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Notes to Accounts of Tata Elxsi Ltd.

Mar 31, 2015

1 Corporate information

Tata Elxsi Limited was incorporated in 1989. The Company provides product design and engineering services to the consumer electronics, communications & transportation industries and systems integration and support services for enterprise customers. It also provides digital content creation for media and entertainment industry.

The company is headquartered in Bengaluru, and operates through delivery centers in Bengaluru, Chennai, Pune, Mumbai and Tiruvananthapuram. Its sales operations are located in multiple cities in India, and in multiple international locations including Dubai, France, Germany, Japan, UK, Ireland and USA.

Rs lakhs As at As at 31 March, 2015 31 March, 2014

2.1 Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities

(a) Claims against the Company not acknowledged as debt

1. Disputed demands for Income Tax aggregates. 580.83 502.40

2. Disputed demands for Wealth Tax aggregates. 25.89 25.89

3. Service tax matters 842.26 842.26

4. Bank Guarantees 766.16 865.07

(b) Guarantees - Guarantees given to a Housing Finance Company for 37.06 51.85 housing loans availed by employees during their employment with the company

(ii) Capital Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for Tangible fixed assets 184.73 780.00

Intangible assets 61.94 314.99

2.2 Details on derivatives instruments and unhedged foreign currency exposures

I. The following derivative positions are open as at 31 March, 2015. These transactions have been undertaken to act as economic hedges for the Company''s exposures to various risks in foreign exchange markets and may/ may not qualify or be designated as hedging instruments. The accounting for these transactions is stated in Notes 2.10 and 2.21

(a) Forward exchange contracts and options [being derivative instruments], which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) Outstanding forward exchange contracts entered into by the Company as on 31 March, 2015 - Nil Previous year (Nil)

In accordance with the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be nil as on April 1, 2014, and has adjusted an amount of Rs. 1,329.58 lakhs (net of deferred tax of Rs. 684.63 lakhs) against the opening Surplus balance in the Statement of Profit and Loss under Reserves and Surplus.

The depreciation expense in the Statement of Profit and Loss for the year is higher by Rs. 311.72 lakhs consequent to the change in the useful life of the assets.

2.3 Employee benefit plans

2.3.a Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 697.13 lakhs (Year ended 31 March, 2014 Rs. 608.74 lakhs) for Provident Fund contributions and Rs. 360.38 lakhs (Year ended 31 March, 2014Rs.242.41 lakhs) for Superannuation Fund contributions, Employee state Insurance Scheme Rs.3.86 lakhs (Year ended 31 March, 2014 Rs. 3.46 lakhs) in the Statement of Profit and Loss.Company makes foreign contribution towards ESIC Rs. 92.33 lakhs (Year ended 31 March, 2014Rs.60.08 lakhs) The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

2.4 Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily System integration & support and Software Development & Services. Revenues and expenses directly attributable to segments are reported under each reportable segment. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company are India, US, UK, Europe, and Others

3 The schedule III to the Companies Act, 2013 has become effective from 01 April, 2014 for the preparation of financial statements and accordingly, disclosure and presentation have been made in the financial statements.

4 Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/ disclosure.


Mar 31, 2014

1 Corporate information

Tata Elxsi Limited was incorporated in 1989. The Company provides product design and engineering services to the consumer electronics, communications & transportation industries and systems integration and support services for enterprise customers. It also provides digital content creation for media and entertainment industry.

The Company is headquartered in Bangalore, and operates through delivery centers in Bangalore, Chennai, Pune, Mumbai and Tiruvananthapuram.

Its sales operations are located in multiple cities in India, and in multiple international locations including Dubai, France, Germany, Japan, UK and USA.

Rs. lakhs As at 31 As at 31

March, 2014 March, 2013

2 Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities

(a) Claims against the Company not acknowledged as debt

1. Disputed demands for Income Tax aggregates 502.40 502.40

2. Disputed demands for Wealth Tax aggregates 25.89 25.89

3. Disputed amount of Sales Tax aggregates – 656.72

4. Service tax matters 842.26 842.26

5. Other claims not acknowledged as debts – 484.85

(b) Guarantees- Guarantees given to a Housing Finance Company for 51.85 73.96 housing loans availed by employees during their employment with the company

(ii) Capital Commitments :

Estimated amount of contracts remaining to be executed on capital account and not provided for Tangible fixed assets 780.00 465.29

Intangible assets 314.99 250.39

3.1 Details on derivatives instruments and unhedged foreign currency exposures

I. The following derivative positions are open as at 31 March, 2014. These transactions have been undertaken to act as economic hedges for the Company''s exposures to various risks in foreign exchange markets and may / may not qualify or be designated as hedging instruments. The accounting for these transactions is stated in Notes 2.10 and 2.21.

(a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) Outstanding forward exchange contracts entered into by the Company as on 31st March, 2014-Nil Previous year (Nil)

(ii) Outstanding option contracts entered into by the Company as on 31st March, 2014

4 Disclosures under Accounting Standards

4.1 Employee benefit plans

4.1.a Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to Defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the Benefits. The Company recognised Rs. 608.74 lakhs (Year ended 31st March, 2013 Rs. 628.74 lakhs) for Provident Fund contributions and Rs. 242.41 lakhs (Year ended 31st March, 2013 Rs. 232.69 lakhs) for Superannuation Fund contributions, Employee state Insurance Scheme Rs. 3.46 lakhs (Year ended 31st March, 2012 Rs. 3.57 lakhs) in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

4.1.b Defined benefit plans

The Company offers gratuity (included as part of Contribution to Provident and other funds in Note 21 Employee Benefits expense) to its employees under Defined benefit plans.

4.2 Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily System integration & support and Software Development & Services. Revenues and expenses directly attributable to segments are reported under each reportable segment. All other expenses which are not attributable or allocable to segments have been disclosed as un-allocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as un-allocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company are India, Europe, US, Japan and Others

Segment revenue in India comprises revenue from System Integration and software development and services. Segment revenue outside India predominantly comprises revenue from software development and services. Segment assets include all assets relating to the segment and consist principally of Fixed assets, Receivables, Inventory, Other Current and Non-Current Assets. Assets located outside India primarily relate to Trade Receivables.

4.3.c Advance to A Squared Elxsi Entertainment LLC, USA

Exceptional item in the previous year relates to the settlement of the demand received from the Banker to whom the Company had given a financial guarantee on behalf of A Squared Elxsi Entertainment LLC, USA ("A2E2"), an entity that was proposed to be a joint venture company of the Company.

5 Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosure.


Mar 31, 2013

1 Corporate information

Tata Elxsi Limited was incorporated in 1989. The Company provides product design and engineering services to the consumer electronics, communications & transportation industries and systems integration and support services for enterprise customers. It also provides digital content creation for media and entertainment industry

The company is headquartered in Bangalore, and operates through delivery centers in Bangalore, Chennai, Pune, Mumbai and Thiruvananthapuram.

Its sales operations are located in multiple cities in India, and in multiple international locations including Dubai, France, Germany, Japan, UK and USA.

2.1 Details on derivatives instruments and unhedged foreign currency exposures

I. The following derivative positions are open as at 31 March, 2013. These transactions have been undertaken to act as economic hedges for the Company''s exposures to various risks in foreign exchange markets and may / may not qualify or be designated as hedging instruments. The accounting for these transactions is stated in Notes 2.10 and 2.21

(a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

3.1 Employee benefit plans 24.1.a Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.628.74 lakhs (Year ended 31 March, 2012 Rs. 471.93 lakhs) for Provident Fund contributions and Rs.232.69 lakhs (Year ended 31 March, 2012 Rs. 197.99 lakhs) for Superannuation Fund contributions, Employee state Insurance Scheme Rs. 3.57 lakhs (Year ended 31 March, 2012 Rs 5.41 lakhs) in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

3.2 Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily System integration & support and Software Development & Services. Revenues and expenses directly attributable to segments are reported under each reportable segment. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company are India, Europe, US, Japan and Others

3.3.a Advance to A Squared Elxsi Entertainment LLC, USA

The Company had entered into an agreement with A Squared Entertainment LLC, USA ("A2") for carrying on business in the field of animated content development, development of related characters/intellectual property and licensing thereof to merchandising companies, pursuant to which A Squared Elxsi Entertainment LLC ("A2E2") was incorporated to carry on the activities stated in the agreement. In the previous year, the Company remitted USD 1,000,001 as Share Application Money to A2E2 against which shares were yet to be allotted. The Company had recognised Rs.411 lakhs (Approximately USD 7,95,000) in the previous year ended 31.03.2012 and Rs.107 lakhs (Approximately USD 2,05,000) during the current year as provision against such Share Application Money. On June 22nd 2012, the company had intimated A2E2 of it''s decision not to further finance the operation of A2E2, pursuant to which the company ceased its association with A2 and A2E2. Subsequently the company received a demand from the Banker of A2E2 to whom the company had given a financial guarantee towards the outstanding dues of Rs. 1,589.57 lakhs (USD 30.19 lakhs) due by A2E2 to its banker. The Company has settled it''s obligation towards the bank guarantee and accrued the said amount, which is included as exceptional item in the financials.

4 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2012

1 Corporate information

Tata Elxsi Limited was incorporated in 1989. The Company provides product design and engineering services to the consumer electronics, communications & transportation industries and systems integration and support services for enterprise customers. It also provides digital content creation for media and entertainment industry.

The company is headquartered in Bangalore, and operates through delivery centers in Bangalore, Chennai, Coimbatore, Pune, Mumbai and Tiruvananthapuram.

Its sales operations are located in multiple cities in India, and in multiple international locations including Dubai, France, Germany, Japan, UK and USA. Rs. lakhs

As at 31, As at 31, March March 2012 2011

2.1 Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities

(a) Claims against the Company not acknowledged as debt

1. Disputed demands for Income Tax aggregates. 1,038.12 1,040.69 Rs. lakhs

As at 31, As at 31, March March 2012 2011

2. Disputed demands for Wealth Tax aggregates. 25.89 25.89

3. Disputed amount of Sales Tax aggregates. 656.83 656.83

4. Service tax matters. 842.26 193.61

5. Amount not recognised as debts. 292.44 -

(b) Guarantees- Guarantees given to a Housing Finance Company for housing loans 104.96 122.87 availed by employees during their employment with the company

(c) Guarantee given to a bank for a loan to be secured by A Squared Elxsi Entertainment 1,594.50 - LLC, USA(A2E2)

(d) Loan drawn by A2E2 against the above guarantee 1,024.38 -

(ii) Capital Commitments :

Estimated amount of contracts remaining to be executed on capital account and not provided for :

Tangible assets 198.30 215.10

Intangible assets 141.50 37.51

2.2 Details on derivatives instruments and unhedged foreign currency exposures

I. The following derivative positions are open as at 31 March, 2012. These transactions have been undertaken to act as economic hedges for the Company's exposures to various risks in foreign exchange markets and may / may not qualify or be designated as hedging instruments. The accounting for these transactions is stated in Notes 2.11 and 2.22

(a) Forward exchange contracts and options [being derivative instruments], which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

3.1 Employee benefit plans

3.1 .a Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 471.93 lakhs (Year ended 31 March, 2011 Rs. 415.99 lakhs) for Provident Fund contributions and Rs.197.99 lakhs (Year ended 31 March, 2011 Rs. 150.95 lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

3.2 Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily System Integration & Support and Software Development & Services. Revenues and expenses directly attributable to segments are reported under each reportable segment. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company are India, Europe, US, Japan and Others Segment asset include all assets relating to the segment and consist principally of fixed assets, receivables, other current assets and non-current assets.

Segment liabilities include all liabilities relating to the segment and consist principally of trade payables on other operating liabilities.

Note: Figures in bracket relates to the previous year Segment revenue in India comprises revenue from System Integration and software development and services. Segment revenue outside India predominantly comprises revenue from software development and services. Segment assets include all assets relating to the segment and consist principally of Fixed assets, Receivables, Inventory, Other Current and Non-Current Assets. Assets located outside India primarily relate to Trade Receivables.

3.3.c Investment in A Squared Elxsi Entertainment LLC, USA

The Company has entered into a Joint Venture Agreement with A Squared Entertainment LLC, USA ("A2") for carrying on business in the field of animated content development, development of related characters/ intellectual property, and licensing thereof to merchandising companies, pursuant to which A Squared Elxsi Entertainment LLC, USA ("A2E2") has been incorporated to carry on the activities of the joint venture. The Company has remitted USD 1,000,001 as Share Application Money to A2E2, against which shares are yet to be allotted as at March 31, 2012. The JV Partner, A2 is in the process of completing its obligation under the agreement, on completion of which and issuance of equity to both the parties, A2E2 will become a subsidiary of the Company.

4 The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.


Mar 31, 2011

1. Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs.252.61 lakhs (Previous year Rs. 248.59 lakhs).

2. Contingent liabilities

a) Disputed demands for Income Tax aggregates to Rs. 1,040.69 lakhs (Previous year Rs. 921.90 lakhs).

b) Disputed demands for Wealth Tax aggregates to Rs. 25.89 lakhs (Previous year Rs. 25.89 lakhs).

c) Guarantees given to Housing Finance Company for housing loans availed by employees during their employment with the Company Rs.122.87 lakhs (Previous year Rs. 135.03 lakhs).

d) Disputed amount of Sales Tax aggregates to Rs. 656.83 lakhs (Previous year Rs. 0.11 Lakhs).

e) Service tax matters Rs. 193.61 lakhs (Previous year: Nil)

The above information that is given in Schedule 11 - "Current Liabilities & Provisions" regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information collected by the Management based on enquiries made with the vendors. This has been relied upon by the auditors.

Basic Earnings per Share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

3. Provision for tax includes Rs. 135.00 lakhs (Previous year Rs. 140.04 lakhs) in respect of overseas operations.

4. Employee benefits

The estimates of future salary increase considered in the actuarial valuation take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. The above information is certified by the actuary and relied upon by the auditors.

The employers best estimates of the contribution expected to be paid to the plan during the next year is Rs 163.61 lakhs (Previous year: Rs. 130.18 lakhs)

b) Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution retirement benefit plans for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.

The Provident Fund scheme additionally requires the Company to guarantee payment of interest at rates notified by the Central Government from time to time. However considering the size of the investment in the Provident Fund and the Provident Fund liabilities accrued to the employees at the Balance Sheet Date, the Company believes that there would not be any shortfall in the Fund balance and hence no actuarial valuation has been carried out towards interest payments to be made in the future.

The Company recognised Rs. 415.99 Lakhs (Previous year Rs.425.97 Lakhs) for provident fund contributions and Rs. 150.95 Lakhs (Previous year: Rs. 161.62 Lakhs) for superannuation contributions in the Profit and Loss account. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

5. Related party disclosure

A. Related parties and their relationships

Tata Elxsi (Singapore) Pte Ltd. Subsidiary Company

Tata Sons Limited Company with significant influence

Mr. Madhukar Dev - Managing Director Key management personnel

Note:

Related party relationship is as identified by the Company on the basis of information available with them and relied upon bythe auditors.

There have been no dues from or to related parties which have been written off or written back during the year.

6. Operating Lease

The Company has entered into operating leases in respect of office premises. The lease rentals charged to the Profit & Loss account in respect of these leases amount to Rs. 1,193.81 lakhs. (Previous Year Rs. 1,136.12 Lakhs).

7. Segment reporting

The Companys operations predominantly relate to providing systems integration and software development services in the Information Technology field.

Accordingly the Systems Integration & Support and Software Development & Services comprise the primary basis for segmental information. The secondary segment is geographical, determined based on the location of the clients. Clients are classified as either India or Overseas.

8. Derivative Financial Instruments

Outstanding Forward Exchange Contracts, which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables, are as follows.

9. Notes relating to Cash Flow Statement

a) The cash flow statement has been prepared under the "Indirect Method" as set out in the Accounting Standard 3 - Cash Flow Statements as per the Companies (Accounting Standards) Rules, 2006.

b) Cash and cash equivalents include balances with scheduled banks on dividend account Rs.235.82 Lakhs (Previous year Rs. 220.85 Lakhs) which are not available for use by the company.

c) Cash and cash equivalents include balances in deposit accounts Rs. 1.72 Lakhs (Previous year Rs. 1.72 Lakhs) which are not available for use by the company.

10. The Board of Directors of the company has given consent with regard to non-disclosure of information referred to in paragraphs 3(i)(a) and 3(ii)(b) of Schedule VI part II of the Companies Act, 1956 under notification S.0.301 (E) dated February 08,2011 issued by the Ministry of Corporate Affairs, Government of India.

11. Figures for the previous year have been regrouped and rearranged wherever necessary to conform to the current years classifications.

 
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