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Notes to Accounts of TD Power Systems Ltd.

Mar 31, 2016

Other Information

I The Company has only one class of equity shares having par value of Rs. 10/- each. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

For the period ended 31st March 2016 (31 March 2015, Rs. 2.645), a dividend per share of Rs. 3.05/- has been provided for payment to shareholders subject to approval at the Annual General Meeting of the Company.

II Equity shares include

a Shares allotted pursuant to a contract without consideration being received in cash.

Issued to the shareholder of subsidiary company, DF Power Systems Private Limited, in exchange of 1,700,000 fully paid up equity shares of Rs. 10/- each on 19th October 2010

b Shares allotted by way of bonus shares.

On Capitalization out of Reserves to an extent of 16,246,934 Equity Shares of Rs. 10/- each on 11th January 2011.

Defined Benefit Plan

The employees'' gratuity fund scheme managed by a trust is a defined benefit plan. The Present value of obligation is determined based on actuarial valuation using the projected unit credit method.

1. SEGMENT REPORTING

The Company''s operation comprises of Manufacturing business & Project Business. Primary segmental reporting comprises of Manufacturing Business & Project Business Segments. Secondary Segmental reporting is based on geographical location of Activities. Under primary segment revenue and direct expenses, which relate to a particular segment and which are identifiable are reported under that segment.

Certain expenses, which are not allocable to any specific segment, are separately disclosed at the enterprise level. Cash and bank balances in India are reported at the enterprise level as the company operates common bank accounts. Fixed assets, Liabilities, Current assets and Current liabilities relating to specific business segments are identified and reported. Those that are not identifiable are reported as common items.

Secondary segment is reported based on the geographical location of the company, viz., India and Japan. Revenues in the secondary segment are based on the sales made by the branch office. Inter-segmental purchases & sales are separately identified and reported. Fixed assets, Current Assets including Cash and Bank accounts, and Current Liabilities are identified based on the branch office to which they relate and are reported accordingly.

2. OPERATING LEASE

The Company has various operating leases for office facilities, guesthouse and residential premises of employees that are renewable on a periodic basis, and cancelable at its option. Rental expenses for operating leases included in the financial statements for the year are Rs. 10,878,320/- (Previous year Rs. 13,986,741/-).

3. WARRANTY CLAIMS

Provisions for warranties are made on an estimated basis. During the reporting period, the Company has made provisions towards Warranty claims; the details of the same areas under:

4. a. The company does not have any pending litigations which would impact its financial position as on the reporting date.

b. The company does not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

c. There are no amounts required to be transferred to the Investor Education and Protection Fund by the Company as on the reporting date.

d. Previous reporting year figures have been regrouped wherever required in conformity with the presentation for the current reporting year.

Dividend declared is higher by 15% at Rs. 3.05 per share and the Dividend payout will account for 67.67 % excluding dividend distribution tax.

Forward-Looking Statement

Statements in the Management Discussion and Analysis describing the Company''s plans, estimates and projections may be ''forward looking statements'' within the meaning of applicable securities laws and regulations. Actual results may materially differ from those expressed or implied in the report. The Company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events.


Mar 31, 2015

1. SHARE CAPITAL

I Equity shares include

a Shares allotted pursuant to a contract without consideration being received in cash.

Issued to the shareholder of subsidiary company, DF Power Systems Private Limited, in exchange of 1,700,000 fully paid up equity shares of Rs. 10/- each on 19th October 2010.

b Shares allotted by way of bonus shares.

On Capitalisation out of Reserves to an extent of 16,246,934 Equity Shares of Rs. 10/- each on 11th January 2011.

As at As at 31.03.2015 31.03.2014 Rs. Rs.

2. CONTINGENT LIABILITIES AND COMMITMENTS

(to the extent not provided for)

Contingent Liabilities

Claims against the Company not - - acknowledged as debts

Guarantees 592,944,983 715,518,533

Letters of credit 279,059,745 175,303,155

The management believes, based on internal assessment and/or legal advice, that the probability of an ultimate adverse decision and outflow of resources of the Company is not probable and accordingly, no provision for the same is considered necessary.

Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 89,393,155 93,300,798

Corporate Guarantee issued to the bankers of the subsidiary company (DFPS) 1,420,000,000 5,540,000,000

Corporate Guarantee issued on behalf of subsidiary company (Japan WOS)

17,506,701 182,270,682

Outstanding Bills discounted under Letter of Credit - -

Department of Income Tax (TDS Circle) have issued demand notice under section 201(1)/201(1a) of the Income Tax act, based on tax payer's data reflected in the computer system of the department for Short deduction / Short payments and interest thereon, for the financial years 2006-07, 2007-08, 2008-09, 2009-2010, 2010-2011 amounting to Rs. 754,934/- including Rs. 322,946/- towards interest on such short deduction/payment under Forms 27EQ, 26Q & 24Q. The Company has pursued the matter with the department and the same is under appeal for such short deduction/late payment.

The Company has obtained EPCG licence No. 073001256 dt. 10.07.2013 to the extent of Rs. 6.95 Crores for importation of capital goods without payment of custom duties. Under the licence the company will have to fulfill the export obligation of Rs. 41.71 Crores.

The Company has obtained EPCG licence No. 0730014370 dt.31.03.2015 to the extent of Rs. 1.92 Crores for importation of capital goods without payment of custom duties. Under the licence the company will have to fulfill the export obligation of Rs. 11.574 Crores.

3. SEGMENT REPORTING

The Company's operation comprises of Manufacturing business & Project Business. Primary segmental reporting comprises of Manufacturing Business & Project Business Segments. Secondary Segmental reporting is based on geographical location of Activities. Under primary segment revenue and direct expenses, which relate to a particular segment and which are identifiable are reported under that segment.

Certain expenses, which are not allocable to any specific segment, are separately disclosed at the enterprise level. Cash and bank balances in India are reported at the enterprise level as the company operates common bank accounts. Fixed assets, Liabilities, Current assets and Current liabilities relating to specific business segments are identified and reported. Those that are not identifiable are reported as common items.

Secondary segment is reported based on the geographical location of the company, viz., India and Japan. Revenues in the secondary segment are based on the sales made by the branch office. Inter-segmental purchases & sales are separately identified and reported. Fixed assets, Current Assets including Cash and Bank accounts, and Current Liabilities are identified based on the branch office to which they relate and are reported accordingly.

4. RELATED PARTIES DISCLOSURE

Name of the Related Party Relationship

DF Power Systems Private Limited Subsidiary

TD Power Systems (USA) Inc. Subsidiary

TD Power Systems Japan Limited Subsidiary

Nikhil Kumar Key Managerial Personnel

Hitoshi Matsuo Key Managerial Personnel

Tadao Kuwashima Key Managerial Personnel

Mohib N. Khericha Key Managerial Personnel

5. OPERATING LEASE

The Company has various operating leases for office facilities, guesthouse and residential premises of employees that are renewable on a periodic basis, and cancelable at its option. Rental expenses for operating leases included in the financial statements for the year are Rs. 13,986,741/- (Previous year Rs. 15,337,415/-).

6. a. The company does not have any pending litigations which would impact its financial positon as on the reporting date.

b. The company does not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

c. There are no amounts required to be transferred to the Investor Education and Protection Fund by the Company as on the reporting date.

d. Previous reporting year figures have been regrouped wherever required in conformity with the presentation for the current reporting year.


Mar 31, 2014

Contingent Liabilities

Claims against the Company not acknowledged as debts — 19,711,242

Guarantees 715,518,533 521,904,676

Letters of credit 175,303,155 107,318,622

The management believes, based on internal assessment and / or legal advice, that the probability of an ultimate adverse decision and outflow of resources of the Company is not probable and accordingly, no provision for the same is considered necessary.

As at 31.03.2014 As at 31.03.2013 Rs. Rs.

CONTINGENT LIABILITIES AND COMMITMENTS (Contd.)

Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 93,300,798 472,196,698

Corporate Guarantee issued to the bankers of the subsidiary company (DFPS) 5,540,000,000 5,540,000,000

Corporate Guarantee issued on behalf of subsidiary company. (Japan WOS) 182,270,682 —

Outstanding Bills discounted under Letter of Credit — 24,715,274

Department of Income Tax (TDS Circle) have issued demand notice under section 201(1)/201(1a) of the Income Tax act, based on tax payer''s data reflected in the computer system of the department for Short deduction / Short payments and interest thereon, for the financial years 2006-07, 2007-08, 2008-09, 2009-2010, 2010-2011 amounting to Rs. 40,543,629/- including Rs. 10,742,443/- towards interest on such short deduction/payment under Forms 27EQ, 26Q & 24Q. The company has pursued the matter with the department during the year and the balance demand of Rs. 393,400/- is under appeal including Rs. 109,520/- towards interest on such short deduction/late payment.

2. SEGMENT REPORTING

The company''s operation comprises of Manufacturing business & Project Business. Primary segmental reporting comprises of Manufacturing Business & Project Business Segments. Secondary Segmental reporting is based on geographical location of Activities. Under primary segment revenue and direct expenses, which relate to a particular segment and which are identifiable, are reported under that segment.

Certain expenses, which are not allocable to any specific segment, are separately disclosed at the enterprise level. Cash and bank balances in India are reported at the enterprise level as the company operates common bank accounts. Fixed assets, Liabilities, Current assets and Current Liabilities relating to specific business segments are identified and reported. Those that are not identifiable are reported as common items.

Secondary segment is reported based on the geographical location of the company, viz., India and Japan. Revenues in the secondary segment are based on the sales made by the branch office. Inter-segmental purchases & sales are separately identified and reported. Fixed assets, Current Assets including Cash and Bank accounts, and Current Liabilities are identified based on the branch office to which they relate and are reported accordingly.

3. OPERATING LEASE

The Company has various operating leases for office facilities, guesthouse and residential premises of employees that are renewable on a periodic basis, and cancellable at its option. Rental expenses for operating leases included in the financial statements for the year are Rs. 15,337,415/- (Previous year Rs.29,318,726/-).

4. PREVIOUS REPORTING YEAR

Previous reporting year figures have been regrouped wherever required in conformity with the presentation for the current reporting year


Mar 31, 2013

1 SEGMENT REPORTING

The company''s operation comprises of Manufacturing business & Project Business. Primary segmental reporting comprises of Manufacturing Business & Project Business Segments. Secondary Segmental reporting is based on geographical location of Activities. Under primary segment revenue and direct expenses, which relate to a particular segment and which are identifiable, are reported under that segment.

Certain expenses, which are not allocable to any specific segment, are separately disclosed at the enterprise level. Cash and bank balances in India are reported at the enterprise level as the company operates common bank accounts. Fixed assets, Liabilities, Current assets and Current liabilities relating to specific business segments are identified and reported. Those that are not identifiable are reported as common items.

Secondary segment is reported based on the geographical location of the company, viz., India and Japan. Revenues in the secondary segment are based on the sales made by the branch office. Inter-segmental purchases & sales are separately identified and reported. Fixed assets. Current Assets including Cash and Bank accounts, and Current Liabilities are identified based on the branch office to which they relate and are reported accordingly.

2 OPERATING LEASE

The Company has various operating leases for office facilities, guesthouse and residential premises of employees that are renewable on a periodic basis, and cancelable at its option. Rental expenses for operating leases included in the financial statements for the year are Rs. 29,318,726/- (Previous year Rs.29,285,271/-).

3 INITIAL PUBLIC OFFERING (IPO]

During the financial year 2011-2012 the company raised funds amounting to Rs. 2,269,999,872/- through an Initial Public Offer by filing prospectus with SEBI through a book building process. A share of the company was issued at the premium of Rs.246/- having face value of Rs.10 each. All the Issue Related Expense have been debited to Share Premium Account to Rs. 139,082,279/- and the statement of utilisation of IPO Proceeds is as follows:

4 MANAGERIAL REMUNERATION

1. Consequent to completion of the term of appointment, Mr. Hitoshi Matsuo ceased to be the Managing Director of the Company with effect from September 30,2012.

In terms of a resolution of the Shareholders by a postal ballot approved on August 27,2012 and on December 22,2012, Mr. Hitoshi Matsuo was appointed as a Whole time Director of the company designated as Director - International from October 1,2012 for a period of 2 years, to be based in Japan, subject to approval of the Central government. Since Mr. Matsuo is a Non-Resident, an application has been made to the Central government in this regard.

2. Mr. Nikhil Kumar Joint Managing Director was re-designated as Managing director of the company effective October 1, 2012 as approved by the Company''s shareholders through a postal ballot on August 27,2012. Approval of the Central government has been received for the same in terms of Section 268 of the Companies Act, 1956.

3. Notwithstanding the shareholders'' approval, agreements with the Managing director and whole time directors and the central government approval as applicable for a higher remuneration, the Board of Directors of the Company vide circular resolution dated November 19,2012 approved in principle and finally approved atthe Board meeting held on February 6, 2013 that, the remuneration payable to Mr. Nikhil Kumar, Managing Director, Mr. Hitoshi Matsuo, Whole time Director and Mr. Tadao Kuwashima, Whole time Director shall be computed in terms of Section 349 & 350 of the Companies Act, 1956 subject to however that, the total remuneration payable to all such Directors shall not exceed 10% of the net profits of the company. Accordingly, the remuneration payable to Managing & Whole time Directors for the financial year 2012-2013 is provided in the Books of Accounts of the Company.

5 PREVIOUS REPORTING YEAR

Previous reporting year''s figures have been regrouped wherever required in conformity with the presentation for the current reporting period


Mar 31, 2011

1. 31.03.2011(Rs.) 31.02.2010(Rs.)

Contingent Liabilities etc.:

i. Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances) 78,916,794 -

ii. Guarantees, Counter Guarantees given on Imports and Sale Contract etc. (net of margins held by bank) 1,055,047,279 829,048,472

iii. Corporate Guarantee issued to the bankers of the subsidiary company 3,790,000,000 3,790,000,000

iv. Corporate Guarantee issued on behalf of subsidiary company. 450,040,508 450,040,508

v. Outstanding Bills discounted under Letter of Credit 81,577,318 -

2. Operational Lease

The Company has various operating lease for office, transit house and residential premises for employees that are renewable on a periodic basis, and cancelable at its option. Rental expenses for operating lease included in the Income Statement for the year is Rs.17,045,961/- (Previous Year Rs.15,346,913/-).

3. Segment Reporting

the company's operation comprises of Manufacturing business & Project Business. Primary segmental reporting comprises of Manufacturing Business & Project Business Segments. Secondary Segmental reporting is based on geographical location of Activities. Under primary segment revenue and direct expenses, which relate to a particular segment and which are identifiable, are reported under that segment.

Certain expenses, which are not allocable to an-/ specific segment, are separately disclosed at the enterprise level. Cash and bank balances in India are reported at the enterprise level as the company operates common bank accounts. Fixed assets, Liabilities, Current assets and Current liabilities relating to specific business segments are identified and reported. Those that are not identifiable are reported as common items. Secondary segment is reported based on the geographical location of the company, viz., India and Japan. Revenues in the secondary segment are based on the sales made by the branch office. Inter-segmental purchases & sales are separately identified and reported. Fixed assets, Current Assets including Cash and Bank accounts, and Current Liabilities are identified based on the branch office to which they relate and are reported accordingly.

4. Deferred Tax Liability is calculated in accordance with AS 22, and the net tax liability for the year is debited to Profit & Loss Account.

5. Disclosure in terms of Accounting Standard 29, on Provisions, Contingent Liabilities & Contingent Assets.

Consequent to a Special Resolution passed at the Extra ordinary General Meeting held on 17th January 2011, the Company converted to a Public Limited Company. In terms of the opinion obtained by the company the existing appointments are deemed to be appointments u/s Section 269 of the Companies Act 1956 and the remuneration payable to the aforesaid directors for the period 17-Jan-2011 to 31- Mar-2011 amounting to Rs. 16,912,549/- is governed by Clause (C) of Section II of Part II of Schedule XIII of the Companies Act 1956 and as specified the remuneration paid as above were approved by the Remuneration Committee of the Board at it's meeting held on 15th March 2011 and is subject to approval of the Shareholders.

6. Based on availability and subject to its captive requirements, the company makes available its technical, marketing and financial personnel on chargeable basis to its subsidiary company M/s DF POWER SYSTEMS PRIVATE LIMITED, for execution of projects undertaken by the said subsidiary company. The value of this transaction was Rs. 30,782,480/- (Previous Year Rs.25,481,038/-)- The company has been advised that the same would not be covered by Section 297 of the Companies Act 1956.

7. Department of Income Tax (TDS Circle) have issued demand notice under section 201(l)/201(la) of the Income Tax act, based on tax payer's data reflected in the computer system of the department for Short deduction / Short payments and interest thereon, for the financial years 2006-07, 2007-08, 2008-09 amounting to Rs.31,391,530/- including Rs.9,096,720/- towards interest on such short deduction/payment under Forms 27EQ, 26Q & 24Q. The company has preferred an appeal against the demand notice for an amount of Rs. 31,377,260/- and rectification thereon.

8. Disclosure under The Micro, Small & Medium Enterprises Development Act, 2006 in respect of establishments considered as Micro, Small & Medium Enterprise based on the information made available by the Suppliers.

9. Consequent to the announcement by the ICAI in 2005, following are the disclosures as required for the derivative instruments on hedging foreign currency exposures.

10. Disclosure requirement of AS-15 Revised (2005) "Employee Benefits"- Defined Contribution Plan

11. All the expense related to proposed capital rising is grouped under pre-paid expenses.

12. Figures in brackets refer to previous year ended 31st March 2010 and are re-grouped wherever necessary to conform to the presentation of the current year accounts and have been rounded off to the nearest Rupee.