year are classified as Non- current investments.

Long term investments are carried at cost. Provision for diminution in value, if any, is made to recognise a decline other than temporary in the value of investments.

Investment in TVS Shriram Growth Fund, Scheme 1B of TVS Capital Funds Limited, Chennai, viz., 11,250 units are carried at par value of Rs.1,000/- per unit aggregating to Rs.1.13 crores. However, the Fund has declared its Net Asset Value as at 31st March 2013 at Rs.935/- per unit. Thus, there is a diminution in value to the extent of Rs.65/- per unit aggregating to Rs.0.07 crores. This diminution is not provided for in the accounts as the management opines that the portfolio is relatively younger in its investment horizon of 4-5 years with life of the Fund of 7 years with returns commencing from year 4 onwards and hence the fall in value is only temporary. This opinion is based on the fact that the fund returns will start to rise steeply and the growth fund will make positive returns soon.

Investment in equity shares of Sai Regency Power Corporation Private Limited, Chennai - 3,75,000 equity shares.

The shares are acquired subject to the Memorandum and Articles of Association of the Investee Company and is further subject to restrictions on transfer as per the said Articles of Association.

Refer note no IX for aggregate value of quoted and unquoted investments Provision for diminution in value of investments

- Sundaram Energy Opportunities Fund (Growth) of Sundaram Mutual Fund,

Chennai

- SBI Magnum Comma Fund of SBI Mutual Fund, Mumbai

- Sundaram Capex Opportunities Fund of Sundaram Mutual Fund, Chennai Total

n) AS - 14 Accounting for Amalgamation

During the year there was no amalgamation.

o) AS - 15 Accounting for employee benefits

Disclosure is made as per the requirements of the Standard and the same is furnished below:

A Defined contribution plans

Contribution to provident fund is in the nature of defined contribution plan and are made to a recognised trust.

The Company''s Provident Fund is exempted under Section 17 of the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952. Exemption was granted subject to the condition that the employer shall make good deficiency, if any, in the interest rate declared by the Trust vis-a-vis statutory rate. If any such deficiency is determined, the same will be made good by the employer.

B Defined benefit plan

(a) The Company extends defined benefit plans in the form of leave salary to employees. In addition, the Company also extends pension to senior managers of the Company. Provision for leave salary and pension is made on actuarial valuation basis.

(b) The Company also extends defined benefit plan in the form of gratuity to employees. Contribution to gratuity is made to Life Insurance Corporation of India in accordance with the scheme framed by the Corporation.

p) AS - 16 Borrowing costs

The borrowing cost has been treated in accordance with Accounting Standard on borrowing cost (AS 16) issued by the Institute of Chartered Accountants of India. During the year, a sum of Rs. 1.48 crores (last year Rs 4.85 crores) being interest on borrowings attributable to qualifying assets have been capitalised under the various heads.

q) AS - 17 Segment reporting

The Company operates in only one segment viz., Automotive Components and there are no separate reportable segments.

r) AS - 18 Related party disclosure

Disclosures are made as per the requirements of the standard and clarifications issued by The Institute of Chartered Accountants of India.

s) AS -19 Accounting for leases

The Company has taken the following assets under operating lease.

1. Vehicle

The lease period is for 60 months.

The details of maturity profile of future operating lease payments are furnished below:

a. The total of future minimum lease payments under non-cancellable operating lease for each of the following periods:

- Not later than one year

- Later than one year and not later than five years

- Later than five years

b. Total of minimum sub-lease payments expected to be received under non-cancellable sub-leases at the Balance Sheet date

c. Lease payments recognised in the Statement of Profit and Loss for the period under the head rent paid

2. Plant & Machinery, Electrical Equipments and other Equipments

The lease period is for 10 years.

The details of maturity profile of future operating lease payments are furnished below:

a. The total of future minimum lease payments under non-cancellable operating lease for each of the following periods:

- Not later than one year

- Later than one year and not later than five years

- Later than five years

b. Total of minimum sub-lease payments expected to be received under non-cancellable sub-leases at the Balance Sheet date

c. Lease payments recognised in the Statement of Profit and Loss for the period under the head rent paid

t) AS - 20 Earnings Per Share (EPS)

Earnings per share is calculated by dividing the profit attributable to the shareholders by the number of equity shares outstanding as at the close of the year.

Profit after tax

Number of equity shares

Face value of the share (in rupees)

Weighted average number of equity shares Earnings per share (EPS) (in rupees)

Diluted earnings per share (in rupees)

u) AS - 21 Consolidated financial statements

Consolidated financial statements of the Company and its subsidiaries are enclosed.

v) AS - 22 Accounting for taxes on income

Current tax is determined as per the provisions of Section 115JB of the Income Tax Act, 1961.

Deferred tax liability and asset are recognised, subject to the consideration of prudence, on timing differences using the tax rates substantively enacted on the Balance Sheet date.

Deferred tax liabilities

Tax on depreciation - timing difference

Less: Deferred tax assets

On employee related schemes

On other provision which will be allowed on payment basis like provision for warranty, provision for doubtful debts, deductions for demerger expenses etc.

Total

Net Deferred Tax Liability

w) AS - 23 Accounting for Investments in Associates in Consolidated Financial Statements

I) The Company holds 23.53% of the equity share capital of Sundram Non-Conventional Energy Systems Limited, Chennai (SNES). Hence, SNES is an associate of the Company.

II) Emerald Haven Realty Limited, Chennai (EHRL) (formerly known as Green Earth Homes Limited) is an associate of TVS Motor Company Limited which is a subsidiary of the Company. The Company indirectly holds 28% of the equity share capital of EHRL. Hence, EHRL is an associate of the Company.

III) TVS Wind Power Limited, Chennai is a subsidiary of TVS Energy Limited, Chennai, which is a subsidiary of TVS Motor Company Limited, Chennai. The Company indirectly holds 43.75% of the equity share capital of TVS Wind Power Limited. Hence, TVS Wind Power Limited is an associate of the Company.

IV) The Company holds 43.96% of the shares of TVS Training & Services Limited, Chennai (TVSTS). Hence, TVSTS is an associate of the Company.

x) AS - 24 Discontinuing operations

The Company has not discontinued any operation during the year.

y) AS - 25 Interim Financial Reporting

The Company has elected to publish quarterly financial results which were subject to limited review by the statutory auditors.

z) AS - 26 Intangible Assets

During the year, the Company acquired the following assets falling under the definition of intangible assets as per the Accounting Standard and the following disclosure is made in respect of those assets:

Software :

- Useful life of the assets

- Amortisation rates used

aa) AS - 27 Financial reporting of interest in joint ventures

There is no joint venture.

ab) AS - 28 Impairment of Assets

The carrying amount of the assets net of accumulated depreciation as on the balance sheet date is not less than the recoverable amount of those assets.

ac) AS - 29 Provisions, contingent liabilities and contingent assets

(i) Provisions

The management has an estimated warranty provision of Rs. 2.96 crores (previous year - Rs. 2.83 crores)

(ii) Contingent liabilities

Amount for which the Company is contingently liable is disclosed in Note No. XXIII (6).

(iii) Contingent assets

Contingent assets which are likely to give rise to possibility of inflow of economic benefits - NIL

(iv) Contested liabilities are detailed in Note no.XXIII (10)


Mar 31, 2012

A) AS - 1 Disclosure of Accounting policies

The accounts are maintained on accrual basis as a going concern.

b) AS - 2 Valuation of Inventories

Inventories are valued in accordance with the method of valuation prescribed by The Institute of Chartered Accountants of India at lower of weighted average cost or net realisable value.

c) AS - 3 Cash flow statement

Cash flow statement is prepared under "Indirect Method" and the same is annexed.

d) AS - 4 Contingencies and events occurring after the balance sheet date

Please refer Preamble (b) regarding the order received from the Hon'ble High Court of Judicature at Madras sanctioning the Composite Scheme of Arrangement on 3rd August 2012. As per the Scheme, a sum of Rs.1821 lakhs has been deposited into an escrow account of the designated entity for complying with the exit option provided to the public shareholders. Towards this a liability has been created and accounted under the head current liabilities.

f) AS - 6 Depreciation accounting

Depreciation has been provided under the straight line method at the rates prescribed under Schedule XIV of the Companies Act, 1956 with applicable shift allowance. In respect of the assets added/sold during the year, pro-rata depreciation has been provided.

Depreciation in respect of computers and vehicles has been provided @ 30% and 18% respectively which are higher than the rate prescribed in Schedule XIV of the Companies Act, 1956.

Depreciation in respect of assets acquired during the year whose actual cost does not exceed Rs.5,000/- has been provided at 100%

g) AS - 7 Construction contracts

This accounting standard is not applicable.

h) AS - 8 Research and Development

This accounting standard is withdrawn.

i) AS - 9 Revenue recognition

The income of the Company is derived from sale of gravity and pressure die castings, traded goods (upto 06.07.2011) net of trade discount and from sale of services. Interest income is recognised on a time proportion basis taking into account the amount outstanding and rate applicable.

Dividend from investments is recognised when the Company in which they are held declares the dividend and when the right to receive is established.

The revenue and expenditure are accounted on a going concern basis.

j) AS - 10 Accounting for fixed assets

All the fixed assets are valued at cost including expenditure incurred in bringing them to usable condition as reduced by depreciation.

k) AS - 11 Accounting for effects in Foreign Exchange rates Foreign currency transactions

Income and expenses in foreign currencies are converted at exchange rates prevailing on the date of the transaction. Foreign currency monetary assets, liabilities and external commercial borrowings are translated at the exchange rate prevailing on the balance sheet date.

In terms of Companies (Accounting Standards) Amendment Rules, 2009, and Companies (Accounting Standards) Amendment Rules, 2011 on Accounting Standard-11 (AS-11), notified by the Government of India, the Company has opted to adjust the changes in foreign exchange rates relating to long term foreign currency monetary items to the carrying cost of fixed asset and to Foreign Currency Monetary Item Translation Difference Account. The impact is set out below:

a) Derivative instruments:

Derivative contracts are entered into by the Company only based on underlying transaction. The Company has not entered into any derivative contracts of a speculative nature.

b) Currency Swaps:

The Company has entered into two currency swap contracts covering the total External Commercial Borrowings - JPY equivalent to USD 15 Million, with an option to fix the repayment liability of the Company in Indian Rupees. ( Outstanding ECB loan at the end of the year is JPY equivalent to USD 8 Million)

c) Interest Rate Structure (IRS):

The Company has entered into one derivative contract (included in currency swaps above) in respect of External Commercial Borrowings amounting to JPY equivalent to USD 10 Million to convert the floating interest rate to fixed interest rate. (Outstanding at the end of the year is USD 6 million)

Net gain / (loss) on foreign exchange fluctuation credited / debtited to statement of profit and loss - under Other expenses in note no. XXIII.

l) AS - 12 Accounting for Government grants

The Company has not received any grants from the Government.

m) AS - 13 Accounting for Investments

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments.

Current investments are carried at lower of cost or realisable value determined on individual basis. Long term investments are carried at cost. Provision for diminution in value, if any, is made to recognise a decline other than temporary in the value of investments.

Investment in TVS Shriram Growth Fund, Scheme 1 of TVS Capital Funds Limited, Chennai viz., 97,443 units are carried at par value of Rs.1000/- per unit aggregating to Rs.974.43 lakhs. However, the Fund has declared its Net Asset Value as at 31st March 2012 at Rs.943/- per unit. Thus there is a diminution in value to the extent of Rs.57/- per unit aggregating to Rs.55.54 lakhs. This diminution is not provided for in the accounts as the management opines that the portfolio is relatively younger in its investment horizon of 4-5 years with life of the Fund of 7 years with returns commencing from year 4 onwards and hence the fall in value is only temporary. This opinion is based on the fact that the fund returns will start to rise steeply and the growth fund will make positive returns soon.

n) AS - 14 Accounting for Amalgamation

Anusha Investments Limited, erstwhile subsidiary of the Company, amalgamated with the Company through a Composite Scheme of Arrangement sanctioned by the Hon'ble High Court of Judicature at Madras. Please refer Preamble (b)

o) AS - 15 Accounting for retirement benefits

Disclosure is made as per the requirements of the Standard and the same is furnished below:

A Defined contribution plans

Contribution to provident fund is in the nature of defined contribution plan and are made to a recognised trust.

B Defined benefit plan

(a) The Company extends defined benefit plans in the form of leave salary to employees. In addition, the Company also extends pension to senior managers

o) AS - 15 Accounting for retirement benefits - (continued)

of the Company. Provision for leave salary and pension is made on actuarial valuation basis.

(b) The Company also extends defined benefit plan in the form of gratuity to employees. Contribution to gratuity is made to Life Insurance Corporation of India in accordance with the scheme framed by the Corporation.

p) AS - 16 Borrowing costs

The borrowing cost has been treated in accordance with Accounting Standard on borrowing cost (AS 16) issued by The Institute of Chartered Accountants of India. During the year, a sum of Rs.484.85 lakhs (last year Rs.295.78 lakhs) being interest on borrowings attributable to qualifying assets have been capitalised under the various heads.

q) AS - 17 Segment reporting

The Company operates in only one segment viz., Automotive Components and there are no separate reportable segments. The income from trading in non-automotive business till the date of demerger i.e. 6th July 2011 being only Rs.26.34 lakhs and less than 10% of total income. Hence, this is not recognised as a separate segment.

r) AS - 18 Related party disclosure

Disclosures are made as per the requirements of the Standard and clarifications issued by The Institute of Chartered Accountants of India.

s) AS - 23 Accounting for Investments in Associates in Consolidated Financial Statements

t) The Company holds 23.53% of the equity share capital of Sundram Non-Conventional Energy Systems Limited, Chennai (SNES). Hence SNES is an associate of the Company.

II) Emerald Haven Realty Limited, Chennai (EHRL) (formerly known as Green Earth Homes Limited) is an associate of TVS Motor Company Limited which is a subsidiary of the Company. The Company indirectly holds 28% of the equity share capital of EHRL. Hence, EHRL is an associate of the Company.

III) TVS Wind Power Limited, Chennai is a subsidiary of TVS Energy Limited, Chennai, which is a subsidiary of the TVS Motor Company Limited, Chennai. The Company indirectly holds 43.75% of the equity share capital of TVS Wind Power Limited, Hence, TVS Wind Power Limited is an associate of the Company.

IV) Sundaram Engineering Products Services Limited, Chennai (SEPSL) is a subsidiary of TVS Motor Company Limited which is a subsidiary of the Company. The Company indirectly holds 29.87% of the equity share capital of SEPSL. Hence, SEPSL is an associate of the Company.

V) TVS Finance and Services Limited, Chennai (associate till 6.07.2011)

ab) AS - 28 Impairment of Assets

The carrying amount of the assets net of accumulated depreciation as on the balance sheet date is not less than the recoverable amount of those assets.

ac) AS - 29 Provisions, contingent liabilities and contingent assets

(i) Provisions

The management has made an estimated warranty provision of Rs. 282.51 lakhs (previous year - Rs. 267.51 lakhs)

(ii) Contingent liabilities

Amount for which the company is contingently liable is disclosed in Note No. XXIV (6).

(iii) Contingent assets

Contingent assets which are likely to give rise to possibility of inflow of economic benefits - NIL

(iv) Contested liabilities are detailed in Note no.XXIV (10)


Mar 31, 2011

A) AS - 1 Disclosure of Accounting policies

The accounts are maintained on accrual basis as a going concern.

b) AS - 2 Valuation of Inventories

Inventories are valued in accordance with the method of valuation prescribed by The Institute of Chartered Accountants of India at lower of weighted average cost or net realisable value.

c) AS - 3 Cash flow statement

Cash flow statement is prepared under "Indirect Method" and the same is annexed.

d) AS - 4 Contingencies and events occurring after the balance sheet date

Disclosure of contingencies as required by the Accounting Standard is furnished in note no. 9

f) AS - 6 Depreciation accounting

Depreciation has been provided under the straight line method at the rates prescribed under Schedule XIV of the Companies Act, 1956 with applicable shift allowance. In respect of the assets added/sold during the year, pro-rata depreciation has been provided.

Depreciation in respect of computers and vehicles has been provided @ 30% and 18% respectively which are higher than the rate prescribed in Schedule XIV of the Companies Act, 1956.

Depreciation in respect of assets acquired during the year whose actual cost does not exceed Rs. 5,000/- has been provided at 100%

g) AS - 7 Construction contracts

This accounting standard is not applicable.

h) AS - 8 Research and Development

This accounting standard is withdrawn.

i) AS - 9 Revenue recognition

The income of the Company is derived from sale of gravity and pressure die castings, traded goods, net of trade discount and includes realised exchange fluctuation gain on exports Rs. 79.70 Lakhs (Last year - Rs.322.62 Lakhs). Interest income is recognised on a time proportion basis taking into account the amount outstanding and rate applicable.

Dividend from investments is recognised when the company in which they are held declares the dividend and when the right to receive is established. The revenue and expenditure are accounted on a going concern basis.

j) AS - 10 Accounting for fixed assets

All the fixed assets are valued at cost including expenditure incurred in bringing them to usable condition as reduced by Central Value Added Tax (CENVAT) credit less depreciation.

k) AS - 11 Accounting for effects in Foreign exchange rates

Foreign currency transactions

Income and expenses in foreign currencies are converted at exchange rates prevailing on the date of the transaction. Foreign currency monetary assets, liabilities and external commercial borrowings are translated at the exchange rate prevailing on the balance sheet date.

a) Derivative instruments:

Derivative contracts are entered into by the company only based on underlying transaction. The Company has not entered into any derivative contracts of a speculative nature.

b) Currency Swaps:

The Company has entered into three currency swap contracts covering the total External Commercial Borrowings - JPY equivalent to USD 22 Million, with an option to fix the repayment liability of the Company in Indian Rupees. ( Outstanding ECB loan at the end of the year is JPY equivalent to USD 16.80 Million)

c) Interest Rate Structure (IRS):

The Company has entered into one derivative contract (included in currency swaps above) in respect of external commercial borrowings amounting to JPY equivalent to USD 10 Million to convert the floating interest rate to fixed interest rate.

l) AS - 12 Accounting for Government grants

The Company has not received any grants from the Government.

p) AS - 16 Borrowing costs

The borrowing cost has been treated in accordance with Accounting Standard on borrowing cost (AS 16) issued by The Institute of Chartered Accountants of India. During the year, a sum of Rs. 295.78 lakhs (last year Rs 310.44 lakhs) being interest on borrowings attributable to qualifying assets have been capitalised under the various heads.

q) AS - 17 Segment reporting

The Company operates in only one segment viz., Automotive Components and there are no separate reportable segments. As the income from traded goods i.e., Rs 204.18 lakhs is less than 10% of total income and is also a non - automotive activity, the income therefrom is not recognised as a separate segment.

r) AS - 18 Related party disclosure

Disclosures are made as per the requirements of the Standard and clarifications issued by The Institute of Chartered Accountants of India.

s) AS -19 Accounting of leases

The Company has taken vehicles under operating lease arrangement. The lease period is for 60 months.

t) AS - 20 Earnings Per Share (EPS)

Disclosure is made in the Profit and Loss Account as per the requirements of the Standard.

u) AS - 21 Consolidated financial statements

Consolidated financial statements of the Company and its subsidiaries are enclosed.

v) AS - 22 Accounting for taxes on income

Current tax is determined as the amount of tax payable in respect of taxable income for the period.

Deferred tax liability and asset are recognised, subject to the consideration of prudence, on timing differences using the tax rates substantively enacted on the Balance Sheet date.

w) AS - 23 Accounting for Investments in Associates in Consolidated Financial Statements

I) Sundram Non-Conventional Energy Systems Limited, Chennai (SNES) is an associate of Anusha Investments Limited, Chennai, which is a wholly owned subsidiary of the Company. Hence SNES is an associate of the Company.

II) TVS-e Access (India) Limited, Chennai is a subsidiary of TVS Investments Limited, Chennai, which is a wholly owned subsidiary of the Company. Hence TVS-e Access (India) Limited, Chennai is a subsidiary of the Company. Anusha Investments Limited, Chennai and TVS-e Access (India) Limited together hold 33.90% of equity share capital of TVS Finance & Services Limited, Chennai (TVS F&S). Hence TVS F & S is an associate of the company.

III) TVS Wind Power Limited, Chennai is a subsidiary of TVS Energy Limited, Chennai, which is a subsidiary of the TVS Motor Company Limited, Chennai. The Company holds indirectly 44.52% of the equity share capital of TVS Wind Power Limited, Hence, TVS Wind Power Limited is an associate of the Company,

Accordingly, the financial statements of SNES, TVS Wind Power Limited and TVS F&S are considered as associates in the preparation of consolidated financial statements of the Company.

x) AS - 24 Discontinuing operations

The Company has not discontinued any operations during the year.

y) AS - 25 Interim Financial Reporting

The Company has elected to publish quarterly financial results which were subject to limited review by the statutory auditors.

aa) AS - 27 Financial reporting of interest in joint ventures

The Company has no interest in joint venture.

ab) AS - 28 Impairment of Assets

The carrying amount of the assets net of accumulated depreciation as on the balance sheet date is not less than the recoverable amount of those assets.


Mar 31, 2010

Preamble:

The company is engaged mainly in the business of manufacture and sale of non ferrous gravity and pressure die castings which is the core and strategic activity. The company also derives Income from sale of certain electronic hardware items which is non core and non strategic in nature.

The method of accounting and compliance with various accounting standards is displayed below:

1 Accounting Standards

a) AS -1 Disclosure of Accounting policies

The accounts are maintained on accrual basis as a going concern.

b) AS - 2 Valuation of Inventories

Inventories are valued in accordance with the method of valuation prescribed by The Institute of Chartered Accountants of India at lower of weighted average cost or net realisable value.

c) AS - 3 Cash flow statement

Cash flow statement is prepared under "Indirect Method" and the same is annexed.

d) AS - 4 Contingencies and events occurring after the balance sheet date

Disclosure of contingencies as required by the accounting standard is furnished in note no. 9

In respect of External Commercial Borrowings (ECB) - USD 5 Million, the company has created charge subsequent to the Balance sheet date and hence, the same has been included under "secured loans". This was grouped under the head "unsecured loans" in the last year, now reclassified under "secured loans".

f) AS - 6 Depreciation accounting

Depreciation has been provided under the straight line method at the rates prescribed under Schedule XIV of the Companies Act, 1956 with applicable shift allowance. In respect of the assets added/sold during the year, pro-rata depreciation has been provided.

Depreciation in respect of computers and vehicles has been provided @ 30% and 18% respectively which is higher than the rate prescribed in schedule XIV of the Companies Act, 1956.

Depreciation in respect of assets acquired during the year whose actual cost does not exceed Rs. 5,000/- has been provided at 100%.

g) AS - 7 Construction contracts

This accounting standard is not applicable.

h) AS - 8 Research and Development

This accounting standard is withdrawn.

i) AS - 9 Revenue recognition

The income of the company is derived from sale of gravity and pressure die castings, traded goods, net of trade discount and includes realised exchange fluctuation gain on exports Rs.322.62 Lakhs (Last year Rs.55.52 Lakhs). Interest income is recognised on a time proportion basis taking into account the amount outstanding and rate applicable.

Dividend from investments is recognised when the company in which they are held declares the dividend and when the right to receive is established. The revenue and expenditure are accounted on a going concern basis.

j) AS -10 Accounting for Fixed assets

All the fixed assets are valued at cost including expenditure incurred in bringing them to usable condition as reduced by Central Value Added Tax (CENVAT) credit less depreciation.

k) AS -11 Accounting for effects in Foreign exchange rates

Foreign currency transactions

Income and expenses in foreign currencies are converted at exchange rates prevailing on the date of the transaction. Foreign currency monetary assets, liabilities and external commercial borrowings are translated at the exchange rate prevailing on the balance sheet date.

In terms of Companies (Accounting Standards) Amendment Rules, 2009, on Accounting Standard-11 (AS-11), notified by the Government of India on 31 st March 2009, the company has opted to adjust the changes in foreign exchange rates relating to long term foreign currency monetary items to the carrying cost of fixed asset and to Foreign Currency Monetary Item Translation Difference Account. The impact is set out below:

a) Derivative instruments:

Derivative contracts are entered into by the company only based on underlying transaction. The company has not entered into any derivative contracts of a speculative nature.

b) Currency Swaps:

The company has entered into three currency swap contracts covering the total external commercial borrowings - JPY equivalent to USD 22 Million, with an option to fix the repayment liability of the company in Indian Rupees. (Outstanding ECB loan at the end of the year is JPY equivalent to USD 20.6 Million)

c) Interest Rate Structure (IRS):

The company has entered into one derivative contract (included in currency swaps above) in respect of external commercial borrowings amounting to JPY equivalent to USD 10 Million to convert the floating interest rate to fixed interest rate.

l) AS -12 Accounting for Government grants

The company has not received any grants from the Government

m) AS -13 Accounting for Investments

Investments are valued at cost. Provision for diminution in the carrying cost of long term investments is made if such diminution is other than temporary in nature in the opinion of the management.

n) AS -14 Accounting for Amalgamation

Auto (India) Engineering Limited, Chennai, the companys wholly owned subsidiary got amalgamated with the company through the order of Honble High Court of Judicature, Madras vide its order dated 1 st July 2009. The effects of amalgamation have been carried out during the year in the books of accounts.

o) AS -15 Accounting for retirement benefits

Disclosure is made as per the requirements of the standard and the same is furnished below:

A Defined contribution plans

Contribution to provident fund is in the nature of defined contribution plan and are made to a recognised trust.

B Defined benefit plan

(a) The company extends defined benefit plans in the form of leave salary to employees. In addition, the company also extends pension to senior managers of the company.

Provision for leave salary and pension is made on actuarial valuation basis.

(b) The company also extends defined benefit plan in the form of gratuity to employees. Contribution to gratuity is made to Life Insurance Corporation of India in accordance with the scheme framed by the Corporation.

p) AS -16 Borrowing costs

The borrowing costs has been treated in accordance with Accounting Standard on borrowing costs (AS 16) issued by The Institute of Chartered Accountants of India. During the year, a sum of Rs. 310.44 lakhs (last year Rs. 295.82 lakhs) being interest on borrowings attributable to qualifying assets have been capitalised under the various heads.

q) AS -17 Segment reporting

The Company operates in only one segment viz., Automotive Components and there are no separate reportable segments. As the income from traded goods i.e., Rs 471.34 lakhs is less than 10% of total income and is also a non - automotive activity, the income therefrom is not recognised as a separate segment.

r) AS -18 Related party disclosure

Disclosures are made as per the requirements of the standard and clarifications issued by The Institute of Chartered Accountants of India.

s) AS -19 Accounting of leases

Since all the lease agreements were entered before 1st April 2001 this standard is not applicable.

t) AS - 20 Earnings per share (EPS)

Disclosure is made in the Profit and Loss Account as per the requirements of the standard.

u) AS - 21 Consolidated financial statements

Consolidated financial statements of the company and its subsidiaries are enclosed.

v) AS - 22 Accounting for taxes on income

Current tax is determined as the amount of tax payable in respect of taxable income for the period.

Deferred tax liability and asset are recognised, subject to the consideration of prudence, on timing differences using the tax rates substantively enacted on the Balance Sheet date.

w) AS - 23 Accounting for Investments in Associates in Consolidated Financial Statements

I) Sundram Non-Conventional Energy Systems Limited, Chennai (SNEL) is an associate of Anusha Investments Limited, Chennai, which is a wholly owned subsidiary of the Company. Hence SNEL is an associate of the Company.

II) TVS-E Access India Limited, Chennai is a subsidiary of TVS Investments Limited, Chennai, which is a wholly owned subsidiary of the Company. Hence TVS-E Access India Limited, Chennai is a subsidiary of the Company.

Anusha Investments Limited, Chennai and TVS-E Access India Limited together hold 37.67% of equity share capital of TVS Finance & Services Limited, Chennai (TVS F&S). Hence TVS F & S is an associate of the Company. Accordingly, the financial statements of SNEL and TVS F & S are considered in the preparation of consolidated financial statements of the Company.

x) AS - 24 Discontinuing operations

The Company has not discontinued any operations during the year.

y) AS - 25 Interim Financial Reporting

The Company has elected to publish quarterly financial results which were subject to limited review by the statutory auditors.

 
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