Notes to Accounts of Sundram Fasteners Ltd.
Mar 31, 2023
The Honourable National Company Law Tribunal, Chennai bench, vide its order dated December 6, 2021, approved the composite scheme of amalgamation and arrangement (demerger) inter-alia amongst T V Sundram Iyengar & Sons Private Limited (âTVSSâ), Sundaram Industries Private Limited (âSIPLâ), Southern Roadways Private Limited (âSRPLâ) and TVS Sundram Fasteners Private Limited (âTPLâ) (âComposite Schemeâ) in accordance with Sections 230 to 232 and other applicable provisions under the Companies Act, 2013 and rules made thereunder and other applicable laws. The Composite Scheme was made effective on January 6, 2022 (âEffective Dateâ).
14 Share capital and other equity (Contd.)
Pursuant to the Composite Scheme, SRPL and SIPL merged into TVSS on the Effective date, thereby holding 49.53% of the paid up share capital of the Company. Further, in terms of the Scheme, the Fasteners business undertaking of TVSS, including 49.53% shareholding in the Company was demerged from TVSS and has been vested in / transferred to TPL on February 4, 2022. Consequently, effective February 4, 2022, TPL is the Promoter of the Company.
e) Rights, preferences and restrictions Equity shares
The Company has only one class of equity shares having a par value of '' 1/- per share. Each holder of equity share is entitled to one vote per share. Accordingly, all equity shares rank equally with regard to dividends and share in the Companyâs residual assets on winding up. The Company declares and pays dividends in Indian Rupees. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive 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.
f) There are no bonus shares or buy-back of shares or shares issued for consideration other than cash during a period of five years immediately preceding financial year ended March 31,2023
g) Capital management
The Companyâs capital management objective is to ensure adequate return to the shareholder by maintaining the optimal capital structure. The Companyâs policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. It sets the amount of capital required on the basis of annual business and long-term operating plans which include capital and other strategic investments.
For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to maximise the shareholder value.
Management assesses the Companyâs capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
(i) Working capital loan from banks
The Company has various working capital facilities with an aggregate outstanding of '' 37.83 (March 31,2022: '' 21.54) carrying interest rate of 8.90% per annum (March 31, 2022: 9.75%) per annum. These facilities are repayable on demand, partly secured by pari-passu first charge on current assets viz., stocks of raw materials, work in progress and finished goods.
Preshipment packing credit loan is availed in INR amounting to '' 275.00 (March 31,2022: '' 250.00). The loan is unsecured and is repayable within 360 days and carries interest in the range of 4.93% to 5.65% per annum (March 31,2022: 2.10% to 2.75%) per annum.
(ii) Term loan from banks
External Commercial Borrowing (ECB) loan from a bank amounting to USD 5 million, equivalent to '' 41.09 (March 31,2022: USD 10 million, equivalent to '' 75.80), repayable over 3 equal yearly instalments commencing from July 2021. The loan is unsecured and its interest rate is linked to Libor agreed spread per annum. Another ECB loan from the same bank amounting to USD 10 million, equivalent to '' 82.18 (March 31, 2022: USD 15 million, equivalent to '' 113.70), repayable over 3 equal yearly instalments commencing from August 2022. The loan is unsecured and its interest rate is linked to LIBOR agreed spread per annum.
The companyâs exposure to liquidity, interest rate and currency risk related to borrowings are disclosed in note 35.
a) Provision for employee benefits Defined benefit plans:
The Company operates post-employment defined benefit plans comprising of gratuity plan, group terminal benefit plan and an exempted provident fund managed through trust. The post employment benefit in the form of gratuity is managed and administered by Life Insurance Corporation of India. The provident fund contributions to trust are managed through trust investments in addition to contribution of a portion of its provident fund liability to employees provident fund organisation. The group terminal benefit plan is made available to certain class of employees and the same is unfunded. The Company obtains an actuarial valuation from an independent actuary measured using projected unit credit method to determine the liability as at the reporting date.
The post-employment defined benefit plans operated by the Company are as follows: i) Gratuity
The following tables summarise the components of net benefit expenses recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the Gratuity.
The Company has its defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this legislation, employee who has completed five years of service is entitled to specific benefit. The level of benefit provided depends on the employeeâs length of service and salary at retirement/ termination age. The gratuity plan is a funded plan and the Company makes its contributions to a recognised fund in India.
The Companyâs Gratuity plan valuation report includes employee benefits of the Company, its subsidiaries of (i) TVS Upasana Limited, Chennai; and (ii) TVS Next Limited, Chennai and its Holding company TVS Sundram Fasteners Private Limited, Chennai. Based on an entity specific valuation obtained in this respect, the amounts are recognised in the Companyâs standalone financial statements. The following table sets out such amounts recognised in Companyâs standalone financial statements:
All eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan in which both the employee and employer (at a determined rate) contribute monthly. The Company also contributes as specified under the law, in case of certain class of employees, to a provident fund trust set up and to respective Regional Provident Fund Commissioner. The Companyâs contribution to the Provident Fund, where set up as a trust, is liable for future provident fund benefits to the extent of its annual contribution and any shortfall in fund assets based on government specified minimum rates of return relating to current period service and recognises such contributions and shortfall, if any as an expense in the year incurred. In accordance with an actuarial valuation, there is no deficiency in the interest cost as the present value of the expected future earnings on the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest. Such contributions made into the fund and to the regional provident fund commissioner during the year are recognised as an expense in the statement of profit and loss.
32 Other statutory information
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company has not traded or invested in Crypto currency or virtual currency during the financial year.
(iii) A) During the previous year ended March 31, 2022, the Company loaned '' 7.82 (including extension of existing
loan) to Sundram International Limited (wholly owned subsidiary of the Company), an intermediary, which has inturn loaned such amount to Cramlington Precision Forge Limited (âCPFLâ) (wholly owned subsidiary of Sundram International Limited), the ulitmate beneficiary of such loan. This loan was made in the ordinary course of business to facilitate the working capital requirements of CPFL.
B) During the year, the Company has not advanced or loaned or invested funds to any persons or entities, including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
1) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
2) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(iv) The Company has not received any fund from any persons or entities, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(v) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
Note 1: In view of the impact of COVID-19 Pandemic, certain activities to complete the shooting schedules relating to wildlife photography project were postponed which were originally planned to be completed by January 2022, resulting in postponement of planned spend. The Company has spent Rs. 0.35 during the year ended March 31, 2023 and intends to spend the remaining expenditure within the prescribed timelines.
Note 2 : The above expenditure includes contribution to Krishna Educational Society, over which the Company has significant influence (also refer note 37)
Note 3 : The Company has deposited the unspent obligation in a separate CSR unspent account within the prescribed timelines.
Financial risk management framework
The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The board of directors along with the top management are responsible for developing and monitoring the Companyâs risk management policies. The Companyâs senior management advises on financial risks and the appropriate financial risk governance framework for the Company.
The Companyâs risk management policies established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Company, through establishment of standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Companyâs audit committee oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
The Companyâs principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Companyâs operations and to provide guarantees to support the operations of its group companies. The Companyâs principal financial assets include loans, trade and other receivables, investments and cash and cash equivalents that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the company. The Company uses derivative financial instruments, such as foreign exchange forward contracts that are entered to hedge foreign currency risk exposure. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
35 Financial instruments - Fair values and risk management (Contd.)
Financial risk management (Contd.)
The sources of risks which the company is exposed to and their management is given below: a) Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings. The Company is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which arise from both its operating and investing activities.
i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings, import of raw materials and spare parts, capital expenditure, export sales and the Companyâs net investments in foreign subsidiaries.
Currency risk (foreign exchange risk) arises on financial instruments that are denominated in a foreign currency, i.e. in a currency other than the functional currency in which they are measured. For the purpose of Ind AS, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency.
The Company manages its foreign currency risk by hedging transactions through forward contracts, for the repayment of short and long term borrowings and payables arsing out of procurement of raw materials and other components. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.
Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken.
Foreign currency denominated financial assets and liabilities which expose the Company to currency risk are disclosed below. The amounts shown are those reported translated at the closing rate. Unhedged foreign currency risk exposure at the end of the reporting period has been expressed in Rupees.
35 Financial instruments - Fair values and risk management (Contd.)
Foreign currency sensitivity
The following table illustrates the sensitivity of profit and equity with respect to the Companyâs financial assets and financial liabilities and in relation to the fluctuation in the respective currencies âall other things being equalâ
If the Indian Rupee had strengthened/ weakened against the respective currency by 5% during the year ended March 31,2023 (March 31,2022: 5%), then this would have had the following impact on profit before tax and equity:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs debt obligations with floating interest rates.
The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate borrowings. The Company has Nil% (March 31, 2022: 15%) of its borrowings at a fixed rate of interest.
The Company does not expect any change in interest rates on fixed rate borrowings and accordingly have not presented any sensitivities on such borrowings.The Company also does not expect any significant impact of changes in the market interest rates on account of COVID-19.
The Company has invested in listed and unlisted equity instruments. All investments in equity portfolio are reviewed and approved by the Board of Directors.
At the reporting date, the exposure to listed equity securities at fair value was '' 20.58 (March 31,2022: '' 18.76) b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including, foreign exchange transactions and other financial instruments.
Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of the Companyâs trade receivables, certain loans and advances and other financial assets. The Company enters into long term contracts with its customers whereby it mitigates the risk exposure on high risk customers. Further, none of the customers contributes to more than 10% of the Companyâs total revenues as continuous efforts are made in expanding its customer base. Outstanding customer receivables are regularly monitored and reviewed by the Audit committee periodically.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including end-user customers, their geographic location, industry, trading history with the Company and existence of previous financial difficulties. With respect to other financial assets, the Company does not expect any credit risk against such assets except as already assessed. The Company is monitoring the economic environment in the country and is taking actions to limit its exposure to customers with customers experiencing particular economic volatility.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. The Company has adopted a practical measure of computing the expected credit loss allowance for trade receivable and other financial assets, which comprise large number of small balances, based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information including consideration for increased likelihood of credit risk. Further, the Company also makes an allowance for doubtful debts on a case to case basis.
Investments of surplus funds are made only with approval of Board of Directors. Investments primarily include investments in equity instruments of various listed entities, power generation companies, compulsorily convertible preference shares and other trade investments. The Company does not expect significant credit risks arising from these investments after considering impact of COVID-19 pandemic.
(iv) Cash and cash equivalents and Bank balances other than cash and cash equivalents
The Company has its cash and bank balances deposited with credit worthy banks as at the reporting date. The Company does not expect any loss from non-performance by these counter-parties.
(v) Others
Other financial assets comprising of security deposits, derivative assets, interest receivable and advance recoverable primarily consists of deposits with TNEB for obtaining Electricity connections, rental deposits given for lease of premises. The Company does not expect any loss from non-performance by these counter-parties.
c) Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Companyâs treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Companyâs liquidity position through rolling forecasts on the basis of expected cash flows.
The Companyâs objective is to maintain a current ratio with an optimal mix of short term loans and long term loans. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months and the management is confident that it can roll over its debt with existing lenders. The Board of Directors periodically reviews the Companyâs business requirements vis-a-vis the source of funding.
(i) The Honâble Supreme Court in its ruling dated February 28, 2019 held that the allowances paid to employees are essentially a part of the basic wage, which are necessarily and ordinarily paid to all employees and are to be treated as wages for the purpose of â(PF)â Provident Fund contribution, with fewer exception to the same. With respect to a demand of '' 1.63 pertaining to the period March 2011 to December 2013 raised earlier by PF authorities, a provision has been made, however writ petition/appeal has been filed by the Company challenging the same and pending before Tribunal. Based on legal advice, considering that the PF authorities has not commenced any proceedings claiming contribution on allowances for prior or subsequent periods and considering interpretative challenges surrounding the retrospective application of the judgement and absence of reliable measurement of provisions relating to earlier periods, this matter has been disclosed as a contingent liability.
(ii) In addition to the above, the Company from time to time is also engaged in proceedings pending with various authorities in the ordinary course of business. Judgement is required in assessing the range of possible outcomes for some of these matters, which could change substantially over time as each of the matters progresses depending on experience on actual assessment proceedings by the respective authorities and other judicial precedents. Based on its internal assessment supported by external legal counsel views, as considered necessary, the Company believes that it will be able to sustain its positions if challenged by the authorities and accordingly no additional provision / disclosures are required for these matters.
Management is of the view that above matters will not have any material adverse effect on the Companyâs financial position and results of operations.
|
36 Contingencies and commitments (Contd.) |
As at March 31, 2023 |
As at March 31,2022 |
|
|
a) |
Contingent liabilities (Contd.) |
||
|
- Guarantees |
|||
|
Guarantees including financial guarantees issued to subsidiaries and utilised (Total guarantees issued to subsidiaries: '' 303.90 (March 31,2022: '' 302.89)) |
140.25 |
210.99 |
|
|
- Other money for which the Company is contingently liable |
|||
|
On letters of credit |
11.42 |
2.13 |
|
|
On partly paid shares of The Adyar Property Holding Company Limited (aggregating to '' 1,225/-)* |
0.00 |
0.00 |
|
|
* Amount less than '' 0.01 |
|||
|
b) |
Contingent assets Claim of additional compensation against land acquisition |
0.23 |
0.23 |
|
c) |
Capital commitments |
||
|
Estimated amount of contracts remaining to be executed on capital account and not provided for |
101.01 |
44.89 |
|
The Company has taken various premises including godowns, offices, flats, machinery and other assets under lease for which lease agreements are generally cancellable in nature and are renewable by mutual consent on agreed upon terms.
In accordance with Ind AS 108, segment information with respect to geographic segment has been provided in the consolidated financial statements of the Company and therefore no separate disclosures have been given in these standalone financial statements.
Management believes that the Companyâs international transactions with related parties continue to be at armâs length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision for taxation.
42 Events after the reporting period
The Board of Directors of the Company has declared interim dividend in its meeting held on May 04, 2023 as disclosed under note 14B(b).
Mar 31, 2022
!. Fair value hierarchy and valuation technique
The fair value of investment properties is '' 8.84 Crores as at March 31,2022 and March 31,2021. These disclosures are based on external information available with the company including valuations reports obtained by the company from an independent valuer specialised in valuing these types of investment properties and registered as a valuer as defined under Rule 2 of Companies (registered valuers and valuation) Rules, 2017.
* Consequent to the Composite Scheme of amalgamation and arrangement, the aforesaid shareholders are part of the promoter group of the company. Their share holding under this clause for the year ended March 31,2021 has been made for comparative purposes.
The Honourable National Company Law Tribunal, Chennai bench, vide its order dated December 6, 2021, approved the composite scheme of amalgamation and arrangement (demerger) inter-alia amongst T V Sundram Iyengar & Sons Private Limited ("TVSS"), Sundaram Industries Private Limited ("SIPL"), Southern Roadways
14 Share capital and other equity (Contd.)
Private Limited (âSRPLâ) and TVS Sundram Fasteners Private Limited (âTPLâ) (âComposite Schemeâ) in accordance with Sections 230 to 232 and other applicable provisions under the Companies Act, 2013 and rules made thereunder and other applicable laws. The Composite Scheme was made effective on January 6, 2022 (âEffective Dateâ).
Pursuant to the Composite Scheme, SRPL and SIPL merged into TVSS on the Effective date, thereby holding 49.53% of the paid up share capital of the Company. Further, in terms of the Scheme, the Fasteners business undertaking of TVSS, including 49.53% shareholding in the Company was demerged from TVSS and has been vested in / transferred to TPL on February 4, 2022. Consequently, effective February 4, 2022, TPL is the Promoter of the Company.
e) Rights, preferences and restrictions Equity shares
The Company has only one class of equity shares having a par value of '' 1/- per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive 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.
f) There are no bonus shares or buy-back of shares or shares issued for consideration other than cash during a period of five years immediately preceding financial year ended March 31,2022.
g) Capital management
The Companyâs capital management objective is to ensure adequate return to the shareholder by maintaining the optimal capital structure. The Companyâs policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. It sets the amount of capital required on the basis of annual business and long-term operating plans which include capital and other strategic investments.
For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to maximise the shareholder value.
Management assesses the Companyâs capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
(c) Nature and purpose of reserves General reserve
General reserve is an accumulation of retained earnings of the Company, apart from the balance in the statement of profit and loss which can be utilised for meeting future obligations.
C Analysis of items of OCI (net of tax)
(a) Fair valuation of equity instruments
The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the equity till the same is derecognised/ disposed off.
(b) Remeasurement of defined benefit liability
Remeasurement of defined benefit liability comprises of actuarial gain or losses and return on plan assets (excluding interest income).
(i) Working capital loan from banks
The Company has various working capital facilities with an aggregate outstanding of '' 21.54 (March 31,2021: '' 11.67) carrying interest rate of 9.75% per annum (March 31, 2021: 7.05% to 8.50%) per annum. These facilities are repayable on demand, partly secured by pari-passu first charge on current assets viz., stocks of raw materials, work in progress and finished goods.
Preshipment packing credit loan is availed in '' amounting to '' 250.00 (March 31, 2021: '' 225.00). The loan is unsecured and is repayable within 360 days and carries interest in the range of 2.10% to 2.75% per annum (March 31,2021: 1.50% to 5.04%) per annum.
External Commercial Borrowing (ECB) loan from a bank amounting to USD 10 million, equivalent to '' 75.80 (March 31,2021 - USD 15 million, equivalent to '' 109.68), repayable over 3 equal yearly instalments commencing from July 2021. The loan is unsecured and its interest rate is linked to Libor agreed spread per annum. Another ECB loan from the same bank amounting to USD 15 million, equivalent to '' 113.70 (March 31,2021 - USD 15 million, equivalent to '' 109.68), repayable over 3 equal yearly instalments commencing from August 2022. The loan is unsecured and its interest rate is linked to Libor agreed spread per annum.
The companyâs exposure to liquidity, interest rate and currency risk related to borrowings are disclosed in note 35.
a) Term loans were applied for the purpose they were obtained. Further, short term loans availed have not been utilised for long term purposes by the Company.
b) Quarterly returns or statements of current assets filed by the Company for the sanction of working capital loans with banks or financial institutions are not materially different with that of books of accounts.
c) The Company has not been declared as wilful defaulter by any bank or financial institution or government or any government authority.
a) Provision for employee benefits Defined benefit plans:
The Company operates post-employment defined benefit plans comprising of gratuity plan, group terminal benefit plan and an exempted provident fund managed through trust. The post employment benefit in the form of gratuity is managed and administered by Life Insurance Corporation of India. The provident fund contributions to trust are managed through trust investments in addition to contribution of a portion of its provident fund liability to employees provident fund organisation. The group terminal benefit plan is made available to certain class of employees and the same is unfunded. The Company obtains an actuarial valuation from an independent actuary measured using projected unit credit method to determine the liability as at the reporting date.
The post-employment defined benefit plans operated by the Company are as follows; i) Gratuity
The following tables summarise the components of net benefit expenses recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the Gratuity.
The Company has its defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this legislation, employee who has completed five years of service is entitled to specific benefit. The level of benefit provided depends on the employeeâs length of service and salary at retirement/ termination age. The gratuity plan is a funded plan and the Company makes its contributions to a recognised fund in India.
The Companyâs Gratuity plan valuation report includes employee benefits of the Company, its subsidiaries of (i) TVS Upasana Limited, Chennai; and (ii) TVS Next Limited, Chennai and its Holding company TVS Sundram Fasteners Private Limited, Chennai. Based on an entity specific valuation obtained in this respect, the amounts are recognised in the Companyâs standalone financial statements. The following table sets out such amounts recognised in Companyâs standalone financial statements:
All eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan in which both the employee and employer (at a determined rate) contribute monthly. The Company also contributes as specified under the law, in case of certain class of employees, to a provident fund trust set up and to respective Regional Provident Fund Commissioner. The Companyâs contribution to the Provident Fund, where set up as a trust, is liable for future provident fund benefits to the extent of its annual contribution and any shortfall in fund assets based on government specified minimum rates of return relating to current period service and recognises such contributions and shortfall, if any as an expense in the year incurred. In accordance with an actuarial valuation, there is no deficiency in the interest cost as the present value of the expected future earnings on the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest. Such contributions made into the fund and to the regional provident fund commissioner during the year are recognised as an expense in the statement of profit and loss.
32 Other statutory information
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company has not traded or invested in Crypto currency or virtual currency during the financial year.
(iii) A) The Company loaned '' 7.82 (including extension of existing loan) during the year to Sundram International
Limited (wholly owned subsidiary of the Company), an intermediary, which has inturn loaned such amount to Cramlington Precision Forge Limited (''CPFL'') (wholly owned subsidiary of Sundram International Limited), the ulitmate beneficiary of such loan. This loan was made in the ordinary course of business to facilitate the working capital requirements of CPFL.
B) The Company has not advanced or loaned or invested funds to any persons or entities, including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
1) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
2) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(iv) The Company has not received any fund from any persons or entities, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(v) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
Note 1: In view of the impact of Covid-19 Pandemic, certain activities to complete the shooting schedules relating to wildlife photography project were postponed which were originally planned to be completed by January 2022, resulting in postponement of planned spend.
Note 2 : The above expenditure includes contribution to Krishna Educational Society, over which the Company has significant influence (also refer note 37).
Financial risk management framework
The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The board of directors along with the top management are responsible for developing and monitoring the Companyâs risk management policies. The Companyâs senior management advises on financial risks and the appropriate financial risk governance framework for the Company.
The Companyâs risk management policies established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Company, through establishment of standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Companyâs audit committee oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
The Companyâs principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Companyâs operations and to provide guarantees to support the operations of its group companies. The Companyâs principal financial assets include loans, trade and other receivables, investments and cash and cash equivalents that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the company. The Company uses derivative financial instruments, such as foreign exchange forward contracts that are entered to hedge foreign currency risk exposure. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
35 Financial instruments - Fair values and risk management (Contd.)
Financial risk management (Contd.)
The sources of risks which the company is exposed to and their management is given below: a) Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings. The Company is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which arise from both its operating and investing activities.
i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings, import of raw materials and spare parts, capital expenditure, export sales and the Companyâs net investments in foreign subsidiaries.
Currency risk (foreign exchange risk) arises on financial instruments that are denominated in a foreign currency, i.e. in a currency other than the functional currency in which they are measured. For the purpose of Ind AS, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency.
The Company manages its foreign currency risk by hedging transactions through forward contracts, for the repayment of short and long term borrowings and payables arsing out of procurement of raw materials and other components. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.
Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken.
Foreign currency denominated financial assets and liabilities which expose the Company to currency risk are disclosed below. The amounts shown are those reported translated at the closing rate. Unhedged foreign currency risk exposure at the end of the reporting period has been expressed in Rupees.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs debt obligations with floating interest rates.
The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate borrowings. The Company has approximately 15% (March 31,2021: 4%) of its borrowings at a fixed rate of interest.
The Company does not expect any change in interest rates on fixed rate borrowings and accordingly have not presented any sensitivities on such borrowings.The Company also does not expect any significant impact of changes in the market interest rates on account of COVID-19.
The Company has invested in listed and unlisted equity instruments. All investments in equity portfolio are reviewed and approved by the Board of Directors.
At the reporting date, the exposure to listed equity securities at fair value was '' 18.76 (March 31,2021: '' 19.19). b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including, foreign exchange transactions and other financial instruments.
Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of the Companyâs trade receivables, certain loans and advances and other financial assets. The Company enters into long term contracts with its customers whereby it mitigates the risk exposure on high risk customers. Further, none of the customers contributes to more than 10% of the Companyâs total revenues as continuous efforts are made in expanding its customer base. Outstanding customer receivables are regularly monitored and reviewed by the Audit committee periodically.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including end-user customers, their geographic location, industry, trading history with the Company and existence of previous financial difficulties. With respect to other financial assets, the Company does not expect any credit risk against such assets except as already assessed. The Company is monitoring the economic environment in the country and is taking actions to limit its exposure to customers with customers experiencing particular economic volatility.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. The Company has adopted a practical measure of computing the expected credit loss allowance for trade receivable and other financial assets, which comprise large number of small balances, based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information including consideration for increased likelihood of credit risk. Further, the Company also makes an allowance for doubtful debts on a case to case basis.
Investments of surplus funds are made only with approval of Board of Directors. Investments primarily include investments in equity instruments of various listed entities, power generation companies, compulsorily convertible preference shares and other trade investments. The Company does not expect significant credit risks arising from these investments after considering impact of COVID-19 pandemic.
(iv) Cash and cash equivalents and Bank balances other than cash and cash equivalents
The Company has its cash and bank balances deposited with credit worthy banks as at the reporting date. The Company does not expect any loss from non-performance by these counter-parties.
(v) Others
Other financial assets comprising of security deposits, derivative assets, interest receivable and advance recoverable primarily consists of deposits with TNEB for obtaining Electricity connections, rental deposits given for lease of premises. The Company does not expect any loss from non-performance by these counter-parties.
c) Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Companyâs treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Companyâs liquidity position through rolling forecasts on the basis of expected cash flows.
The Companyâs objective is to maintain a current ratio with an optimal mix of short term loans and long term loans. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months and the management is confident that it can roll over its debt with existing lenders. The Board of Directors periodically reviews the Companyâs business requirements vis-a-vis the source of funding.
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments:
(i) The Honâble Supreme Court in its ruling dated February 28, 2019 held that the allowances paid to employees are essentially a part of the basic wage, which are necessarily and ordinarily paid to all employees and are to be treated as wages for the purpose of â(PF)â Provident Fund contribution, with fewer exception to the same. With respect to a demand of '' 1.63 pertaining to the period March 2011 to December 2013 raised earlier by PF authorities, a provision has been made, however writ petition/appeal has been filed by the Company challenging the same and pending before Tribunal. Based on legal advice, considering that the PF authorities has not commenced any proceedings claiming contribution on allowances for prior or subsequent periods and considering interpretative challenges surrounding the retrospective application of the judgement and absence of reliable measurement of provisions relating to earlier periods, this matter has been disclosed as a contingent liability.
(ii) The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in this standalone financial statements.
Including the matters disclosed above, the Company is involved in taxation matters that arise from time to time in the ordinary course of business. Judgement is required in assessing the range of possible outcomes for some of these tax matters, which could change substantially over time as each of the matters progresses depending on experience on actual assessment proceedings by tax authoritieis and other judicial precedents. Based on it internal assessment supported by external legal counsel views, where the management considered necessary, the Company believes that it will be able to sustain its positions if challenged by the authorities and accordingly no additional provision is required for these matters.
Management is of the view that above matters will not have any material adverse effect on the Companyâs financial position and results of operations.
The Company has taken various premises including godowns, offices, flats, machinery and other assets under lease for which lease agreements are generally cancellable in nature and are renewable by mutual consent on agreed upon terms.
The following are the disclosures that has been made pursuant to Ind AS 116 requirements:
In accordance with Ind AS 108, segment information with respect to geographic segment has been provided in the consolidated financial statements of the Company and therefore no separate disclosures have been given in these standalone financial statements.
Management believes that the Companyâs international transactions with related parties continue to be at armâs length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision for taxation.
42 Events after the reporting period
There are no significant subsequent events that have occurred after the reporting period till the date of these standalone financial statements.
Prior year figures have been reclassified wherever necessary to conform to current yearâs classification.
Mar 31, 2019
1. CORPORATE INFORMATION
Sundram Fasteners Limited (âthe Companyâ) is domiciled in India, with its registered office situated at No. 98-A, VII Floor, Dr. Radhakrishnan Salai, Mylapore, Chennai 600004. The Company has been incorporated under the provisions of the Companies Act, 1956 and its equity shares are listed on the National Stock Exchange (âNSEâ) and the Bombay Stock Exchange (âBSEâ) in India. The Company is primarily engaged in manufacture and sale of bolts and nuts, water and oil pumps, sintered products, cold extruded components, hot & warm forged parts, radiator caps and other parts which has applications mainly in automobile industry.
2. BASIS OF PREPARATION
2.1 Statement of compliance
These standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the âActâ) and other relevant provisions of the Act.
The standalone financial statements for the year ended March 31, 2019 (including comparatives) are duly adopted by the Board on May 9, 2019.
Details of the Companyâs accounting policies are included in note 3.
2.2 Functional and presentation currency
These standalone financial statements are presented in Indian Rupees which is also the Companyâs functional currency. All amounts have been presented in crores of Indian Rupees (Rs.), except share data and as otherwise stated.
2.3 Basis of measurement
The standalone financial statements have been prepared on the historical cost basis except for the following items;
2.4 Use of estimates and judgments
In preparing these standalone financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.
Significant management judgment
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the standalone financial statements is included in the following notes:
- Note 36 leases: whether an arrangement contains a lease; and
- Note 36 lease classification
Assumptions and estimation uncertainty
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is mentioned below. Actual results may be different from these estimates.
2.4.1 Recognition of deferred tax assets:
The extent to which deferred tax assets can be recognized is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and tax loss carry-forwards can be utilized. In addition, careful judgment is exercised in assessing the impact of any legal or economic limits or uncertainties in various tax issues. (also refer note 17)
2.4.2 Impairment of financial and non-financial assets
In assessing impairment, management has estimated economic use of assets, the recoverable amount of each asset or cash- generating units based on expected future cash flows and use an interest rate to discount them. Estimation of uncertainty relates to assumptions about future operating cash flows and determination of a suitable discount rate. (also refer note 3.8)
2.4.3 Useful lives of depreciable assets
Management reviews its estimate of useful lives of depreciable assets at each reporting date, based on expected utility of assets. Uncertainties in these estimates relate to technological obsolescence that may change utility of assets (also refer note 3.2.2.4)
2.4.4 Inventories
Management has carefully estimated the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by market-driven changes.
2.4.5 Defined benefit obligation (DBO)
The actuarial valuation of the DBO is based on a number of critical underlying managementâs assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses (also refer note 16)
2.4.6 Recognition and measurement of provisions and contingencies:
Key assumptions about the likelihood and magnitude of an outflow of resources (also refer note 3.11 and 34)
2.5 Measurement of fair values
A number of the Companyâs accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. The inputs used to measure the fair value of assets or a liability fall into different levels of the fair value hierarchy. Accordingly, the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the low level input that is significant to the entire measurement.
Management uses various valuation techniques to determine fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management based on its assumptions on observable data as far as possible but where it not available, the management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an armâs length transaction at the reporting date (also refer note 33). The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
2.6 Current and non-current classification
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or non-current classification of assets and liabilities.
a) Plant and equipment includes net block of assets leased out amounting to Rs. 7.67 (March 31,2018 : Rs. 6.28)
b) Refer note 15 for assets pledged as securities for borrowings
c) Refer note 34 for capital commitments
d) Rights, preferences and restrictions Equity shares
The Company has only one class of equity shares having a par value of Rs. 1/- per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive 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.
e) Bonus shares / buy-back / shares for consideration other than cash issued during a period of five years immediately preceding financial year ended March 31, 2019:
(i) Aggregate number of equity shares allotted as fully paid up pursuant to contracts without payment being received in cash: Nil
(ii) Aggregate number of equity shares allotted as fully paid up by way of bonus shares: Nil
(iii) Aggregate number of equity shares bought back: Nil
f) Capital management
The Companyâs capital management objective is to ensure adequate return to the shareholder by maintaining the optimal capital structure. The Companyâs policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. It sets the amount of capital required on the basis of annual business and long-term operating plans which include capital and other strategic investments.
For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to maximise the shareholder value.
Management assesses the Companyâs capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
ii) After the reporting dates the following interim dividend (excluding dividend distribution tax) was declared by the directors; this dividend has not been recognised as liabilities and would attract dividend distribution tax when paid.
A. Nature and purpose of reserves
i) General reserve
General reserve is an accumulation of retained earnings of the Company, apart from the balance in the statement of profit and loss which can be utilised for meeting future obligations.
ii) Special Economic Zone reinvestment reserve
The Special Economic Zone (SEZ) re-investment reserve has been created out of the profit of eligible SEZ units in terms of the provisions of section 10AA(1)(ii) of the Income-tax Act, 1961. The reserve will be utilised by the Company for acquiring new assets as per the terms of section 10AA(2) of Income-tax Act, 1961.
B. Analysis of items of OCI (net of tax)
i) Equity instrument through OCI
The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the equity till the same is derecognised/ disposed off.
ii) Remeasurement of defined benefit liability
Remeasurement of defined benefit liability comprises of actuarial gain or losses and return on plan assets (excluding interest income).
(i) Term Loan from banks include
External Commercial Borrowing (ECB) loan from a bank amounting to USD 15 million, equivalent to Rs. 103.74 (March 31, 2018: USD 15 million, equivalent to Rs. 97.77), repayable over 3 equal yearly instalments commencing from July 2021. The loan is unsecured and its interest rate is linked to Libor agreed spread p.a.
During the year, the Company obtained a new ECB loan from a bank amounting to USD 15 million, equivalent to Rs. 103.74 (March 31, 2018: Nil), repayable over 3 equal yearly instalments commencing from August 2022. The loan is unsecured and its interest rate linked to Libor agreed spread p.a.
The foreign currency term loan of USD 10 million, equivalent to Rs. 65.18 and an ECB loan of USD 5 million equivalent to Rs. 31.86 outstanding as at March 31, 2018 were repaid during the year.
(ii) Working capital loan from banks include
The Company has various working capital facilities aggregating to Rs. 38.49 (March 31, 2018: Rs. 72.40) carrying interest rate ranging from 8.10% - 15% p.a. These facilities are repayable on demand, partly secured by pari-passu first charge on current assets viz., stocks of raw materials, work-in-progress and finished goods. Preshipment packing credit loan is availed in '' and foreign currency aggregating to Rs. 555.00 (March 31, 2018: Rs. 294.73). They are partly secured by pari-passu first charge on current assets viz., stocks of raw materials, work-in-progress and finished goods. Preshipment packing credit (secured and unsecured) is repayable within 360 days and carries interest in the range of 4.80% to 5.60%.
The Company''s exposure to liquidity, interest rate and currency risk related to borrowings are disclosed in note 33.
a) Provision for employee benefits Defined benefit plans:
The Company operates post-employment defined benefit plans comprising of gratuity plan, group terminal benefit plan and an exempted provident fund managed through trust. The post employment benefit in the form of gratuity is managed and administered by Life Insurance Corporation of India. The provident fund contributions to trust are managed through trust investments in addition to contribution of a portion of its provident fund liability to employees provident fund organisation. The group terminal benefit plan is made available to certain class of employees and the same is unfunded. The Company obtains an actuarial valuation from an independent actuary measured using projected unit credit method to determine the liability as at the reporting date.
The post-employment defined benefit plans operated by the Company are as follows;
i) Gratuity
The following tables summarise the components of net benefit expenses recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the Gratuity.
The Company has its defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this legislation, employee who has completed five years of service is entitled to specific benefit. The level of benefit provided depends on the employeeâs length of service and salary at retirement/ termination age. The gratuity plan is a funded plan and the Company makes its contributions to a recognised fund in India.
The Companyâs Gratuity plan valuation report includes employee benefits of the Company and its subsidiaries of
(i) TVS Upasana Limited, Chennai; (ii) Sundram Precision Components Limited, Chennai; and (iii) TVS Infotech Limited, Chennai. Based on an entity specific valuation obtained in this respect, the amounts are recognised in the Companyâs standalone financial statements. The following table sets out such amounts recognised in Companyâs standalone financial statements:
ii) Group terminal benefit
Group terminal benefit relates to post employment benefit paid to certain class of employees upon their retirement / death. The level of benefit provided depends on the employeeâs length of service at retirement / termination age. The following table sets out the status of the group terminal benefit plan and the amounts recognised in the Companyâs standalone financial statements as at balance sheet date:
iii) Provident Fund
All eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan in which both the employee and employer (at a determined rate) contribute monthly. The Company also contributes as specified under the law, in case of certain class of employees, to a provident fund trust set up and to respective Regional Provident Fund Commissioner. The Companyâs contribution to the Provident Fund, where set up as a trust, is liable for future provident fund benefits to the extent of its annual contribution and any shortfall in fund assets based on government specified minimum rates of return relating to current period service and recognised such contributions and shortfall, if any as an expense in the year incurred. In accordance with an actuarial valuation, there is no deficiency in the interest cost as the present value of the expected future earnings on the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest. Such contributions made into the fund and to the regional provident fund commissioner during the year are recognised as an expense in the statement of profit and loss.
iv) Compensated absences
The Companyâs net obligation in respect of Compensated absences is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The obligation is measured on the basis of an annual independent actuarial valuation using the projected unit credit method.
The above disclosures are provided by the Company based on the information available with the Company in respect of the registration status of its vendors/suppliers.
All Trade Payables are âcurrentâ. The Companyâs exposure to currency and liquidity risks related to trade payables is disclosed in note 33.
* This includes fair value of forward contracts entered with banks for the purpose of hedging repayments of foreign currency borrowings from banks.
The Companyâs exposure to currency risk and liquidity risk related to other financial liability are disclosed in note 33
Diluted earnings per share
The Company does not have any potential equity shares. Accordingly, basic and diluted EPS would remain the same.
Fair value measurement hierarchy
The company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are
(a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the standalone financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard.
C. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Market risk
- Credit risk
- Liquidity risk
Financial risk management framework
The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The board of directors along with the top management are responsible for developing and monitoring the Companyâs risk management policies. The Companyâs senior management advises on financial risks and the appropriate financial risk governance framework for the Company.
The Companyâs risk management policies established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Company, through establishment of standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Companyâs audit committee oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
The Companyâs principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Companyâs operations and to provide guarantees to support the operations of its group companies. The Companyâs principal financial assets include loans, trade and other receivables, investments and cash and cash equivalents that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the company. The Company uses derivative financial instruments, such as foreign exchange forward contracts that are entered to hedge foreign currency risk exposure. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments
The sources of risks which the company is exposed to and their management is given below:
a) Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings. The Company is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which arise from both its operating and investing activities.
i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings, import of raw materials and spare parts, capital expenditure, export sales and the Companyâs net investments in foreign subsidiaries.
Currency risk (or foreign exchange risk) arises on financial instruments that are denominated in a foreign currency, i.e. in a currency other than the functional currency in which they are measured. For the purpose of Ind AS, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency.
The Company manages its foreign currency risk by hedging transactions through forward contracts, for the repayment of short and long term borrowings and payables arsing out of procurement of raw materials and other components. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.
Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken.
Foreign currency denominated financial assets and liabilities which expose the Company to currency risk are disclosed below. The amounts shown are those reported translated at the closing rate. Unhedged foreign currency risk exposure at the end of the reporting period has been expressed in Rupees.
Foreign currency sensitivity
The following table illustrates the sensitivity of profit and equity with respect to the Companyâs financial assets and financial liabilities and the ''/USD exchange rate and ''/GBP exchange rate âall other things being equalâ.
If the Indian Rupee had strengthened/ weakened against the respective currency by 5% during the year ended March 31, 2019 (March 31, 2018: 5%), then this would have had the following impact on profit before tax and equity:
Derivative instruments
The Company holds derivative financial instruments such as foreign currency forward to mitigate the risk of changes in exchange rates on foreign currency exposure arising from settlement of borrowings. The counterparties of these contracts are generally banks. These derivative financial instruments are determined using quoted forward exchange rates at the reporting dates based on information obtained from respective bankers.
ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs debt obligations with floating interest rates.
The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate borrowings. At March 31, 2019, approximately 24% (March 31, 2018: 37%) of the Companyâs borrowings are at a fixed rate of interest.
Interest rate sensitivity
The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of /-1% for the year ended March 31, 2019 and March 31, 2018. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.
The Company does not expect any change in interest rates on fixed rate borrowings and accordingly have not presented any sensitivities on such borrowings.
Equity price risk
The Company has invested in listed and unlisted equity instruments. All investments in equity portfolio are reviewed and approved by the Board of Directors.
At the reporting date, the exposure to listed equity securities at fair value was Rs. 15.44 (March 31, 2018: Rs. 14.31)
b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including, foreign exchange transactions and other financial instruments.
Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of the Companyâs trade receivables, certain loans and advances and other financial assets. The Company enters into long term contracts with its customers whereby it mitigates the risk exposure on high risk customers. Further, none of the customers contributes to more than 10% of the Companyâs total revenues as continuous efforts are made in expanding its customer base. Outstanding customer receivables are regularly monitored and reviewed by the Audit committee periodically.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including end-user customers, their geographic location, industry, trading history with the Company and existence of previous financial difficulties. With respect to other financial assets, the Company does not expect any credit risk against such assets except as already assessed. The Company is monitoring the economic environment in the country and is taking actions to limit its exposure to customers with customers experiencing particular economic volatility.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. The Company has adopted a practical measure of computing the expected credit loss allowance for trade receivable and other financial assets, which comprise large number of small balances, based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. Further, the Company also makes an allowance for doubtful debts on a case to case basis.
The management also assesses the credit losses on account of the financial guarantees extended by the Company. The management evaluates the credit risk associated with these companies, ability of them to repay the debts and probable exposure of the Company incase a group company fails to make payment when due in accordance with the original or modified terms of a debt instrument of such group Company.
(ii) Investments
Investments of surplus funds are made only with approval of Board of Directors. Investments primarily include investments in equity instruments of various listed entities, power generation companies, mutual funds and other trade investments. The Company does not expect significant credit risks arising from these investments.
The balance is primarily constituted by loans given to related parties and to its employees. The Company does not expect any loss from non-performance by these counter-parties.
(iv) Cash and cash equivalents and Bank balances other than mentioned in cash and cash equivalents
The Company has its cash and bank balances deposited with credit worthy banks as at the reporting date. The Company does not expect any loss from non-performance by these counter-parties.
(v) Others
Other financial assets comprising of security deposits, interest receivable and advance recoverable primarily consists of deposits with TNEB for obtaining Electricity connections, rental deposits given for lease of premises. The Company does not expect any loss from non-performance by these counter-parties.
c) Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Companyâs treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Companyâs liquidity position through rolling forecasts on the basis of expected cash flows.
The Companyâs objective is to maintain a current ratio with an optimal mix of short term loans and long term loans. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months and the management is confident that it can roll over its debt with existing lenders. The Board of Directors periodically reviews the Companyâs business requirements vis-a-vis the source of funding.
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments
D Offsetting financial assets and financial liabilities
The Company does not have any financial instruments that are offset or are subject to enforceable master netting arrangements and other similar agreements.
3. Related party disclosures Related Parties:
(I) Where Control exists:
(A) Ultimate holding Company
(1) TV Sundram Iyengar & Sons Private Limited, Madurai, India
(B) Subsidiary Companies Indian Subsidiaries
(1) Sundram Fasteners Investments Limited, Chennai,
(2) TVS Upasana Limited, Chennai,
(3) Sundram Non-Conventional Energy Systems Limited, Chennai,
(4) Sundram Precision Components Limited, Chennai and
(5) TVS Infotech Limited, Chennai.
Foreign Subsidiaries
(1) Sundram International Limited, UK and
(2) Sundram International Inc, Michigan, USA
(C) Step down subsidiary companies Indian Subsidiary
(1) TVS Next Private Limited, Chennai (Subsidiary of TVS Infotech Limited, Chennai) Foreign Subsidiaries
(1) Sundram Fasteners (Zhejiang) Limited, Zhejiang, Peoples Republic of China (Subsidiary of Sundram International Limited, UK),
(2) Cramlington Precision Forge Limited, Northumberland, United Kingdom (Subsidiary of Sundram International Limited, UK) and
(3) TVS Infotech Inc., Michigan, USA (Subsidiary of TVS Infotech Limited, Chennai, India)
(II) Other Related Parties:
(A) Key Management Personnel (KMP)
(1) Mr Suresh Krishna
(2) Ms Arathi Krishna
(3) Ms Arundathi Krishna
(4) Mr S Meenakshisundaram* and
(5) Mr R Dilip Kumar*
Non-executive directors
(1) Mr K Ramesh
(2) Mr S Mahalingam
(3) Mr Heramb R Hajarnavis
(4) Mr B Muthuraman
(5) Mr R Srinivasan
(6) Ms Preethi Krishna
(7) Dr. Nirmala Lakshman
(B) Relatives of KMP
(1) Ms Usha Krishna
(2) Ms Preethi Krishna and
(3) Mr K Ramesh
*Key Managerial Personnel as per Companies Act, 2013
(III) Subsidiaries / joint ventures / associates of ultimate holding company:
(1) Brakes India Private Limited, Chennai, India
(2) Delphi TVS Diesel Systems Limited, Chennai, India
(3) India Motor Parts & Accessories Limited, Chennai, India
(4) India Nippon Electricals Limited, Chennai, India
(5) Lucas Indian Services Limited, Mumbai, India
(6) Lucas TVS Limited, Chennai, India
(7) Madurai Trans Carrier Limited, Chennai, India
(8) Southern Roadways Limited, Madurai, India
(9) Sundaram-Clayton Limited, Chennai, India
(10) The Associated Auto Parts Private Limited, Mumbai, India
(11) TVS Automobile solutions Private Limited, Madurai, India
(12) TVS Electronics Limited, Chennai, India
(13) TVS Logistics Services Limited, Madurai, India
(14) TVS Motor Company Limited, Chennai, India
(15) TVS Training and Services Limited, Chennai, India
(16) Wheels India Limited, Chennai, India
(V) Terms and conditions of transactions with related parties
- Transactions with related parties are at arm''s length and all the outstanding balances are unsecured.
4. Leases
The Company has taken various premises including godowns, offices, flats, machinery and other assets under lease for which lease agreements are generally cancellable in nature and are renewable by mutual consent on agreed upon terms. Accordingly, the following disclosure have been made only to the extent of leases are non-cancellable in nature and outstanding as at the reporting date.
b) Operating lease payments recognised in statement of profit and loss amounted to Rs. 5.36 (March 31, 2018: Rs. 4.48)
c) General description of leasing agreements:
- Leased assets: Godowns, offices, flats, machinery and others
- Future Lease rentals are determined on the basis of agreed terms.
- At the expiry of lease terms, the Company has an option to return the assets or extend the term by giving notice in writing.
5. Transfer pricing
Management believes that the Companyâs international transactions with related parties continue to be at armâs length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision for taxation.
6. Events after the reporting period
(i) The Board of Directors of the Company has declared interim dividend in its meeting held on May 9, 2019 as disclosed in note 14B(i)
(ii) The Board of Directors of the Company, in their meeting held on August 08, 2018, approved the scheme of amalgamation of its wholly owned subsidiary Sundram Precision Components Limited (âSPCLâ). The Company has received an order from National Company Law Tribunal dated April 11, 2019 approving the merger scheme with respect to merger of Sundram Precision Components Limited, a wholly owned subsidiary with Sundram Fasteners Limited. The merger is effective subsequent to the year end.
7. Prior year comparatives
Prior year figures have been reclassified wherever necessary to conform to current yearâs classification.
Mar 31, 2018
1. Corporate information
Sundram Fasteners Limited (âthe Companyâ) is domiciled in India, with its registered office situated at No. 98-A, VII Floor, Dr. Radhakrishnan Salai, Mylapore, Chennai 600 004. The Company has been incorporated under the provisions of the Companies Act, 1956 and its equity shares are listed on the National Stock Exchange (âNSEâ) and the Bombay Stock Exchange (âBSEâ) in India. The Company is primarily engaged in manufacture and sale of bolts and nuts, water and oil pumps, sintered products, cold extruded components, hot & warm forged parts, radiator caps and other parts which has applications mainly in automobile industry.
2. Basis of preparation
2.1 Statement of compliance
These standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the âActâ) and other relevant provisions of the Act.
The standalone financial statements for the year ended March 31, 2018 (including comparatives) are duly adopted by the Board on May 9, 2018.
Details of the Companyâs accounting policies are included in note 3.
2.2 Functional and presentation currency
These standalone financial statements are presented in Indian Rupees which is also the Companyâs functional currency. All amounts have been presented in crores of Indian Rupees (â), except share data and as otherwise stated.
2.3 Basis of measurement
The standalone financial statements have been prepared on the historical cost basis except for the following items;
2.4 Use of estimates and judgments
In preparing these standalone financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.
Significant management judgment
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the standalone financial statements is included in the following notes:
- Note 37 leases: whether an arrangement contains a lease; and
- Note 37 lease classification
Assumptions and estimation uncertainty
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is mentioned below. Actual results may be different from these estimates.
2.4.1 Recognition of deferred tax assets:
The extent to which deferred tax assets can be recognized is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and tax loss carry-forwards can be utilized. In addition, careful judgment is exercised in assessing the impact of any legal or economic limits or uncertainties in various tax issues. (also refer note 17)
2.4.2 Impairment of financial and non-financial assets
In assessing impairment, management has estimated economic use of assets, the recoverable amount of each asset or cash-generating units based on expected future cash flows and use an interest rate to discount them. Estimation of uncertainty relates to assumptions about future operating cash flows and determination of a suitable discount rate. (also refer note 3.8)
2.4.3 Useful lives of depreciable assets
Management reviews its estimate of useful lives of depreciable assets at each reporting date, based on expected utility of assets. Uncertainties in these estimates relate to technological obsolescence that may change utility of assets (also refer note 3.2.4.)
2.4.4 Inventories
Management has carefully estimated the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by market-driven changes.
2.4.5 Defined benefit obligation (DBO)
The actuarial valuation of the DBO is based on a number of critical underlying managementâs assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses (also refer note 16) 2.4.6 Recognition and measurement of provisions and contingencies:
Key assumptions about the likelihood and magnitude of an outflow of resources (also refer note 3.11 and note 35).
2.5 Measurement of fair values
A number of the Companyâs accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. The inputs used to measure the fair value of assets or a liability fall into different levels of the fair value hierarchy. Accordingly, the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the low level input that is significant to the entire measurement.
Management uses various valuation techniques to determine fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management based on its assumptions on observable data as far as possible but where it not available, the management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an armâs length transaction at the reporting date (also refer note 34). The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
2.6 Current and non-current classification
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or non-current classification of assets and liabilities.
3A. New standards and amendment to existing standards issued but not yet effective
New Standard - Ind AS 115, Revenue from Contracts with Customers
Ind AS 115, establishes a comprehensive framework for determining whether, how much and when revenue should be recognised. It replaces existing revenue recognition guidance, including Ind AS 18 on Revenue, Ind AS 11 on Construction Contracts and Guidance Note on Accounting for Real Estate Transactions. This standard is effective from annual periods beginning on or after April 1, 2018 and will be applied accordingly. In this regard, the Company is in process of carrying out assessment of potential impact on adoption of Ind AS 115 on accounting policies followed and accordingly impact on its standalone financial statements on initial application of this standard is not reasonably estimable at present.
Amendment to existing standard - Ind AS 21 - The effect of changes in Foreign Exchange rates
The amendment to Ind AS 21 clarifies on accounting of transactions that include receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the nonmonetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. In this regard, the Company is in the process of carrying out its initial assessment of potential impact on adoption of this amendment on accounting policies followed in its standalone financial statements.
d) Rights, preferences and restrictions Equity shares
The Company has only one class of equity shares having a par value of Rs.1/- per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive 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.
e) Bonus shares/buy-back/shares for consideration other than cash issued during a period of five years immediately preceding financial year ended March 31, 2018:
(i) Aggregate number of equity shares allotted as fully paid up pursuant to contracts without payment being received in cash : Nil
(ii) Aggregate number of equity shares allotted as fully paid up by way of Bonus Shares : Nil
(iii) Aggregate number of equity shares bought back : Nil
f) Capital management
The Companyâs capital management objectives is to ensure the adequate return to the shareholder by maintaining the optimal capital structure. The Companyâs policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. It sets the amount of capital required on the basis of annual business and long-term operating plans which include capital and other strategic investments.
For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Groupâs capital management is to maximise the shareholder value.
Management assesses the Companyâs capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
After the reporting dates the following dividends (excluding dividend distribution tax) were proposed by the directors subject to the approval at the annual general meeting (except for interim dividend); these dividends have not been recognised as liabilities and would attract dividend distribution tax when declared or paid.
(ii) Special Economic Zone reinvestment reserve
This represents reserves created pursuant to the requirements of Income-tax Act, 1961 for claiming certain tax benefits.
(iii)Analysis of items of OCI (net of tax)
a) Equity instrument through OCI
The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the equity.
b) Remeasurement of defined benefit liability
Remeasurement of defined benefit liability comprises of actuarial gain or losses and return on plan assets (excluding interest income).
(i) Term Loan from banks include
An outstanding External Commercial Borrowing (ECB) from a bank amounted to USD 5 million, equivalent to Rs.31.86 (March 31, 2017: USD 10 million, equivalent to Rs.66.00), net of initial transaction costs, repayable over 3 equal yearly instalments commencing from July 2016. The loan is secured by a first pari passu charge on movable fixed assets, both present and future. The interest rate is linked to Libor agreed spread p.a.
Foreign currency term loan from a bank amounted to USD 10 million, equivalent to Rs.65.18, is repayable in July 2018 (March 31, 2017: USD 10 million, equivalent to Rs.64.86). The loan is secured by a second pari passu charge on movable fixed assets, both present and future. The interest rate is linked to Libor agreed spread p.a.
The outstanding of another ECB loan amounted to USD 15 million, equivalent to Rs.97.77 (March 31, 2017: Nil), repayable over 3 equal yearly instalments commencing from July 2021. The loan is unsecured. The interest rate is linked to Libor agreed spread p.a.
Term loan of Rs.40.00 as at March 31, 2017 taken from a bank in local currency has been closed during the year.
(ii) Working capital loan from banks include
The Company has working capital facilities of Rs.72.40 (March 31, 2017: 22.41) outstanding carrying interest rate ranging from 8.10% - 15% p.a. These facilities are repayable on demand, partly secured by pari-passu first charge on current assets viz., stocks of raw materials, work-in-progress and finished goods.
Preshipment packing credit loan is availed in local currency and foreign currency amounting to Rs.294.73 (March 31, 2017: 369.00) They are partly secured by pari-passu first charge on current assets viz., stocks of raw materials, work-in-progress and finished goods. Preshipment packing credit (secured & unsecured) is repayable within 360 days and carries interest in the range of 1.80% to 5.00 %.
Buyers credit of Rs.63.89 as at March 31, 2017 taken from banks in foreign currency have been closed during the year.
The Companyâs exposure to liquidity, interest rate and currency risk related to borrowings are disclosed in note 34C.
a) Provision for employee benefits Defined benefit plans:
The Company operates post-employment defined benefit plans comprising of gratuity plan, group terminal benefit plan and an exempted provident fund managed through trust. The post employment benefit in the form of gratuity is managed and administered by Life Insurance Corporation of India. The provident fund contributions to trust are managed through trust investments in addition to contribution of a portion of its provident fund liability to employees provident fund organisation. The group terminal benefit plan is made available to certain class of employees and the same is unfunded. The Company obtains an actuarial valuation from an independent actuary measured using projected unit credit method to determine the liability as at the reporting date.
The post-employment defined benefit plans operated by the Company are as follows;
i) Gratuity
The following tables summarise the components of net benefit expenses recognised in the statement of profit and loss, the funded status and amounts recognised in the balance sheet towards Gratuity.
The Company has its defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this legislation, employee who has completed five years of service is entitled to specific benefit. The level of benefit provided depends on the employeeâs length of service and salary at retirement/ termination age. The gratuity plan is a funded plan and the Company makes its contributions to a recognised fund in India.
The Companyâs Gratuity plan valuation report includes employee benefits of the Company and its subsidiaries
(i) TVS Upasana Limited, Chennai; (ii) Sundram Precision Components Limited, Chennai; and (iii) TVS Infotech Limited, Chennai. Based on an entity specific actuarial valuation obtained in this respect, the amounts are recognised in the Companyâs standalone financial statements. The following table sets out such amounts recognised in the Companyâs standalone financial statements:
ii) Group terminal benefit
Group terminal benefit relates to post-employment benefit paid to certain class of employees upon their retirement/ death. The level of benefit provided depends on the employeeâs length of service at retirement / termination age. The following table sets out the status of the group terminal benefit plan and the amounts recognised in the Companyâs standalone financial statements as at balance sheet date:
iii) Provident Fund
All eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan in which both the employee and employer (at a determined rate) contribute monthly. The company also contributes as specified under the law, in case of certain class of employees, to a provident fund trust set up and to respective Regional Provident Fund Commissioner. The Companyâs contribution to the Provident Fund, where set up as a trust, is liable for future provident fund benefits to the extent of its annual contribution and any shortfall in fund assets based on government specified minimum rates of return relating to current period service and recognizes such contributions and shortfall, if any as an expense in the year incurred. In accordance with an actuarial valuation, there is no deficiency in the interest cost as the present value of the expected future earnings on the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest. Such contributions made into the fund and to the Regional Provident Fund Commissioner during the year are recognized as an expense in the statement of profit and loss.
iv) Compensated absences
The Companyâs net obligation in respect of Compensated absences is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The obligation is measured on the basis of an annual independent actuarial valuation using the projected unit credit method.
F Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items, because it is not probable that future long term capital gain will be available against which the Company can use the benefits therefrom:
4 Financial instruments - Fair values and risk management
A Accounting classification and fair values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy
Fair value measurement hierarchy
The company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the standalone financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard.
B Measurement of fair values
The following table shows the valuation techniques used in measuring Level 2 and Level 3 fair values for financial instruments measured at fair value in balance sheet including the related valuation techniques used
C Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Market risk
- Credit risk
- Liquidity risk
Financial risk management framework
The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The board of directors along with the top management are responsible for developing and monitoring the Companyâs risk management policies. The Companyâs senior management advises on financial risks and the appropriate financial risk governance framework for the Company.
The Companyâs risk management policies established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Companyâs audit committee oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
The Companyâs principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Companyâs operations and to provide guarantees to support the operations of its group Companies. The Companyâs principal financial assets include loans, trade and other receivables, investments and cash and cash equivalents that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Csompany. The Company uses derivative financial instruments, such as foreign exchange forward contracts to hedge foreign currency risk exposure. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
The sources of risks which the company is exposed to and their management is given below:
a) Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings. The Company is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which result from both its operating and investing activities.
i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings, import of raw materials and spare parts, capital expenditure, export sales and the Companyâs net investments in foreign subsidiaries.
Currency risk (or foreign exchange risk) arises on financial instruments that are denominated in a foreign currency, i.e. in a currency other than the functional currency in which they are measured. For the purpose of Ind AS, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency.
The Company manages its foreign currency risk by hedging transactions through forward contracts, for the repayment of short and long term borrowings and payables arising out of procurement of raw materials and other components. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.
Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken.
Foreign currency denominated financial assets and liabilities which expose the Company to currency risk are disclosed below. The amounts shown are those reported translated at the closing rate. Unhedged foreign currency risk exposure at the end of the reporting period has been expressed in Rupees.
Foreign currency sensitivity
The following table illustrates the sensitivity of profit and equity with respect to the Companyâs financial assets and financial liabilities and the Rs/USD exchange rate and Rs./GBP exchange rate âall other things being equalâ. If the Indian Rupee had strengthened/ weakened against the respective currency 5% during the year ended March 31, 2018 (March 31, 2017: 5%), then this would have had the following impact on profit before tax and equity:
The sensitivity analysis is based on the Companyâs foreign currency financial instruments held at each reporting date.
Derivative instruments
The Company holds derivative financial instruments such as foreign currency forward to mitigate the risk of changes in exchange rates on foreign currency exposure arising from settlement of borrowings. The counterparties of these contracts are generally banks. These derivative financial instruments are determined using quoted forward exchange rates at the reporting dates based on information obtained from respective bankers.
ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs debt obligations with floating interest rates.
The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate borrowings. As at March 31, 2018, approximately 37% (March 31, 2017: 69%) of the Companyâs borrowings are at a fixed rate of interest.
Interest rate sensitivity
The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of /- 1% for the year ended March 31, 2018 and March 31, 2017. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.
The Company does not expect any change in interest rates on fixed rate borrowings and accordingly have not presented any sensitivities on such borrowings.
Equity price risk
The Company has invested in listed and unlisted equity instruments. All investments in equity portfolio are reviewed and approved by the board of directors.
As at the reporting date, the exposure to listed equity securities at fair value was Rs.14.31 (March 31, 2017: Rs.11.78)
b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including, foreign exchange transactions and other financial instruments.
Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of the Companyâs trade receivables, certain loans and advances and other financial assets. The Company enters into long term contracts with its customers whereby it mitigates the risk exposure on high risk customers. Further, none of the customers contributes to more than 10% of the Companyâs total revenues as continuous efforts are made in expanding its customer base. Outstanding customer receivables are regularly monitored and reviewed by the Audit committee periodically.
The carrying amount of financial assets represents the maximum credit exposure.
(i) Trade receivables
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including end-user customers, their geographic location, industry, trading history with the Company and existence of previous financial difficulties. With respect to other financial assets, the Company does not expect any credit risk against such assets except as already assessed. The Company is monitoring the economic environment in the country and is taking actions to limit its exposure to customers with customers experiencing particular economic volatility.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivable and other financial assets, which comprise large number of small balances, based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. Further, the Company also makes an allowance for doubtful debts on a case to case basis.
The maximum exposure to credit risk for trade and other receivables are as follows:
The management also assesses the credit losses on account of the financial guarantees extended by the Company. The management evaluates the credit risk associated with these companies, ability of them to repay the debts and probable exposure of the Company, in case a group Company fails to make payment when due in accordance with the original or modified terms of a debt instrument of such group Company.
(ii) Investments
Investments of surplus funds are made only with approval of Board of Directors. Investments primarily include investments in equity instruments of various listed entities, power generation companies, mutual funds and other trade investments. The Company does not expect significant credit risks arising from these investments.
(iii) Loans
The balance is primarily constituted by loans given to related parties and to its employees. The Company does not expect any loss from non-performance by these counter-parties.
(iv) Cash and cash equivalents and Bank balances other than mentioned in cash and cash equivalents
The Company has its cash and bank balances deposited with credit worthy banks as at the reporting date. The Company does not expect any loss from non-performance by these counter-parties.
(v) Others
Other financial assets comprising of security deposits, interest receivable and advance recoverable primarily consists of deposits with TNEB for obtaining Electricity connections, rental deposits given for lease of premises. The Company does not expect any loss from non-performance by these counter-parties.
c) Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Companyâs treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Companyâs liquidity position through rolling forecasts on the basis of expected cash flows.
The Companyâs objective is to maintain a current ratio with an optimal mix of short term loans and long term loans. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months and the management is confident that it can roll over its debts with existing lenders. The Board of Directors periodically reviews the Companyâs business requirements vis-a-vis the source of funding.
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments
D Offsetting financial assets and financial liabilities
The Company does not have any financial instruments that are offset or are subject to enforceable master netting arrangements and other similar agreements.
5 Related party disclosures Related Parties:
(I) Where Control exists:
(A) Ultimate holding Company
(1) TV Sundram Iyengar & Sons Private Limited, Madurai, India
(B) Subsidiary Companies Indian Subsidiaries
(1) Sundram Fasteners Investments Limited, Chennai;
(2) TVS Upasana Limited, Chennai;
(3) Sundram Non-Conventional Energy Systems Limited, Chennai;
(4) Sundram Precision Components Limited, Chennai and
(5) TVS Infotech Limited, Chennai.
Foreign Subsidiaries
(1) Sundram International Limited, UK and
(2) Sundram International Inc, Michigan, USA
(C) Step down subsidiary companies Indian Subsidiary
(1) TVS Next Private Limited, Chennai (Subsidiary of TVS Infotech Limited, Chennai)
Foreign Subsidiaries
(1) Sundram Fasteners (Zhejiang) Limited, Zhejiang, Peoples Republic of China (Subsidiary of Sundram International Limited, UK);
(2) Cramlington Precision Forge Limited, Northumberland, United Kingdom (Subsidiary of Sundram International Limited, UK) and
(3) TVS Infotech Inc., Michigan, USA (Subsidiary of TVS Infotech Limited, Chennai, India)
(II) Other Related Parties:
(A) Key Management Personnel (KMP)
(1) Mr Suresh Krishna
(2) Ms Arathi Krishna
(3) Ms Arundathi Krishna
(4) Mr S Meenakshisundaram* and
(5) Mr R Dilip Kumar*
Non-executive directors
(1) Mr K Ramesh
(2) Mr S Mahalingam (from January 30, 2018)
(3) Mr Heramb R Hajarnavis (from September 20, 2017)
(4) Mr B Muthuraman
(5) Mr R Srinivasan
(6) Mr V Narayanan
(7) Mr M Raghupathy (upto September 22, 2017)
(8) Mr R Ramakrishnan (upto September 22, 2017)
(9) Mr C V Karthik Narayanan (upto December 13, 2017) and
(10) Ms Preethi Krishna (from July 5, 2017)
(B) Relatives of KMP
(1) Ms Usha Krishna
(2) Ms Preethi Krishna and
(3) Mr K Ramesh
*Key Managerial Personnel as per Companies Act, 2013
(III) Subsidiaries / joint ventures / associates of holding companies:
(1) Southern Roadways Limited, Madurai, India
(2) The Associated Auto Parts Private Limited, Mumbai, India
(3) Sundaram-Clayton Limited, Chennai, India
(4) Madurai Trans Carrier Limited, Chennai, India
(5) TVS Electronics Limited, Chennai, India
(6) TVS Motor Company Limited, Chennai, India
(7) Lucas TVS Limited, Chennai, India
(8) TVS Training and Services Limited, Chennai, India
(9) Lucas Indian Services Limited, Mumbai, India
(10) India Motor Parts & Accessories Limited, Chennai, India
(11) Delphi TVS Diesel Systems Limited, Chennai, India
(12) Wheels India Limited, Chennai, India
(13) Brakes India Private Limited, Chennai, India
(14) TVS Logistics Services Limited, Madurai, India and
(15) India Nippon Electricals Limited, Chennai, India
(VI) Terms and conditions of transactions with related parties
- Transactions with related parties are at armâs length and all the outstanding balances are unsecured.
6 Leases
The Company has taken various premises including godowns, offices, flats, machinery and other assets under lease for which lease agreements are generally cancellable in nature and are renewable by mutual consent on agreed upon terms. Accordingly, the following disclosure have been made only to the extent of leases are non-cancellable in nature and outstanding as at the reporting date.
b) Operating lease payments recognised in statement of profit and loss amounted to Rs.4.48 (March 31, 2017 Rs.3.97)
c) General description of leasing agreements:
- Leased assets: Godowns, offices, flats, machinery and others
- Future Lease rentals are determined on the basis of agreed terms.
- At the expiry of lease terms, the Company has an option to return the assets or extend the term by giving notice in writing.
7 Transfer pricing
The Companyâs international transactions with related parties are at armâs length as per the independent accountants report for the year ended March 31, 2017. Management believes that the Companyâs international transactions with related parties for the year ended March 31, 2018 continue to be at armâs length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision for taxation.
8 Events after the reporting period
The Board of Directors of the Company has declared interim dividend in its meeting held on May 9, 2018 as disclosed under note 14B(i).
9 Prior year comparatives
The previous year standalone financial statements have been audited by a firm other than B S R & Co. LLP. Prior year figures have been reclassified wherever necessary to conform to current yearâs classification.
Mar 31, 2017
a) Inventory written down Nil and Reversal of written down inventory Nil.
b) In view of the varieties of the products involved, it is impractical to determine the carrying amount of inventory attributable to sales.
c) Refer note 16 for security on borrowings.
c) Rights, preferences, restrictions Equity shares
The Company has only one class of equity shares having a par value of Rs. 1 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive 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.
d) Bonus Shares/ Buy Back/ Shares for consideration other than cash issued during the period of five years immediately preceding the financial year ended 31st March 2017:
(i) Aggregate number of equity shares allotted as fully paid up pursuant to contracts without payment being received in cash : Nil
(ii) Aggregate number of equity shares allotted as fully paid up by way of Bonus Shares : Nil
(iii) Aggregate number of equity shares bought back : Nil
e) Capital Management
The Company''s capital management objectives is to ensure the adequate return to the shareholder by maintaining the optimal capital structure.
For the purpose of the Company''s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Group''s capital management is to maximize the shareholder value.
Management assesses the Company''s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
a) Provision for employee benefits
i) Gratuity
Retirement benefit in the form of Gratuity Liability (being administered by Life Insurance Corporation of India) is a defined benefit obligation and is provided for on the basis of an actuarial valuation made at the end of each financial year.
The following tables summarize the components of net benefit expenses recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the Gratuity.
The Company''s Gratuity plan valuation report includes employee benefits of reporting entity and its subsidiaries i)TVS Upasana Limited Chennai (formerly Upasana Engineering Limited) ii) Sundram Precision Components Limited, Chennai (Formerly Sundram Bleistahl Limited) and iii) TVS Infotech Limited, Chennai.
*Defined Contribution Plan:
a. Contribution to Provident Fund is in the nature of defined contribution plan and are made to a recognized fund.
b. Contribution to Superannuation Fund is in the nature of defined contribution plan and is remitted to Life Insurance Corporation of India in accordance with the scheme framed by the Corporation.
c. Contribution to Defined Contribution Plan, recognized as expense for the year are as under:
i) Employer''s Contribution to Provident Fund during the year Rs. 1,088.06 lakhs previous year Rs.1,007.42 lakhs
ii) Employer''s Contribution to Superannuation Fund during the year Rs.69.37 lakhs previous year Rs.69.32 lakhs.
1. RELATED PARTY DISCLOSURES
Related Parties :
(I) Where Control exists:
(A) Subsidiary Companies Indian Subsidiaries
1. Sundram Fasteners Investments Ltd., Chennai,
2. TVS Upasana Ltd., Chennai (Formerly Upasana Engineering Ltd), Chennai
3. Sundram Non-Conventional Energy Systems Ltd., Chennai,
4. Sundram Precision Components Ltd., Chennai (Formerly Sundram Bleistahl Ltd)
5. TVS Infotech Ltd., Chennai
6. TVS Next Private Ltd., Chennai Foreign Subsidiaries
1. Sundram International Limited, UK,
2. Sundram Fasteners (Zhejiang) Ltd., Zhejiang, Peoples Republic of China (Subsidiary of Sundram International Ltd, New Castle, United Kingdom)
3. Cramlington Precision Forge Ltd., Northumberland, United Kingdom (Subsidiary of Sundram International Ltd, New Castle, United Kingdom)
4. Sundram International Inc, Michigan, USA,
5. TVS Infotech Inc., Michigan, USA (Subsidiary of TVS Infotech Ltd, Chennai)
(B) Associate
1. TV Sundram Iyengar & Sons Private Ltd., Madurai and
2. Southern Roadways Ltd., Madurai
(II) Other Related Parties with whom transactions have been entered into during the year :
(A) Key Management Personnel
Mr Suresh Krishna,
Ms Arathi Krishna,
Ms Arundathi Krishna
Mr S Meenakshisundaram* and
Mr R Dilip Kumar*
(B) Relatives of Key Management Personnel
Ms Usha Krishna Ms Preethi Krishna Mr K Ramesh
(C) Enterprise in which Key Management Personnel have significant influence
Upasana Finance Limited, Chennai
* Key Management Personnel as per Companies Act, 2013.
2. Nature and extent of risks arising from financial instruments and respective financial risk management objectives and policies
The Company''s principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its and group companies operations. The Company''s principal financial assets include loans, trade and other receivables, cash and short-term deposits that derive directly from its operations. The Company also enters into derivative transactions and holds short term investments.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management is supported by a financial risk committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk committee provides assurance to the Company''s senior management that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors review and agree policies for managing each of these risks, which are summarized below.
a) Market risk
The Company is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which result from both its operating and investing activities.
b) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates.
The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate borrowings. At 31st March 2017, approximately 69 % of the Company''s borrowings are at a fixed rate of interest (31st March 2016: 74 %).
c) Interest rate sensitivity
The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of /- 1% for the year ended 31st March 2017 (31st March 2016: /- 1%). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in a foreign currency) and the Company''s borrowings in foreign currency.
The Company manages its foreign currency risk by hedging transactions through forward contracts, for the repayment of short term borrowings arising out of procurement of raw materials and other components. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.
Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. Forward exchange contracts are mainly entered into for significant long-term foreign currency exposures that are not expected to be offset by other same-currency transactions.
Foreign currency denominated financial assets and liabilities which expose the Company to currency risk are disclosed below. The amounts shown are those reported to key management translated at the closing rate:-
Currency risk (or foreign exchange risk) arises on financial instruments that are denominated in a foreign currency, i.e. in a currency other than the functional currency in which they are measured. For the purpose of this Ind AS, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency.
Foreign currency sensitivity
The following table illustrates the sensitivity of profit and equity in regards to the Company''s financial assets and financial liabilities and the USD/INR exchange rate and GBP/INR exchange rate ''all other things being equal''. It assumes a /- 5% change of the INR /USD exchange rate for the year ended at 31st March 2017 (31st March 2016: 5%). A /- 5% change is considered for the INR /GBP exchange rate for the year ended (31st March 2016: 5%). Both of these percentages have been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Company''s foreign currency financial instruments held at each reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates.
If the Rupee had strengthened against the USD by 5% during the year ended 31st March 2017 (31st March 2016: 5%) and GBP by 5% during the year ended 31st March 2017 (31st March 2016: 5%) respectively then this would have had the following impact profit before tax and equity before tax:
The movement in the pre-tax effect is a result of a change in the fair value of derivative financial instruments not designated in a hedge relationship and monetary assets and liabilities denominated in US dollars and GBP. Although the derivatives have not been designated in a hedge relationship, they act as an economic hedge and will offset the underlying transactions when they occur.
e) Equity price risk
The Company''s investments in listed and unlisted equity securities are held till maturity. All the investments in the equity portfolio are reviewed and approved by the Board of Directors.
At the reporting date, the exposure to listed equity securities at fair value was Rs.1,177.99 (31st March 2016: Rs.870.17 lacs)
f) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including, foreign exchange transactions and other financial instruments.
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. The Company enters into long term contracts with its customers whereby it mitigates the risk exposure on high risk customers. Further, none of the customers forms more than 15%-20% of the total company''s revenues as the Company makes a continuous effort in expanding its customer base. Outstanding customer receivables are regularly monitored and reviewed by the Board of Directors periodically. At 31st March 2017, the top 15 customers accounted for approximately 62% of all the receivables outstanding. At 31st March, the Company has certain trade receivables that have not been settled by the contractual due date but are not considered to be impaired. The amounts at 31st March, analyzed by the length of time past due, are:
The management also assesses the credit losses on account of the financial guarantees extended by the Company. The management evaluates the credit risk associated with these companies, ability of them to repay the debts and probable exposure of the Company incase a group company fails to make payment when due in accordance with the original or modified terms of a debt instrument.
g) Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed in accordance with the Company''s policy. Investments of surplus funds are made in mutual funds only with approved asset management companies or by way of fixed deposits with scheduled banks within the limits assigned by the Board of Directors.
The Company''s maximum exposure to credit risk for the components of the statement of financial position at 31st March 2017 is the carrying amounts as illustrated in Note 39 and Note 40 except for financial guarantees and derivative financial instruments. The Company''s maximum exposure relating to financial guarantees and financial derivative instruments is noted in the liquidity table below.
h) Liquidity risk
The Company''s objective is to maintain a current ratio of 1.10 with an optimal mix of short term loans and long term loans. Approximately 84% of the Company''s long term debt will mature in less than one year as at 31st March 2017 based on the carrying value of borrowings reflected in the financial statements. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders. The Board of Directors periodically reviews the Company''s business requirements vis-a-vis the source of funding.
The table below summarizes the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments.
3. Events after the reporting period
No adjusting or significant non-adjusting events have occurred between the 31st March 2017 reporting date and the date of authorization except non-adjusting event of proposal of final dividend of Rs. 2.80/- per share subject to the approval of shareholders at the ensuing Annual General Meeting.
4. Commitments, contingent liabilities and contingent assets
a) Operating lease commitments
(i) The company has entered into lease agreements for a period up to five years, which are in the nature of operating leases.
(ii) During the year Rs.396.86 lakhs (Rs. 453.35 lakhs) of Lease payments recognized in the statement of profit and loss, in respect of operating lease agreements entered into on or after 01.04.2001.
(iii) Significant Leasing arrangements:
The company has entered into leasing arrangements in respect of vehicles.
(a) Basis of determining contingent rent:
Contingent rents are payable for excessive, improper or unauthorized use of the asset, beyond the terms of the lease agreement, prejudicially affecting the resale value of the asset, either by way of increase in lease rentals or by way of lump-sum amount, as agreed between the parties.
(b) Renewal / purchase options and escalation clauses:
Lease agreements are renewable for further period or periods on terms and conditions mutually agreed between the parties. Variations in lease rentals are made in the event of a change in the basis of computation of lease rentals by the lessor.
(c) There are no restrictions imposed by the lease arrangements, concerning dividends, additional debt & further leasing.
5. First time adoption of IND AS
The Company has prepared financial statements which comply with Ind AS applicable for period ending 31 March 2017, together with the comparative period data as at and for the year ended 31 March 2016. This note explains the principal adjustments made by the Company in restating its IGAAP statement of financial position as at 1 April 2015 and its previously published IGAAp financial statements as at and for the year ended 31 March 2016.
First time adoption exemptions applied
Upon transition, IND AS 101 permits certain exemptions from full retrospective application of IND AS. The Company has applied the mandatory exemptions and certain optional exemptions, as set out below:
(a) Mandatory exceptions adopted by the Company:
(i) De-recognition of financial assets and liabilities
The de-recognition criteria of Ind AS 109 Financial Instruments has been applied prospectively for transactions occurring on or after the date of transition to Ind AS. Non-derivative financial assets and non-derivative financial liabilities derecognized before the date of transition under previous GAAP are not recognized on the opening Ind AS balance sheet.
(ii) Estimates
The estimates made by the Company under Indian GAAP were not revised for the application of Ind AS except where necessary to reflect any differences in accounting policies or errors.
(b) Non-mandatory exceptions adopted by the Company:
(i) Business Combination
Ind AS 103 Business Combinations has not been applied to acquisitions of subsidiaries, or of interests in associates and joint ventures that occurred before 1 April 2015. Use of this exemption means that the Indian GAAP carrying amounts of assets and liabilities, that are required to be recognized under Ind AS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with Ind AS. Assets and liabilities that do not qualify for recognition under Ind AS are excluded from the opening Ind AS balance sheet. The Company did not recognize or exclude any previously recognized amounts as a result of Ind AS recognition requirements.
(ii) Property, Plant and Equipment
Freehold land are carried at its fair value on the transition date and this fair value has been considered as its deemed cost as on that date. The Company has elected to use carrying value under IGAAP as the deemed cost on the date of transition to Ind AS for all property, plant and equipments.
(iii) Investment in subsidiaries, joint ventures and associates
Investment in subsidiaries are measured at the carrying value under IGAAP on the date of transition to Ind AS. These carrying value under IGAAP are considered to be the deemed cost as at the date of transition.
(iv) Leases
The Company has elected to use facts and circumstances existing at the date of transition to determine whether an arrangement constitutes a lease.
d) Impact of Ind AS adoption on the financial statements Footnotes to the reconciliations
i) Property, plant and equipment
The amount paid (net of amortization) to acquire the rights of leasehold land were disclosed under Property, plant and equipment under IGAAP, however under Ind AS the same has been evaluated to be operating lease based on the terms and conditions of the lease agreement and hence disclosed under Other non-current assets as Unamortized portion of leasehold land. The amortization of these assets is recognized as rental expenses over the period of lease.
ii) Investment property
Under the erstwhile GAAP, investment properties were presented as part of Property, plant and equipments. However under Ind AS, Investment properties are required to be presented separately on the face of the balance sheet. There is no impact on the total equity or profit as a result of this presentation.
iii) Investments
The Company has been accounting for long term investments in unquoted and quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments under IGAAP. Under Ind AS, the Company has designated such investments as Fair value through Other Comprehensive Income investments and hence measured at fair value. At the date of transition to Ind AS, difference between the instrument''s fair value and IGAAP carrying amount to the tune of Rs.1,704.79 lakhs has been recognized as a separate component of equity, in the Accumulated Other Comprehensive Income. Also for the year ended 31st March 2016, the Company has fair valued the quoted and unquoted investments resulting in a gain of Rs. 1,659.97 lakhs.
iv) Deferred taxes
The Company has been accounting for the deferred taxes using income statement approach under IGAAP, which focuses on differences between taxable profits and accounting profits for the year. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under IGAAP. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.
The Company has disclosed Minimum Alternate Tax credit under the head Deferred taxes as per the provisions of Ind AS 12-Income taxes, which requires all unused tax credits to be disclosed as deferred tax assets.
v) Borrowings
Under IGAAP, transaction costs incurred in connection with borrowings were amortized upfront and charged to statement of profit and loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to statement of profit and loss using the effective interest method.
vi) Derivatives
Under IGAAP, the fair value of the forward contracts were not recognized in the books of accounts, however these are fair valued under Ind AS and the gains or losses arising due to fair valuation are recognized in the retained earnings on the date of transition and subsequently in statement of profit and loss.
vii) Provisions
The proposed dividend and corresponding tax, to the tune of Rs.2,039.55 lakhs, recognized during the year ended 31st March 2015 was declared in 2015- 2016. Hence the same has been reversed as at the transition date and accounted in the year in which it was declared as per the requirements of Ind AS.
viii) Excise duty
Under IGAAP, revenue from sale of products has been presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. There is no impact on the total equity and profit.
ix) Financial guarantee
Financial guarantee contracts extended to the subsidiaries are recognized as a liability at fair value on the transition date and this liability is amortized over the period of guarantee under the provisions of Ind AS. The financial guarantee liability was neither required to be recognized nor amortized under IGAAP.
x) Defined benefit obligation
Both under IGAAP and Ind AS, the Company has recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under IGAAP, the entire cost, including actuarial gains and losses, are charged to statement of profit and loss. Under Ind-AS, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income.
xi) Statement of cash flows
There is no material difference between IGAAP and IND AS on the statement of cash flows.
Mar 31, 2015
1 SHARE CAPITAL
e) Terms / rights attached to shares :
The Company has only one class of equity shares having a par value of Rs.
1 per share. Each holder of equity share is entitled to one vote per
share. The Company declares and pays dividends in Indian Rupees.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive 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.
g) Bonus Shares / Buy Back / Shares for consideration other than cash
issued during the period of five years immediately preceding the
financial year ended 31st March 2015 :
(i) Aggregate number of equity shares allotted as fully paid up
pursuant to contracts without payment
being received in cash : Nil (ii) Aggregate number of equity shares
allotted as fully paid up by way of Bonus Shares : Nil (iii) Aggregate
number of equity shares bought back : Nil
2 Figures for the previous year have been re-grouped, wherever
necessary to conform to current year classification.
3. Accounting policies / compliance of Accounting Standards issued by
the Institute of Chartered Accountants of India.
Rs. lakhs
2014-15 2013-14
(4) AS 29: Provisions, Contingent
Liabilities and Contingent Assets
(A) (i) Contingent Liabilities :
a) On Letters of Guarantee 3,463.59 946.65
b) On Letters of Credit 271.84 65.87
c) On partly paid shares of The Adyar
Property Holding Co. Ltd. 0.01 0.01
d) The Company has furnished guarantees to fulfil various obligations
of Cramlington Precision Forge Limited, UK wholly owned subsidiaries of
the Company, the amount of which is to the extent of non fulfilment of
obligations of the subsidiaries which is not ascertainable.
(ii) Liabilities disputed and not provided for :
a) Sales Tax / entry tax - under appeal 3,347.84 1,017.76
b) Excise Duty / Customs Duty / Service
Tax - under appeal 633.89 504.19
c) Income-tax - under appeal 46.29 65.63
d) Others 212.92 1.56
(iii) Estimated amount of contracts remaining
to be executed on capital
account and not provided for 4,784.42 4,334.89
(iv) Contingent Assets :
Claim of additional compensation against
land acquisition 23.29 23.29
(5) AS 30 : Financial Instruments : Recognition and Measurement
a) AS 30 was issued by the Institute of Chartered Accountants of India
(ICAI) in 2007 but has not yet been notified by the Government under
Section 133 of the Companies Act,2013.
b) The Institute of Chartered Accountants of India has clarified that
to the extent of accounting treatments covered by any of the existing
notified accounting standards (for eg. AS 11, AS 13 etc,) the existing
accounting standards would continue to prevail over AS 30.
c) Since the company follows the accounting treatment specified in the
AS 30 through the accounting treatment under existing accounting
standards i.e AS 11 & AS 13 etc, AS 30 is not followed.
Mar 31, 2014
Rs lakhs
2013-14 2012-13
(1) AS 29: Provisions, Contingent Liabilities
and Contingent Assets
(i) Contingent Liabilities :
a) On Letters of Guarantee 946.65 1,135.26
b) On Letters of Credit 65.87 212.05
c) On Guarantee issued to Housing Development
Finance
Corporation on behalf of employees - -
d) On partly paid shares of The Adyar Property
Holding Co. Ltd. 0.01 0.01
e) The Company has given guarantees to fulfil
various obligations of Cramlington Precision Forge
Limited, UK and Sundram Fasteners (Zhejiang)
Limited, China wholly owned subsidiaries of the
Company, theamount of which is to the extent of
non fulfilment of obligations of the subsidiaries
which is not ascertainable.
(ii) Liabilities disputed and not provided for :
a) Sales Tax / entry tax - under appeal 1,017.76 1,663.53
b) Excise Duty / Customs Duty / Service Tax -
under appeal 504.19 190.14
c) Income-tax - under appeal 65.63 52.34
d) Others 1.56 50.67
(iii) Estimated amount of contracts remaining to
be executed on capital account
and not provided for 4,334.89 6,910.71
(iv) Contingent Assets :
Claim of additional compensation against
land acquisition 23.29 23.29
(2) AS 30 : Financial Instruments : Recognition and Measurement
a) AS 30 was issued by the Institute of Chartered Accountants of India
(ICAI) in 2007 but has not yet been notified by the Government under
Section 211(3C) of the Companies Act,1956.
b) The Institute of Chartered Accountants of India has clarified that
to the extent of accounting treatments covered by any of the existing
notified accounting standards (for eg. AS 11, AS 13 etc,) the existing
accounting standards would continue to prevail over AS 30.
c) Since the company follows the accounting treatment specified in the
AS 30 through the accounting treatment under existing accounting
standards i.e AS 11 & AS 13 etc, AS 30 is not followed.
Mar 31, 2013
1 Figures for the previous year have been re-classified / re-arranged
/ re-grouped, wherever necessary to conform to current year
classification.
(2) (AS 2) : Financial Instruments : Recognition and Measurement
a) AS 30 was issued by the Institute of Chartered Accountants of India
(ICAI) in 2007 but has not yet been notified by the Government under
Section 211(3C) of the Companies Act,1956.
b) The Institute of Chartered Accountants of India has clarified that
to the extent of accounting treatments covered by any of the existing
notified accounting standards (for eg. AS 11, AS 13 etc,) the existing
accounting standards would continue to prevail over AS 30.
c) Since the company follows the accounting treatment specified in the
AS 30 through the accounting treatment under existing accounting
standards i.e AS 11 & AS 13 etc, AS 30 is not followed.
Mar 31, 2012
A) Terms / rights attached to shares :
The Company has only one class of equity shares having a par value of
Re 1 per share. Each holder of equity share is entitled to one vote per
share. The Company declares and pays dividends in Indian Rupees.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferred amounts. The distribution will be
in proportion to the number of equity shares held by the shareholders.
b) Bonus Shares / Buy Back / Shares for consideration other than cash
issued during the period of five years immediately preceding the
financial year ended 31st March 2012 :
(i) Aggregate number of equity shares allotted as fully paid up
pursuant to contracts without payment being received in cash : Nil
(ii) Aggregate number of equity shares allotted as fully paid up by way
of Bonus Shares 10,50,64,185 equity shares of Re 1 each were issued as
fully paid Bonus Shares in the proportion of 1 : 1 by capitalization of
General Reserve on 29th January 2007.
(iii) Aggregate number of equity shares bought back : Nil
** Based on the information available with the Company in respect of
Micro, Small & Medium Enterprises (as defined in 'The Micro, Small &
Medium Enterprises Development Act, 2006'). The Company is generally
regular in making payments of dues to such enterprises. Hence the
question of payments of interest or provision therefore towards belated
payments does not arise.
@ Do not individually account for more than 10% of the total
consumption.
* The above particulars excludes inter unit transfers.
1 Figures for the previous year have been re-classified / re-arranged
/ re-grouped, wherever necessary to conform to current year
classification as per the requirement of Revised Schedule VI to the
Companies Act, 1956.
2. Accountings policies / compliance of Accounting sidnudrus issued by
me institute of Chartered Accountants of India
Mar 31, 2011
A) On Letters of Guarantee 1,474.72 1,060.28
The Company has given guarantees to fulfill various
obligations of Cramlington Precision Forge Limited,
UK and Sundram Fasteners(Zhejiang) Limited, People's
Republic of China, wholly- owned subsidiaries of
the Company the amount of which is to the extent of
non-fulfilment of obligations of the subsidiaries
which is not ascertainable.
b) On Letters of Credit 171.88 3,328.80
c) On Guarantee issued to Housing Development
Finance Corporation on behalf of employees 6.01 13.43
d) Bills discounted - 5,637.26
e) On partly paid shares of The Adyar Property
Holding Co. Ltd. 0.01 0.01
f) Claims against the Company not acknowledged
as debts - 2.54
g) Estimated contingent liability for stamp
duty in respect of leased land at Uttarakhand 3.62 3.62
2. Disclosures required under the Companies Act, 1956
1) Share Capital:
a) The subscribed and paid up capital include:
i) 20,00,000 Equity Shares of Re 1 each issued by conversion of loan
into equity. (Last year No. of Equity Shares 20,00,000 of Re 1 each)
ii) 18,46,09,145 Equity Shares of Re 1/- each allotted as fully paid
bonus shares by capitalisation of General Reserve and Share Premium
amounting to Rs 1,846.09 lakhs. (Last year 18,46,09,145 Equity Shares
of Re 1/- each amounting to Rs 1,846.09 lakhs)
iii) 56,110 fully paid-up Equity Shares of Re 1 each allotted pursuant
to a scheme of amalgamation of Odin Metal Powders Limited, Hyderabad,
with the Company. (Last year 56,110 Equity Shares of Re 1 each)
iv) 29,07,565 fully paid-up Equity Shares of Re 1 each allotted
pursuant to a scheme of amalgamation of TVS Autolec Limited, Chennai,
with the Company. (Last year 29,07,565 fully paid-up Equity Shares of
Re 1 each)
v) 10,50,64,185 Equity Shares of Re 1 each allotted as fully paid bonus
shares by capitalisastion of General Reserve amounting to Rs. 1,050.64
lakhs in the year 2006-2007
vi) No. of Equity shares held by T V Sundram Iyengar & Sons Limited,
Madurai - 5,33,12,000 shares and its subsidiary - 5,07,73,280 shares of
face value of Re 1/- each (Last year No. of Equity shares held by T V
Sundaram Iyengar & Sons Limited, Madurai - 5,33,12,000 and its
subsidiary 5,07,73,280 of face value Re 1 each)
**Based on the information available with the Company in respect of
Micro, Small & Medium Enterprises (as defined in The Micro, Small &
Medium Enterprises Development Act, 2006). The Company is generally
regular in making payments of dues to such enterprises. Hence, the
question of payments of interest or provision therefor towards belated
payments does not arise.
* The Company has entered into derivatiave contracts to hedge against
exchange risk. There are no marked to market losses in respect of all
outstanding derivative contracts at the Balance Sheet date
** Hedged by means of Principal Only Swap from JPY to USD. USD-INR leg
is unhedged and is included at (b) below
* The Company has entered into derivatiave contracts to hedge against
exchange risk. There are no marked to market losses in respect of all
outstanding derivative contracts at the Balance Sheet date
2) In terms of Notification No SO 301 (E) dated 8th February 2011 of
Ministry of Corporate Affairs, Board of Directors has given consent for
non disclosure of information relating to the quantitative details of
turnover, raw material consumption, opening and closing stocks of goods
produced.
Mar 31, 2010
(1) AS 29: Provisions, Contingent Liabilities and Contingent Assets
(
i) Contingent Liabilities :
a) On Letters of Guarantee 1,060.28 3,344.41
b) On Letters of Credit 3,328.80 100.04
c) On Guarantee issued to Housing
Development Finance
Corporation on behalf of employees 13.43 19.34
d) Bills discounted 5,637.26 360.05
e) On partly paid shares of The
Adyar Property Holding Co. Ltd. 0.01 0.01
f) The Company has given guarantees
to fulfill various obligations of
Cramlington Precision Forge Limited,
UK, a wholly owned subsidiary of
the Company, and Sundram Fasteners
(Zhejiang) Limited, China the amount
of which is to the extent of non-
fulfilment of obligations of the
subsidiaries.
g) Claims against the Company not
acknowledged as debts 2.54 -
h) Estimated contingent liability
for stamp duty in respect of leased
land at Uttarakhand 3.62 3.62
2. Disclosures required under the Companies Act, 1956
1) Share Capital:
The subscribed and paid up capital include:
i) 20,00,000 Equity Shares of Re 1 each issued by conversion of loan
into equity. (Last year No. of Equity Shares 20,00,000 of Re 1 each)
ii) 18,46,09,145 Equity Shares of Re 1/- each allotted as fully paid
bonus shares by capitalisation of General Reserve and Share Premium
amounting to Rs 1,846.09 lakhs. (Last year 18,46,09,145 Equity Shares
of Re 1/- each amounting to Rs 1,846.09 lakhs.)
iii) 56,110 fully paid-up Equity Shares of Re 1 each allotted pursuant
to a scheme of amalgamation of Odin Metal Powders Limited, Hyderabad,
with the Company. (Last year 56,110 Equity Shares of Re 1 each)
iv) 29,07,565 fully paid-up Equity Shares of Re 1 each allotted
pursuant to a scheme of amalgamation of TVS Autolec Limited, Chennai,
with the Company. (Last year 29,07,565 fully paid-up Equity Shares of
Re 1 each)
v) 10,50,64,185 Equity Shares of Re 1 each allotted as fully paid bonus
shares by capitalisastion of General Reserve amounting to Rs. 1,050.64
lakhs in the year 2006-07.
vi) T V Sundram Iyengar & Sons Limited, Madurai - 5,33,12,000 shares
and its subsidiary - 5,07,73,280 shares of face value of Re 1/- each.
(Last year No. of Equity shares held by T V Sundaram Iyengar & Sons
Limited, - 2,66,56,000 and its subsidiary 2,53,86,640 of face value Re
1 each)
Note: Last years figures have been regrouped wherever necessary to
conform to current years classification.
3) Computation of Net Profit as per Section 309 (5) read with Sections
198 & 349 of the Companies Act, 1956 and calculation of commission
payable to the Chairman and Managing Director and Executive Director.
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