Notes to Accounts of Timken India Ltd.
Mar 31, 2023
Impairment assessment of goodwill as at March 31,2023:
The Company has performed the annual impairment assessment of the goodwill by determining the "value in use" of the Cash Generating Unit (CGU) as an aggregate of present value of cash flow projections covering a five year period and the terminal value. The management considers the entire business operations of the Company as a single CGU for the impairment assessment. Determination of value in use involves significant estimates and assumptions that affect the reporting CGU''s expected future cash flows. These estimates and assumptions, primarily include, but not limited to, the Industry trend, the revenue growth and profitability during the forecasted period, the discount rate and the terminal growth rate.
Considering the historical performance of the CGU and based on the forward looking estimates, revisions were made to the cash flow projections and other key assumptions such as discount rate and the perpetual growth rate. The cash flows are discounted using a post tax discount rate of 13.5%. The terminal value of cash generating unit is arrived at by extrapolating cash flows of latest forecasted year to perpetuity considering a nil growth rate.
During the year ended March 31,2023, the testing did not result in any impairment in the carrying amount of goodwill.
Sensitivity Analysis:
Reasonable sensitivities in key assumptions is unlikely to cause the carrying amount to exceed the recoverable amount of the cash generating unit.
(ii) No trade receivables are due from directors or other officers of the Company or any of them severally or jointly with any other person. Further, no loans are due from firms or private companies in which any director is a partner, a director or a member.
(iii) Trade receivables are non-interest bearing and are generally settled on terms of credit periods agreed with the customers, which is generally in line with the industry the Company operates.
(iv) Refer note 39A for information about credit risk and currency risk which may impact trade receivables.
(v) Refer note 37 for trade receivables from related parties.
(vi) The Company has determined the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions.
In computing the expected credit losses, the Company has also considered external sources of information relating to its customers'' credit risk that were available in public domain to estimate the probability of default in future.
b. Terms/rights attached to equity shares
The Company has only one class of equity shares issued having a par value of '' 10/- per share. Each holder of equity shares is entitled to one vote per share.
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.
c. Dividend details
The Company declares and pays dividends in Indian Rupees. The final dividend proposed by Board of Directors of '' 1.50 per equity share (March 31,2022 - '' 1.50 per equity share) is subject to the approval of the shareholders in the ensuing Annual General Meeting upon which the liability will be recorded in the books.
The final dividend for the year 2021-22 proposed by the Board and approved by the shareholders at the 35th Annual General Meeting, has been paid to the eligible shareholders during the year ended March 31,2023.
The Company has reviewed the various liabilities/ claims relating to indirect taxes and estimated the provision for contingencies based on assessment of its probability of outflows. These provisions have not been discounted as it is not practicable for the Company to estimate the timing of the provision utilisation and cash outflows, if any, pending resolution.
(ii) Other provision of '' 370.30 million represents accrual for fair value of obligations payable relating to certain transactions of acquired Company for earlier periods (i.e. prior to acquisition by the Company vide a NCLT approved scheme of amalgamation in 2018-19). The timing of utilisation of provision depends on the outcome of the decisions of the appropriate authorities and the Company''s rights for future appeals.
(iii) All funds managed by Timken India Provident Fund Trust was transferred to EPFO by July 15, 2022.
(i) During FY 2018-19, the Company acquired ABC Bearings Limited vide a NCLT approved Scheme of amalgamation. The Company continues to apply the initial recognition exemption under Ind AS 12 in respect of recognition of deferred tax liability on Goodwill arising out of the aforesaid acquisition.
(ii) Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set-off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relates to income tax levied by the same taxation authorities.
(iii) The Company has done a detailed analysis of future recoverability of the Deferred Tax assets based on the internal and external information and expects, the recoverability of the Deferred Tax asset is not impacted.
The Company is subject to tax assessments and ongoing proceedings from the Income Tax department. Management periodically reviews and evaluates various tax positions taken in tax returns , including unresolved tax disputes, which involves interpretation of applicable tax regulations and judicial precedents. Current tax liability and tax asset balances are presented, after recognising as appropriate, provision for taxes payable and contingencies basis management''s assessment (including tax experts based on requirement) of outcome of such ongoing proceedings and amounts that may become payable to the tax authorities. Considering the nature of such estimates and uncertainties involved, the amount of such provisions may change upon final resolution of the matters with tax authorities.
(i) Export benefits available under prevalent schemes are accrued as revenue in the year in which the goods are exported and only when there is reasonable assurance that the conditions attached to them will be complied with, and the amounts will be received.
(ii) Performance obligations and remaining performance obligations:
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognised as at the end of the reporting period and an explanation as to when the Company expects to recognise these amounts in revenue. Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts that have original expected duration of one year or less.
(iii) Refer note 37 for revenue from related parties.
|
NOTE 34 : CONTINGENT LIABILITIES AND COMMITMENTS Refer Note 2.7.13.2 for accounting policy on Contingent liabilities and contingent assets A. CONTINGENT LIABILITIES |
'' in million |
|
|
As at March 31, 2023 |
As at March 31, 2022 |
|
|
Claims against the Company not acknowledged as debts a) Indirect tax matters |
44.07 |
46.09 |
|
b) Direct tax matters |
118.02 |
135.29 |
|
c) Other claims |
3.19 |
3.49 |
Indirect tax contingencies
The Company has outstanding disputes with Indirect tax authorities mainly relating to treatment of characterisations and classification of certain items. Direct tax contingencies
The Company has outstanding dispute with Direct tax authorities mainly relating to tax treatment of certain expenses claimed as deductions, computation or allowances.
Other claims
The Company has outstanding disputes from various other statutes, which is consolidated for disclosure as the value is not material.
These demands are being contested by the Company based on the management evaluation and advice of consultants as appropriate. In respect of above matters, future cash outflows are determinable only on receipt of judgments/decisions, which are pending at various authorities and the Company''s rights for future appeals.
The Company does not expect any reimbursements in respect of the above contingent liabilities.
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 its financial statements.
The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial statements.
NOTE 35 : SEGMENT INFORMATION Operating Segment:
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and assessing performance. Information reported to the Chief Operating Decision Maker (CODM) for the assessment of segment performance focuses on the types of products and services delivered or provided. The Company''s CODM is the Board of the Company.
The Company has only one reportable primary segment, viz. ''Bearings and allied goods & services''. Accordingly, no separate disclosure of segment information has been made.
a) The revenue from the reportable segment ''Bearings and allied goods & services'' for year ended March 31,2023''28,066.10 million ( March 31,2022 '' 22,032.44 million)
Credit risk is the risk that 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 investing activities, primarily cash & cash equivalents.
Customer credit risk is managed in accordance with the Company''s established policy, procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored through credit lock and release effectively managing the exposure.
An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of the financial assets disclosed in Note 14. The Company does not hold any collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as most of its external customers (other than related party customers) are established players in their industry or are distributors/ dealers against which the Company holds security deposit as its policy and operate in largely independent markets. All the related party receivables are from various Timken group companies where there is a minimal default risk.
The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Company considered current and anticipated future economic conditions relating to industries the Company deals with and the countries where it operates. In calculating expected credit loss, the Company has also considered related credit information for its customer, that''s available in public domain to estimate the probability of default in future.
ii. Cash & Cash equivalents and Other financial assets
Credit risk from balances with banks is managed by the Company''s treasury department in accordance with the Company''s policy. Investment of surplus funds are made for deposit with banks and short-term liquid funds of rated mutual funds. Investments and Bank deposits are reviewed by the Board of Directors on a quarterly basis.
Credit risk arising from short term liquid fund investments, cash & cash equivalents and other balances with banks is limited and no collaterals are held against these because the counterparties are banks and recognised financial institutions. None of the financial instruments of the Company result in material exposure of credit risk as at March 31,2023.
Other financial assets mainly include, loans and security deposits given, other receivables. There are no indications that defaults in payment obligations would occur in respect of these financial assets.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company is exposed to different types of market risks. For the Company, the market risk is the possibility of changes in foreign currency exchange rates and commodity prices which may affect the value of the Company''s financial assets, liabilities or expected future cash flows.
i. Commodity Risk
Commodity risk for the Company is mainly related to fluctuations in steel prices which drives the prices of steel bars, tubes and wire rods. Since, steel is the primary input materials for making of rings, rollers and cages, which are used in manufacturing the final products , any fluctuation in steel prices can lead to drop in operating margin. Most of these input materials are procured from approved vendors and subject to price negotiations. In order to mitigate the risk associated with raw material and components prices, the Company manages its procurement through productivity improvements, expanding vendor base and constant pricing negotiation with vendors. The Company renegotiates the prices with its customers in case there is more than normal deviation in the prices of its major raw materials. Additionally, the processes and policies related to such risks are reviewed and controlled by senior management team.
ii. 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 risk of fluctuations in foreign currency exchange rates on its financial liabilities including trade and other payables etc., which are mainly in US Dollars are mitigated through the natural hedge alignment, as Company''s export sales are predominantly in US dollars and such economic exposure through trade and other receivables in US dollars provide natural alignment. Hence, a reasonable variation in the Foreign exchange rate would not have much impact on the profit or loss / equity of the Company. Net foreign currency exposure also reviewed by the Board of Directors on a quarterly basis.
iii. 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 interest rate risks arises primarily from security deposits from distributors. The Company has taken interest earning security deposits from the distributors as disclosed in note No.24. An increase / decrease of 1% of interest rate, the profit for the year ended March 31,2023 would decrease / increase by '' 0.29 million ( Year ending March 31,2022''0.31 million)
3. Liquidity risk
Liquidity risk is defined as a risk that the Company will not be able to meet its obligations on time or at a reasonable price. An effective liquidity risk management takes into consideration in maintaining optimum level of cash and cash equivalents and the availability of funding through credit facilities at a reasonable cost to meet the obligation when due. The Company''s treasury department drives the liquidity, funding as well as settlement management. Additionally, the processes and policies related to such risks are reviewed and controlled by senior management team. Management continuously reviews the actual cash flows and forecasts the expected cash flows to monitor the liquidity position. The Company has large investments and deposits either in short term liquid funds or in bank deposits, which can be converted to cash at a very short notice and hence carry negligible liquidity risk. All the current financial liabilities of the Company are due to be paid with in twelve months from the Balance sheet date. All non-current financial liabilities are due to be paid in more than twelve months from the Balance sheet date. However the interest component of all the non-current financial liabilities if any will be payable as and when due, which may be with in twelve months from the date of Balance sheet date.
NOTE 40 : GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS
Refer Note 2.7.11 for accounting policy on Employee benefits
The Company has a defined benefit gratuity plan (funded). Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. Certain employees who has completed more than 30 years of service gets one month salary for every completed year of service in excess of 30 years.
The Company also has a Death Benefit Scheme (unfunded) for specific employee group where the immediate beneficiaries are entitled to a monthly fixed sum till the date of superannuation, for death in harness.
Entire fund managed by Timken India Provident Fund Trust was transferred to EPFO by July 15, 2022. Effective this date the entire Provident Fund management shall be with EPFO. Prior to this date, for certain employees, the Company had a separate Provident Fund Trust (funded) whereby, the employees were entitled to benefits as per Provident Fund Act / Trust Deed. Any shortfall for the Trust was borne by the Company, hence the same was treated as a defined benefit scheme. The actuary had provided a valuation and determined the fund assets and obligations as at March 31,2022. The corresponding disclosures mentioned below were to the extent of the shortfall in the interest guaranteed on the provident fund vis-a-vis the interest rate notified by the Government.
NOTE 42 : ADDITIONAL REGULATORY INFORMATION NOT DISCLOSED ELSEWHERE IN THE FINANCIAL STATEMENTS
(a) There are no properties / assets which are not held or registered in the name of the Company (benami property), other than those disclosed in these standalone financial statements.
(b) Transactions and balances with companies which have been removed from register of Companies [struck off companies] as at the above reporting periods is Nil.
(c) The Company has not traded / invested in Crypto currency.
(d) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies beyond the statutory period.
(e) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(i) 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
(ii) Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(f) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall
(i) 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
(ii) Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(g) The Company has no such 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).
(h) The Company is not a declared willful defaulter by any bank or financial Institution or other lender.
NOTE 43 : Pursuant to the amendments in Rule 3(5) of the Companies (Accounts) Rules, 2014 from August 5, 2022, back-up of the books of account and other books and papers of the Company maintained in electronic mode, including at a place outside India, if any, shall be kept in servers physically located in India on a ''daily'' basis. The Company plans to meet this requirement during the financial year 2023-24.
NOTE 44 : PREVIOUS PERIOD COMPARATIVES
Previous year figures have been regrouped or reclassified wherever necessary to conform to current year''s grouping or classification.
Mar 31, 2022
Impairment assessment of goodwill as at March 31,2022:
The Company has performed the annual impairment assessment of the goodwill by determining the "value in use"of the Cash Generating Unit (CGU) as an aggregate of present value of cash flow projections covering a five year period and the terminal value. The Company considers a single CGU for the impairment assessment. Determination of value in use involves significant estimates and assumptions that affect the reporting CGU''s expected future cash flows. These estimates and assumptions, primarily include, but not limited to, the Industry trend, the revenue growth and profitability during the forecasted period, the discount rate and the terminal growth rate.
Considering the historical performance of the CGU and based on the forward looking estimates, revisions were made to the cash flow projections and other key assumptions such as discount rate and the perpetual growth rate. The cash flows are discounted using a post tax discount rate of 13.5%. The terminal value of cash generating unit is arrived at by extrapolating cash flows of latest forecasted year to perpetuity considering a nil growth rate.
During the year ended March 31 2022, the testing did not result in any impairment in the carrying amount of goodwill.
(ii) No trade receivables are due from directors or other officers of the Company or any of them severally or jointly with any other person. Further, no loans are due from firms or private companies in which any director is a partner, a director or a member.
(iii) Trade receivables are non-interest bearing and are generally settled on terms of credit periods agreed with the customers, which is generally in linewith the industrythe Company operates.
(iv) Refer note 39Afor information about credit risk and currency risk which may impact trade receivables.
(v) Refer note 37 for trade receivables from related parties.
(vi) The Company has determined the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions.
In computing the expected credit losses, the Company has also considered external sources of information relating to its customers'' credit risk that were available in public domain to estimate the probability of default in future.
b. Terms/rights attached to equity shares
The Company has only one class of equity shares issued having a par value of ^ 10/- per share. Each holder of equity shares is entitled to one vote per share. 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.
c. Dividend details
The Company declares and pays dividends in Indian Rupees. The final dividend proposed by Board of Directors of ^ 1.50/- per equity share (March 31,2021 - ^ 1.50/- per equity share) is subject to the approval of the shareholders in the ensuing Annual General Meeting upon which the liability will be recorded in the books.
The final dividend for the year 2020-21 proposed by the Board and approved by the shareholders at the 34th Annual General Meeting, has been paid to the eligible shareholders during the year ended March 31,2022.
The Company has reviewed the various liabilities/ claims relating to indirect taxes and estimated the provision for contingencies based on assessment of its probability of outflows. These provisions have not been discounted as it is not practicable for the Company to estimate the timing of the provision utilisation and cash outflows, if any, pending resolution.
(ii) Other provision of ^ 370.30 million represents accrual for fair value of obligations payable relating to certain transactions of acquired Company for earlier periods (i.e. prior to acquisition by the Company vide a NCLT approved scheme of amalgamation in 2018-19). The timing of utilisation of provision depends on the outcome of the decisions of the appropriate authorities and the Company''s rights for future appeals.
(i) During FY 2018-19, the Company acquired ABC Bearings Limited vide a NCLT approved Scheme of amalgamation. The Company continues to apply the initial recognition exemption under Ind AS 12 in respect of recognition of deferred tax liability on Goodwill arising out of the aforesaid acquisition.
(ii) Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set-off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relates to income tax levied by the sametaxation authorities.
(iii) The Company has done a detailed analysis of future recoverability of the Deferred Tax assets based on the internal and external information and expects, the recoverability of the Deferred Tax asset is not impacted.
The Company is subject to tax assessments and ongoing proceedings from the Income Tax department. Management periodically reviews and evaluates various tax positions taken in tax returns, including unresolved tax disputes, which involves interpretation of applicable tax regulations and judicial precedents. Current tax liability and tax asset balances are presented, after recognising as appropriate, provision for taxes payable and contingencies basis management''s assessment (including tax experts based on requirement) of outcome of such ongoing proceedings and amounts that may become payable to the tax authorities. Considering the nature of such estimates and uncertainties involved, the amount of such provisions may change upon final resolution of the matters with tax authorities.
(i) Export benefits available under prevalent schemes are accrued as revenue in the year in which the goods are exported and only when there is reasonable assurance that the conditions attached to them will be complied with, and the amounts will be received.
(ii) Performance obligations and remaining performance obligations:
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognised as at the end of the reporting period and an explanation as to when the Company expects to recognise these amounts in revenue. Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts that have original expected duration of one year or less.
(iii) Refer note 37 for revenue from related parties.
Indirect tax contingencies
The Company has outstanding disputes with Indirect tax authorities mainly relating to treatment of characterisations and classification of certain items. Direct tax contingencies
The Company has outstanding dispute with Direct tax authorities mainly relating to tax treatment of certain expenses claimed as deductions, computation orallowances.
Other claims
The Company has outstanding disputes from various other statutes, which is consolidated for disclosure as the value is not material.
These demands are being contested by the Company based on the management evaluation and advice of consultants as appropriate. In respect of above matters, future cash outflows are determinable only on receipt of judgments/decisions, which are pending at various authorities and the Company''s rights forfutureappeals.
The Company does not expect any reimbursements in respect of the above contingent liabilities.
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 its financial statements.
The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial statements.
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and assessing performance. Information reported to the Chief Operating Decision Maker (CODM) for the assessment of segment performance focuses on the types of products and services delivered or provided. The Company''s CODM is the Board of the Company.
The Company has only one reportable primary segment, viz. ''Bearings and allied goods & services''. Accordingly, no separate disclosure of segment information has been made.
a) The revenue from the reportable segment ''Bearings and allied goods & services'' foryear ended March 31,2022 ^ 22,032.44 million (March 31,2021 ^ 14,105.20 million)
The management has assessed that the carrying values of the Financial Assets and Liabilities at amortised cost approximate their fair value largely due to the short-term maturities of these instruments.
NOTE 39A: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company''s principal financial assets include trade & other receivables and cash & cash equivalents that derives directly from its operations. The Company''s principal financial liabilities comprise trade & other payables and shortterm borrowings. The main purpose of majority of these financial liabilities is to manage working capital of the Company.
The Company is exposed to credit risk, market risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s financial risk activities are governed by appropriate policies and procedures and financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The below note explains the sources of risk which the Company is exposed to and how the entity manage the risk:
NOTE 39A: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Contd .)1. Credit risk
Credit risk is the risk that 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 investing activities, primarily cash & cash equivalents.
Customer credit risk is managed in accordance with the Company''s established policy, procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored through credit lock and release effectively managing the exposure.
An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of the financial assets disclosed in Note 14. The Company does not hold any collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as most of its external customers (other than related party customers) are established players in their industry or are distributors/ dealers against which the Company holds security deposit as its policy and operate in largely independent markets. All the related party receivables are from various Timken group companies where there is a minimal default risk.
The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Company considered current and anticipated future economic conditions relating to industries the Company deals with and the countries where it operates. In calculating expected credit loss, the Company has also considered related credit information for its customer, that''s available in public domain to estimate the probability of default in future and has taken into account estimates of possible effectfrom the pandemic relating to COVID -19.
ii. Cash and Cash equivalents and Otherfinancial assets
Credit risk from balances with banks is managed bythe Company''s treasury department in accordance with the Company''s policy. Investment of surplus funds are made for deposit with banks and short-term liquid funds of rated mutual funds. Investments and Bank deposits are reviewed bythe Board of Directors on a quarterly basis.
Credit risk arising from short term liquid fund investments, cash and cash equivalents and other balances with banks is limited and no collaterals are held against these because the counterparties are banks and recognised financial institutions. None of the financial instruments of the Company result in material exposure of credit risk as at March 31,2022.
Otherfinancial assets mainly include, loans and security deposits given, other receivables. There are no indications that defaults in payment obligations would occurin respect of these financial assets.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company is exposed to different types of market risks. For the Company, the market risk is the possibility of changes in foreign currency exchange rates and commodity prices which may affect the value of the Company''s financial assets, liabilities or expected future cash flows.
i. Commodity Risk
Commodity risk for the Company is mainly related to fluctuations in steel prices which drives the prices of steel bars, tubes and wire rods. Since, steel is the primary input materials for making of rings, rollers and cages, which are used in manufacturing the final products, any fluctuation in steel prices can lead to drop in operating margin. Most of these input materials are procured from approved vendors and subject to price negotiations. In order to mitigate the risk associated with raw material and components prices, the Company manages its procurement through productivity improvements, expanding vendor base and constant pricing negotiation with vendors. The Company renegotiates the prices with its customers in case there is more than normal deviation in the prices of its major raw materials. Additionally, the processes and policies related to such risks are reviewed and controlled byseniormanagementteam.
ii. 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 risk of fluctuations in foreign currency exchange rates on its financial liabilities including trade and other payables etc., which are mainly in US Dollars are mitigated through the natural hedge alignment, as Company''s export sales are predominantly in US dollars and such economic exposure through trade and other receivables in US dollars provide natural alignment. Hence, a reasonable variation in the Foreign exchange rate would not have much impact on the profit or loss/equity of the Company. Net foreign currency exposure also reviewed bythe Board of Directors on a quarterly basis.
The following table details the Company''s sensitivity to a 10% increase and decrease in INR against the USD, EURO, GBP and JPY. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A negative number below indicates a decrease in profit or equity where the INR weakens 10% against the relevant currency. For a 10% strengthening of the INR against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be positive.
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 interest rate risks arises primarily from security deposits from distributors. The Company has taken interest earning security deposits from the distributors as disclosed in note No.24. An increase/decrease of 1% of interest rate, the profit for the year ended March 31,2022 would decrease / increase by ^ 0.31 million ( Year ending March31,2021 ^0.28 million)
Liquidity risk is defined as a risk that the Company will not be able to meet its obligations on time or at a reasonable price. An effective liquidity risk management takes into consideration in maintaining optimum level of cash and cash equivalents and the availability of funding through credit facilities at a reasonable cost to meet the obligation when due. The Company''s treasury department drives the liquidity, funding as well as settlement management. Additionally, the processes and policies related to such risks are reviewed and controlled by senior management team. Management continuously reviews the actual cash flows and forecasts the expected cash flows to monitor the liquidity position. The Company has large investments and deposits either in short term liquid funds or in bank deposits, which can be converted to cash at a very short notice and hence carry negligible liquidity risk. All the current financial liabilities of the Company are due to be paid with in twelve months from the Balance sheet date. All non-current financial liabilities are due to be paid in more than twelve months from the Balance sheet date. However the interest component of all the non-current financial liabilities if any will be payable as and when due, which may be with in twelve months from the date of Balance sheet date.
a) The Fair value for investments in mutual funds have been determined based on the NAVof the respective funds as on balance sheet date.
b) The Company has determined the carrying value of the investment as its fair value in the absence of any available fair value for its non-current investment which is carried at cost.
The primary objective of the Company''s capital management is to maximise the shareholder value. For the purpose of the Company''s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the Company. The Company''s objective when managing capital are to :
(i) Safeguard their ability to continue as a going concern, so that the Company maximise shareholder value and provide benefits for other stakeholders and
(ii) Maintain an optimal capital structure to reduce the weighted average cost of capital
In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares or sell non-core assets to reduce debts.
NOTE 40 : GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS
Refer Note2.7.11 foraccounting policy on Employee benefits
The Company has a defined benefit gratuity plan (funded). Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.
The Company also has a Death Benefit Scheme (unfunded) for specific employee group where the immediate beneficiaries are entitled to a monthly fixed sum till the date of superannuation, for death in harness.
The Company has a separate Provident Fund Trust (funded) whereby, all the employees are entitled to benefits as per Provident Fund Act/ Trust Deed. Any shortfall for the Trust is borne by the Company, hence the same is treated as a defined benefit scheme. The actuary has provided a valuation and determined the fund assets and obligations as at March 31, 2022. The corresponding disclosures mentioned below are to the extent of the shortfall in the interest guaranteed on the provident fund vis-a-vis the interest rate notified by the Government.
The estimates of rate of escalation in salary considered in actuarial valuation taken into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary. The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Company''s policy for plan assets management.
Each year, the Board of Trustees reviews the level of funding in the Gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy.
NOTE 42: ADDITIONAL REGULATORY INFORMATION NOT DISCLOSED ELSEWHERE IN THE FINANCIAL STATEMENTS
(a) There are no properties / assets which are not held or registered in the name of the Company (benami property), other than those disclosed in these standalone financial statements.
(b) Transactions and balances with companies which have been removed from register of Companies [struck off companies] as at the above reporting periods is Nil.
(c) The Company has not traded/ invested in Crypto currency.
(d) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies beyond the statutory period.
(e) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(i) 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
(ii) Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(f) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall
(i) 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
(ii) Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(g) The Company has no such 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 IncomeTaxAct, 1961).
(h) The Company is not a declared willful defaulter by any bank or financial Institution or other lender.
NOTE 43 : PREVIOUS PERIOD COMPARATIVES
Previous year figures have been regrouped or reclassified wherever necessary to conform to current year''s grouping or classification.
Mar 31, 2021
(i) The Company has adopted Ind AS 116 "Leases"with the date of initial application being April 1,2019. The Company has applied Ind AS 116 using the modified retrospective approach.
(ii) The Company has no leases that were classified as finance leases
(iii) Assessment on account of COVID-19
As on balance sheet date no change in the term of lease arrangements were noted that needed any consideration. There has been no assistance or grant from the Government, which requires any adjustments to the lease arrangements. There had been no trigger for any material adjustments that is required to be done to the present value of lease liabilities as on the balance sheet date.
The fair value of investment property is based on a valuation carried out by an independent valuer during the financial year 2020-21, who holds a recognised and relevant professional qualification and has recent experience in the location and category of the investment property being valued. The fair value of the investment property has been arrived at by means of market approach. As per the said technique, fair value of investment property is arrived by considering the comparable prices of similar property at that location.
Impairment assessment of goodwill as at March 31,2021:
The Company has performed the annual impairment assessment of the goodwill by determining the "value in use" of the Cash Generating Unit (CGU) as an aggregate of present value of cash flow projections covering a five year period and the terminal value. The Company considers a single CGU for the impairment assessment. Determination of value in use involves significant estimates and assumptions that affect the reporting CGU''s expected future cash flows. These estimates and assumptions, primarily include, but not limited to, the Industry trend, the revenue growth and profitability during the forecasted period, the discount rate and the terminal growth rate. While considering these numbers, the Company has considered all possible impacts that is known at the time of preparation of this financial statement due to COVID-19.
Considering the historical performance of the CGU and based on the forward looking estimates (which considered likely impact of COVID-19), revisions were made to the cash flow projections and other key assumptions such as discount rate and the perpetual growth rate. The cash flows are discounted using a post tax discount rate of 13.5%. The terminal value of cash generating unit is arrived at by extrapolating cash flows of latest forecasted year to perpetuity considering a nil growth rate.
During the year ended March 31 2021, the testing did not result in any impairment in the carrying amount of goodwill.
Sensitivity Analysis:
The table below shows the percentage movement in key assumptions that (individually) would be required to reach the point at which the value in use approximates its carrying value.
Assessment on account of COVID-19
(i) Due to COVID 19 driven lockdown, Company''s manufacturing facilities and warehouses were closed for some period during FY 2020-21. The Company has assessed that the changes to the value of inventories pursuant to unabsorbed overheads incurred in the lockdown period are not significant.
(ii) Considering the emergence of second wave of the COVID-19 pandemic, the Company reviewed with additional information from its various internal and external sources. The Company expects full recovery of the carrying value of its inventories.
(ii) No trade receivables are due from directors or other officers of the Company or any of them severally or jointly with any other person. Further, no loans are due from firms or private companies in which any director is a partner, a director ora member.
(iii) Trade receivables are non-interest bearing and are generally settled on terms of credit periods agreed with the customers, which is generally in line with the industry the Company operates.
(iv) Refer note 38Afor information about credit risk and currency risk which may impact trade receivables.
(v) Refer note 36 for trade receivables from related parties.
(vi) The Company has determined the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. While determining this, current and future economic conditions arising from the COVID-19 pandemic event on the customer''s business operations and the consequent ability to pay has been evaluated.
In computing the expected credit losses, the Company has also considered external sources of information relating to its customers'' credit risk that were available in public domain to estimate the probability of default in future and has taken into account possible effects from the pandemic relating to COVID -19.
b. Terms/rights attached to equity shares
The Company has only one class of equity shares issued having a par value of ^ 10/- per share. Each holder of equity shares is entitled to one vote per share.
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.
c. Dividend details
The Company declares and pays dividends in Indian Rupees. The final dividend proposed by Board of Directors of ^ 1.50/- per equity share (March 31,2020 - ^ 50/- per equity share) is subject to the approval of the shareholders in the ensuing Annual General Meeting upon which the liability will be recorded in the books.
The final dividend for the year 2019-20 proposed by the Board and approved by the shareholders at the 33rd Annual General Meeting, has been paid to the eliqible shareholders durinq the year ended March 31,2021.
The Company has reviewed the various liabilities/ claims relating to indirect taxes and estimated the provision for contingencies based on assessment of its probability of outflows. These provisions have not been discounted as it is not practicable for the Company to estimate the timing of the provision utilisation and cash outflows, if any, pending resolution.
(ii) Other provision of ^ 370.30 million represents accrual for fair value of obligations payable relating to certain transactions of acquired Company for earlier periods (i.e. prior to acquisition by the Company vide a NCLT approved scheme of amalgamation in 2018-19). The timing of utilisation of provision depends on the outcome of the decisions of the appropriate authorities and the Company''s rights for future appeals.
(i) The Company has adopted new tax regime under section 115BAA during the year 2019-20. The basic tax rate under the new regime is 22% as against 30%.
(ii) During FY 2018-19, the Company acquired ABC Bearings Limited vide a NCLT approved Scheme of amalgamation. The Company continues to apply the initial recognition exemption under Ind AS 12 in respect of recognition of deferred tax liability on Goodwill arising out of the aforesaid acquisition.
(iii) Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set-off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relates to income tax levied by the sametaxation authorities.
(iv) The Company has done a detailed analysis of future recoverability of the Deferred Tax assets based on the internal and external information and expects, the recoverability of the Deferred Tax asset is not impacted.
(i) Export benefits available under prevalent schemes are accrued as revenue in the year in which the goods are exported and only when there is reasonable assurance that the conditions attached to them will be complied with, and the amounts will be received.
(ii) Performance obligationsand remaining performance obligations:
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognised as at the end of the reporting period and an explanation as to when the Company expects to recognise these amounts in revenue. Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts that have original expected duration of one year or less.
(iii) Refer note 36 for revenue from related parties.
Assessment on account of COVID-19
(iv) Given the current impact of COVID-19 and with available information internally and externally, the Company expects, there is no significant adjustments or disclosures reguired to its revenue estimation under IND AS 115 for the year ended March 31,2021.
Indirect tax contingencies
The Company has outstanding disputes with Indirect tax authorities mainly relating to treatment of characterisations and classification of certain items. Direct tax contingencies
The Company has outstanding dispute with Direct tax authorities mainly relating to tax treatment of certain expenses claimed as deductions, computation orallowances.
Other claims
The Company has outstanding disputes from various other statutes, which is consolidated for disclosure as the value is not material.
These demands are being contested by the Company based on the management evaluation and advice of consultants as appropriate. In respect of above matters, future cash outflows are determinable only on receipt of judgments/decisions, which are pending at various authorities and the Company''s rights forfutureappeals.
The Company does not expect any reimbursements in respect of the above contingent liabilities.
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 its financial statements.
The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial statements.
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and assessing performance. Information reported to the Chief Operating Decision Maker (CODM) for the assessment of segment performance focuses on the types of products and services delivered or provided. The Company''s CODM is the Board of the Company.
The Company has only one reportable primary segment, viz. ''Bearings and allied goods & services''. Accordingly, no separate disclosure of segment information has been made.
a) The revenue from the reportable segment ''Bearings and allied goods & services'' foryearended March 31,2021 ^ 14,105.20 million (March31,2020 ^ 16,168.70million)
b) The Company is domiciled in India. Geographical revenue is allocated based on the location of the customers. Information regarding geographical revenue is as follows:
Credit risk is the risk that 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 investing activities, primarily cash & cash equivalents.
Customer credit risk is managed in accordance with the Company''s established policy, procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored through credit lock and release effectively managing the exposure.
An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of the financial assets disclosed in Note 13. The Company does not hold any collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as most of its external customers (other than related party customers) are established players in their industry or are distributors/ dealers against which the Company holds security deposit as its policy and operate in largely independent markets. All the related party receivables are from various Timken group companies where there is a minimal default risk.
The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Company considered current and anticipated future economic conditions relating to industries the Company deals with and the countries where it operates. In calculating expected credit loss, the Company has also considered related credit information for its customer, that''s available in public domain to estimate the probability of default in future and has taken into account estimates of possible effectfrom the pandemic relating to COVID -19.
ii. Cash and Cash equivalents and Otherfinancial assets
Credit risk from balances with banks is managed bythe Company''s treasury department in accordance with the Company''s policy. Investment of surplus funds are made for deposit with banks and short-term liquid funds of rated mutual funds. Investments and Bank deposits are reviewed bythe Board of Directors on a quarterly basis.
Credit risk arising from short term liquid fund investments, cash and cash equivalents and other balances with banks is limited and no collaterals are held against these because the counterparties are banks and recognised financial institutions. None of the financial instruments of the Company result in material exposure of credit risk as at March 31,2021.
Otherfinancial assets mainly include, loans and security deposits given, other receivables. There are no indications that defaults in payment obligations would occurin respect of these financial assets.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company is exposed to different types of market risks. For the Company, the market risk is the possibility of changes in foreign currency exchange rates and commodity prices which may affect the value of the Company''s financial assets, liabilities or expected future cash flows.
i. Commodity Risk
Commodity risk for the Company is mainly related to fluctuations in steel prices which drives the prices of steel bars, tubes and wire rods. Since, steel is the primary input materials for making of rings, rollers and cages, which are used in manufacturing the final products, any fluctuation in steel prices can lead to drop in operating margin. Most of these input materials are procured from approved vendors and subject to price negotiations. In order to mitigate the risk associated with raw material and components prices, the Company manages its procurement through productivity improvements, expanding vendor base and constant pricing negotiation with vendors. The Company renegotiates the prices with its customers in case there is more than normal deviation in the prices of its major raw materials. Additionally, the processes and policies related to such risks are reviewed and controlled byseniormanagementteam.
ii. 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 risk of fluctuations in foreign currency exchange rates on its financial liabilities including trade and other payables etc., which are mainly in US Dollars are mitigated through the natural hedge alignment, as Company''s export sales are predominantly in US dollars and such economic exposure through trade and other receivables in US dollars provide natural alignment. Hence, a reasonable variation in the Foreign exchange rate would not have much impact on the profit or loss/equity of the Company. Net foreign currency exposure also reviewed bythe Board of Directors on a quarterly basis.
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 interest rate risks arises primarily from security deposits from distributors. The Company has taken interest earning security deposits from the distributors as disclosed in note No. 23. An increase/decrease of 1% of interest rate, the profit for the year ended March 31,2021 would decrease / increase by ^ 0.28 million (Year ending March 31,2020 ^ 0.30 million)
Liquidity risk is defined as a risk that the Company will not be able to meet its obligations on time or at a reasonable price. An effective liquidity risk management takes into consideration in maintaining optimum level of cash and cash equivalents and the availability of funding through credit facilities at a reasonable cost to meet the obligation when due. The Company''s treasury department drives the liquidity, funding as well as settlement management. Additionally, the processes and policies related to such risks are reviewed and controlled by senior management team. Management continuously reviews the actual cash flows and forecasts the expected cash flows to monitor the liquidity position. The Company has large investments and deposits either in shortterm liquid funds or in bank deposits, which can be converted to cash at a very short notice and hence carry negligible liquidity risk. All the current financial liabilities of the Company are due to be paid with in twelve months from the Balance sheet date. All non-current financial liabilities are due to be paid in more than twelve months from the Balance sheet date. However the interest component of all the non-current financial liabilities if any will be payable as and when due, which may be with in twelve months from the date of Balance sheet date.
a) The Fair value for investments in mutual funds have been determined based on the NAVof the respective funds as on balance sheet date.
b) The Company has determined the carrying value of the investment as its fair value in the absence of any available fair value for its non-current investment which is carried at cost.
The primary objective of the Company''s capital management is to maximise the shareholder value. For the purpose of the Company''s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the Company. The Company''s objective when managing capital are to :
(i) Safeguard their ability to continue as a going concern, so that the Company maximise shareholder value and provide benefits for other stakeholders and
(ii) Maintain an optimal capital structure to reduce the weighted average cost of capital
In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares or sell non-core assets to reduce debts.
The Company is not subject to any externally imposed capital requirements. The Company is a Zero debt Company with no long-term borrowings. The debt as shown in the financial statements as defined in note no. 21 is on account of bills discounted with bank.
Refer Note2.7.11 foraccounting policy on Employee benefits
The Company has a defined benefit gratuity plan (funded). Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.
The Company also has a Death Benefit Scheme (unfunded) for specific employee group where the immediate beneficiaries are entitled to a monthly fixed sum till the date of superannuation, for death in harness.
The Company has a separate Provident Fund Trust (funded) whereby, all the employees are entitled to benefits as per Provident Fund Act/ Trust Deed. Any shortfall for the Trust is borne by the Company, hence the same is treated as a defined benefit scheme. The actuary has provided a valuation and determined the fund assets and obligations as at March 31,2021. The corresponding disclosures mentioned below are to the extent of the shortfall in the interest guaranteed on the provident fund vis-a-vis the interest rate notified by the Government.
Previous year figures have been regrouped or reclassified wherever necessary to conform to current year''s grouping or classification.
Mar 31, 2018
1. CORPORATE INFORMATION
Timken India Limited (âthe Companyâ) is a public company domiciled in India. It was incorporated on 15th June 1987 under the provisions of the erstwhile Companyâs Act, 1956. Its shares are listed on two recognized stock exchanges in India. The registered office of the Company is located at 39-42, Electronics City, Phase II, Hosur Road, Bengaluru - 560 100. The Company is primarily into manufacture and distribution of tapered roller bearings, components and accessories for the automotive sector and the railway industry. It also provides maintenance contract services and refurbishment services. The Companyâs primary bearing and components manufacturing plant is located at Jamshedpur in Jharkhand. It also has a gear box repairing facility at Raipur, where it provides repairand maintenance services of industrial gear boxes.
These financial statements were authorised for issue in accordance with a resolution of the Directors on May 21,2018.
The Companyâs Board of Directors at its meeting held on July 4, 2017 has approved a Scheme of Amalgamation and Arrangement amongst Timken India Limited, ABC Bearings Limited and their respective shareholders and creditors in terms of the provisions of Sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The parties are in the process of obtaining necessary approvals from various concerned authorities to give effect to the amalgamation.
2. BASIS OF PREPARATION AND PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
These financial statements for the year ended March 31, 2018 have been prepared in accordance with Indian Accounting Standards (âInd-ASâ) consequent to the notification of The Companies (Indian Accounting Standards) Rules, 2015 (the Rules) issued by the Ministryof Corporate Affairs.
Basis of preparation and measurement
These Ind-AS Financial Statements have been prepared on a going concern basis using historical cost convention, except for certain investments measured at fair value and defined benefit plans which have been measured at actuarial valuation as required by relevant Ind-AS (refer accounting policies forfinancial instruments and employee benefits).
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind-AS 17, and measurements that have some similarities to fair value but are not fair value, such as in value in use in Ind-AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
Functional and presentation currency
These Ind-AS Financial Statements are prepared in Indian Rupee which is the Companyâs functional and presentation currency.
2.1 The preparation of the Companyâs financial statements requires management to make judgements, estimates and assumptions as described below that affect the reported amounts and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
a) Useful lives of property, plant and equipment
The estimated useful lives and residual values are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
b) Defined benefit plans
The cost of the defined benefit plans and the present value of the defined benefit obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differfrom actual developments in the future.
For further details refer to Note 40.
c) Litigations
The Company is involved in certain direct tax and indirect tax disputes. Uncertain tax items for which a provision is made relate principally to the interpretation of tax legislation applicable to arrangements entered into by the Company. Due to the uncertainty associated with such tax items, it is possible that, on conclusion of open tax matters at a future date, the final outcome may differ significantly.
d) Impairment of Trade receivables
The recognition of impairment loss allowance on trade receivables are based on assumptions about risk of default and expected loss rates. The Company uses judgements in making these assumptions and selecting the inputs to the impairment calculation, based on the Companyâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
2.2 The Financial statements of the Company for the year ended 31 March 2017, were audited by S.R. Batliboi & Co. LLP (Firmâs registration no: 301003E/E300005) the predecessor auditor.
3.1: Loans to Employees includes:
(a) Rs. Nil (March 31, 2017 Nil) given to Directors of the Company.
(b) Rs. Nil (March 31, 2016 - Rs. Nil) given to other officers of the Company.
4.1: Trade receivables are non-interest bearing and are generally on terms of 30 to 60 days.
4.2 : The carrying amount of Trade receivables may be affected by the changes in the credit risk of the counterparties as well as the currency risk as explained in note39A.
5.1 : Loans to Employees includes:
(a) Rs. Nil (March 31, 2017 -Rs.0.21) given to Directors of the Company.
(b) Rs. Nil (March 31, 2017 - Rs. 0.01)given to other officers of the Company.
Government grants have been received for import of certain items of Property, Plant and Equipment and capital work in progress against import licences taken under export promotion capital goods scheme of Government of India. The Company has certain export obligations against such benefits availed which it would fulfill within the required time period under the scheme.
Provision for Indirect Taxes includes liabilities aggregating Rs.Nil (March 31, 2017:Rs.303.37 million) towards customs duty on imports for various years. The Company has also deposited Rs.Nil (March 31, 2017:Rs.207.74 million) with customs authorities.
The Company has reviewed the various liabilities/ claims relating to indirect taxes and estimated the provision for contingencies based on assessment of its probability of outflows.
* Sale of goods includes excise duty collected from customers of Rs.177.63 million upto 30th June 2017. (March 31, 2017: Rs.610.43 million). The Government of India introduced the Goods and Service Tax (GST) with effect from July 01, 2017. GST is collected on behalf of the Government and no economic benefit flows to the entity; consequently revenue for the post GST period is presented net of GST.
Excise duty on movement in stock of finished goods amounting to Rs.127.86 million (March 31, 2017: Rs.34.70 million) has been considered as an expense in the statement of profit & loss.
NOTE 6 : LEASES
Assets taken on lease
Office premises are obtained on operating leases which are generally cancellable in nature except two premises for which disclosures are given below.
The lease term is for various number of years and renewable for further periods as per the lease agreements at the option of the Company. There are no restrictions imposed bythe lease arrangements. There are no subleases.
Leases which are non-cancellable in nature
The details of non-cancellable lease rentals payable are given below:
The Company has paid Rs.49.02 million (March 31, 2017: Rs.52.29 million) towards lease rent during the year.
Other Leases
Lease of Land and Building
The Company has taken on lease, land and building thereon, for the purposes of its facility in Raipur relating to servicing of gears/ related accessories. The significant lease terms are as follows:
a. The land lease is for a period of 30 years cancellable with six months prior notice and total lease payments during the lease term amounts toRs.239.18 million. The lease does not involve upfront payment and has terms of renewal and escalation clauses.
b. The building lease is for a period of 7 years cancellable with six months prior notice and total lease payments during the lease term amounts toRs.95.26 million. The lease does not involve upfront payment and has terms of renewal and escalation clauses.
NOTE 7: SEGMENT INFORMATION Operating Segment:
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (CODM) in deciding how to allocate resources and assessing performance. lnformation reported to the chief operating decision maker (CODM) for the assessment of segment performance focuses on the types of products and services delivered or provided. The Companyâs CODM is the Board of the Company.
The Company has identified two operating segments, viz. i) Mobile industry ii) Process industry. In accordance with the process followed by the Timken Group globally and the manner of review of performance bythe management, these have been aggregated due to similar nature of products, production process, distribution process and risks, hence considered as a single reportable segment and accordingly no separate segment information is disclosed.
Entitywide disclosures
a) The revenue from major products and services of the Company are as given below:
b) Geographical revenue is allocated based on the location of the customers. Information regarding geographical revenue is as follows:
c) Revenue from one of the customer group amounted to Rs.3637.04 million (March 31,2017:Rs. 3394.08 million) arising from sale of products & services.
NOTE 8 : RELATED PARTY DISCLOSURE:
Related parties where control exists :
Holding Company - Timken Singapore PTE. Limited
Ultimate Holding Company - The Timken Company,US
Other related parties with whom transactions have taken place during the year:
Fellowsubsidiaries 1) The Timken Corporation, US. 2)Timken Industrial Services, LLC, US. 3) Timken UK Limited. 4) Timken Do Brasil COM.E.IND.LTDA. 5) Timken Korea LLC. 6) Timken South Africa (PTY) Limited. 7) Timken Romania, SA. 8) Yantai Timken Company Limited. 9) Australian Timken Proprietary Limited. 10) Timken Polska, SP z.o.o. 11) Timken (China) Investment Co.Ltd.. 12) Timken Wuxi Bearings Co Ltd - China. 13) Timken (Shanghai) Distribution & Sales Co. Ltd - China. 14) Timken Engineering and Research India Pvt. Ltd. 15) Timken DE Mexico S A De CV. 16) Timken Canada Holdings III, ULC. 17) Timken Argentina S. de R Limitda. 18) Timken Gears & Services Inc. 19) Timken (Chengdu) Aerospace and Precision Products Co. Ltd. 20) Timken Aerospace Drive Systems, LLC. 21) Timken XEMC(Hunan) Bearings Co.Ltd. 22)Timken SMO LLC. 23) Bearing Inspection Inc 24)Timken Italia SRL
Key management personnel
Chairman & Managing Director - Mr. Sanjay Koul
Whole time Director & Chief Financial Officer - Mr. Avishrant Keshava Company Secretary & Chief-Compliance - Mr. Soumitra Hazra
Non-executive director - Mr. PS. Dasgupta
Non-executive director - Mr. Jai S Pathak (till 10th November 2017)
Non-executive director - Mrs. Rupa Mahanty
Non-executive director - Mr. Ajay Kumar Das
Non-executive director - Mr. Bushen Lal Raina(from 5th February 2018)
Firms where a director is a Partner - M/s.Gibson Dunn & Crutcher LLP
- M/s. New Delhi Law Offices
Trusts managed by the Company
- Timken India Provident Fund
- Timken India Gratuity Fund
- Timken India Superannuation Fund
NOTE 9A: Financial Risk Management Objectives and Policies
The Companyâs principal financial liabilities comprise trade and other payables and short term borrowings. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include trade and other receivables, and cash and cash equivalents that derives directly from its operations.
The Company is exposed to credit risk, market risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs financial risk activities are governed by appropriate policies and procedures and financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives.
Credit risk
Credit risk is the risk that 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 investing activities, primarily investments in mutual funds, security deposits, etc.
1. Trade receivables
Customer credit risk is managed in accordance with the Companyâs established policy, procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of the financial assets disclosed in Note 10. The Company does not hold any collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as most of its external customers (other than related party customers) are established players in their industry or are distributors/ dealers against which the Company holds security deposit as its policy and operate in largely independent markets.
2. Investments
Credit risk from investments with banks and financial institutions is managed bythe Companyâs treasury department in accordance with the Companyâs policy. Investment of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Companyâs Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Companyâs Audit Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments. Investments are only made in securities with highest grade rating (AAA) or equivalent hence the credit risk is considered as minimal.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company is exposed to different types of market risks. For the Company, the market risk is the possibility of changes in foreign currency exchange rates and commodity prices which may affect the value of the Companyâs financial assets, liabilities or expected future cash flows.
1. Commodity Risk
The principal raw materials for the Company products are alloy steel bars, tubes and wire rods, which are purchased by the Companyâs vendors from the approved list of global suppliers, in order to leverage The Timken Companyâs economies of scale. Most of the input materials such as rings and cages are procured from domestic vendors. Raw material procurement is subject to price negotiation.
In order to mitigate the risk associated with raw material and components prices, the Company manages its procurement through grading, sourcing of raw material and constant pricing negotiation with vendors. It renegotiates the prices with its customers in case there is more than normal deviation in the prices of its major raw materials.
2. 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 risk of fluctuations in foreign currency exchange rates on its financial liabilities including trade and other payables etc, which are mainly in US Dollars are mitigated through the natural hedge alignment, as Companyâs export sales are predominantly in US dollars and such economic exposure through trade and other receivables in US dollars provide natural alignment. Hence, a reasonable variation in the Foreign exchange rate would not have much impact on the profit/ equity of the Company.
Foreign currency sensitivity analysis
The Company is exposed to the currencies USD, Euro, GBP, JPY and CHF on account of outstanding trade receivables and trade payables.
The following table details the Companyâs sensitivity to a 5% increase and decrease in INR against the USD, Euro, GBP, JPY and CHF. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents managementâs assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. A negative number below indicates a decrease in profit or equity where the INR weakens 5% against the relevant currency. For a 5% strengthening of the INR against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be positive.
(ii) Fair value hierarchy
The following table provides the fair value measurement hierarchy of the Companyâs financial assets
a) The Fair value for investments in mutual funds have been determined based on the NAV of the respective funds as on balance sheet date.
b) The Company has determined the carrying value of the investment as its fair value in the absence of any available fair value for its non-current investment which is carried at cost.
NOTE 9B: Capital management
For the purpose of the Companyâs capital management, capital includes issued equity capital, securities premium 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.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
The Company is not subject to any externally imposed capital requirements.
NOTE 10 : GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS
The Company has a defined benefit gratuity plan (funded). Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.
The Company also has a Death Benefit Scheme (unfunded) for its employees where the immediate beneficiaries are entitled to a monthly fixed sum till the date of superannuation, for death in harness.
The Company has a separate Provident Fund Trust (funded) whereby, all the employees are entitled to benefits as per Provident Fund Act/ Trust Deed. Any shortfall for the Trust is borne by the Company, hence the same is treated as a defined benefit scheme. The actuary has provided a valuation and determined the fund assets and obligations as at March 31, 2018. The corresponding disclosures mentioned below are to the extent of the shortfall in the interest guaranteed on the provident fund vis-a-vis the interest rate notified by the Government.
The estimates of rate of escalation in salary considered in actuarial valuation taken into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary.
The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Companyâs policy for plan assets management.
Each year, the Board of Trustees reviews the level of funding in the Gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy.
NOTE 11 : PREVIOUS PERIOD COMPARATIVES
Previous year figures have been regrouped or reclassified wherever necessary to conform to current yearâs grouping or classification.
Mar 31, 2017
(a) The Company has adopted the exemption under Ind AS 101 and has considered previous GAAP carrying amount as the deemed cost for the Opening Balance sheet as at April 1, 2015. Also refer note 46.
Accordingly the Gross block of each class of Property, plant and equipment has been netted off with their respective accumulated depreciation balances as at April 1, 2015 under Previous GAAP to arrive at the deemed cost for the purpose of opening Ind AS balance sheet.
(b) Includes plant & equipment given on operating lease as follows.
The contract manufacturing agreement as well as the lease agreement between the Company and Timken Engineering Research India Private Limited (TERI)for the lease of above Plant and equipment has been discontinued in the current year.
(c) Details of Expenditure on New/ Expansion Projects (Pending Allocation and included in Capital work in progress)
1: Loans to Employees includes:
(a) Rs. Nil (March 31, 2016 0.21 million; April 1, 2015- Rs. 0.72 million) given to Directors of the Company.
(b) Rs. Nil (March 31, 2016 - Rs.0.01 million; April1,2015- Rs. 0.14million)given to other officers of the Company. Refer note 39A for credit risk exposure on security deposits.
2: Trade receivables are non-interest bearing and are generally on terms of 30 to 60 days.
3 : The carrying amount of Trade receivables may be affected by the changes in the credit risk of the counterparties as well as the currency risk as explained in note39A.
4: No trade or other receivable are due from directors or other officers of the company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member.
(a) Bank Balances on unpaid dividend account represents monies that can be utilized only to pay dividend to equity shareholders against dividend warrants issued to them.
(b) The Company has not transacted in cash during the period November 8, 2016 to December 30, 2016 nor held any cash balance as at November 8, 2016 and December 30, 2016. Consequently, there are no details of Specified Bank Notes as envisaged in Notification G.S.R. 308(E) dated 30th March, 2017 to be furnished.
5 : Loans to Employees includes:
(a) Rs.0.21 million(March31,2016 - Rs.0.51 million; April 1,2015- Rs.0.51 million) given to Directors of the Company.
(b) Rs.0.01 million (March31,2016 - Rs.0.13 million; April 1, 2015 - Rs.0.13million)given to other officers of the Company.
Note : Includes Rs. 22.54 million (March 31, 2016 Rs.22.24 million) amount receivable from a fellow subsidiary, The Timken Corporation, being the insurance claim received by it under the global insurance arrangement towards the previous year''s loss due to fire as explained in note31.
* (i) Calls in arrears have been computed on the basis of information certified by the Registrar & Share Transfer Agent of the Company.
(ii) No Equity shares have been allotted during the year ended March 31, 2017 out of 15,150 shares of Rs. 10/- each kept in abeyance as at 31st March, 1998.
b Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share.
The Company declares and pays dividends in Indian rupees. The dividend proposed by Board of Directors of Rs.1 per equity share (March 31,2016- Rs.1 per equity share) is subject to the approval of the shareholders in the ensuing Annual General Meeting.
The Dividend for the year 2015-16 proposed by the Board and approved by the shareholders at the 29th Annual General Meeting during the year has been paid to the eligible shareholders.
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.
Notes
(i) Out of the total shares issued, 50,999,988 fully paid-up Equity shares of Rs.10/- each are held by Timken Singapore PTE Limited. However, the Timken Company, USA happens to be the Ultimate Holding Company. No shares in the Company are held by any subsidiary or associates of the holding company or the Ultimate Holding Company.
(ii) As per records of the Company, including its register of shareholders/members, the above shareholding represents legal ownership of shares.
Provision for Indirect Taxes includes liabilities aggregating Rs.303.37 million (March 31, 2016: Rs. 276.79 million; April 1, 2015: Rs.221.69 million) towards customs duty on imports for various years. The Company has provided these liabilities based on the most recent assessments. Further, the management is of the view that this liability shall be payable only at the time of final assessment, pending which, the Company has also deposited Rs. 207.74 million (March 31, 2016: Rs.191.02 million; April 1, 2015: Rs. 152.88 million) with customs authorities. The net provision is included in Provision for Indirect Taxes above.
The Company has reviewed the various liabilities/ claims relating to indirect taxes and estimated the provision for contingencies based on assessment of its probability.
c) There are also provisions against Income Tax claims amounting to ? 18.98 million (March 31, 2016: Rs.18.98 million; April 1, 2015: Rs.12.33 million) which is netted off with Advance Income Tax. Also refer note 8.
Government grants have been received for import of certain items of Property, Plant and Equipment and capital work in progress against import licenses taken under export promotion capital goods scheme of Government of India. The Company has certain export obligations against such benefits availed which it would fulfill within the required time period under the scheme.
a) The above are interest bearing deposits (carrying interest @ 8% p.a.) accepted from dealers/ distributors which are repayable only upon termination of the dealership/distributor agreement at 1 month notice by either party.
b) Investor Education and Protection Fund will be credited by the amount of unpaid dividends as and when due.
NOTE 6 : REVENUE FROM OPERATIONS
* Sale of goods includes excise duty collected from customers of Rs. 610.43 million (2015-16: Rs. 588.34 million). Excise duty on movement in stock of finished goods amounting to Rs. 34.70 million (2015-16: Rs.10.92 million) has been considered as an expense in the statement of profit & loss.
(a) Commission expense includes payments made for logistics and warehouse management services rendered by a third party service provider.
(c ) Excise duty expense (net of recovery) represents duty paid/provided for on stocks written off, burnt stock, free samples etc.
During the previous year ended March 31,2016, the Pune warehouse of the Company caught fire damaging all the Inventories and Plant & Equipment(WDV) worth Rs.98.31 million. The Management had recovered an amount of Rs.68.22 million (including Rs.22.24 million receivable in respect of reimbursement from related party) against the loss. The remaining un-recoverable amount of Rs.30.09 million, had been charged off and disclosed as an exceptional item in the previous year''s financial statements.
NOTE 7 : LEASES
Assets taken on lease
Office premises are obtained on operating leases which are generally cancellable in nature except two premises for which disclosures are given below.
The lease term is for various number of years and renewable for further periods as per the lease agreements at the option of the Company. There are no restrictions imposed by the lease arrangements. There are no subleases.
Leases which are non-cancellable in nature
The Company has paid Rs.52.29 million (March 31, 2016: Rs.54.22 million) towards lease rent during the year.
Other Leases
Lease of Land and Building
The Company has taken on lease, land and building thereon, for the purposes of its facility in Raipur relating to servicing of gears/ related accessories. The significant lease terms are as follows:
a. The land lease is for a period of 30 years cancellable with six months prior notice and total lease payments during the lease term amounts to?239.18 million. The lease does not involve upfront payment and has terms of renewal and escalation clauses.
b. The building lease is for a period of 7 years cancellable with six months prior notice and total lease payments during the lease term amounts to Rs.95.26 million. The lease does not involve upfront payment and has terms of renewal and escalation clauses.
NOTE 8: SEGMENT INFORMATION
Operating Segment:
The Company has identified two Operating segments, viz. i) Mobile industry (Automotive and Railway) ii) Process industry. In accordance with the process followed by the Timken Group globally and the manner of review of performance by the management, these have been aggregated due to similar nature of products, production process and distribution process and hence no separate segment information is disclosed.
Entity wide disclosures
The management has assessed that the carrying amount of the Financial Assets/ Liabilities at amortized cost approximate their fair value largely due to their short-term nature.
NOTE 9: Financial Risk Management Objectives and Policies
The Company''s principal financial liabilities comprise trade and other payables and short term borrowings. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include trade and other receivables, cash and cash equivalents and other bank balances that derives directly from its operations.
The Company is exposed to credit risk and market risk. The Company''s senior management oversees the management of these risks. The Company''s financial risk activities are governed by appropriate policies and procedures and financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives.
Credit risk
Credit risk is the risk that the 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 investing activities, primarily investments in mutual funds, security deposits, etc.
1. Trade receivables
Customer credit risk is managed in accordance with the Company''s established policy, procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored.
An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of the financial assets disclosed in Note 10. The Company does not hold any collateral as security for most of its customers. The Company evaluates the concentration of risk with respect to trade receivables as low, as most of its external customers (other than related party customers) are established players in their industry or are distributors/ dealers against which the Company holds security deposit as its policy.
All the related party receivables are from various Timken group companies where there is a minimal default risk.
2. Investments
Credit risk from investments with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investment of surplus funds are made only with approved funds. Credit limits for each fund is reviewed by the Company''s Board of Directors on an quarterly basis, and may be updated throughout the year subject to approval of the Company''s Audit Committee. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through fund''s potential failure to make payments. Investments are only made in securities with highest grade ratings hence the credit risk is considered as minimal.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company is exposed to different types of market risks. For the Company, the market risk is the possibility of changes in foreign currency exchange rates and commodity prices which may affect the value of the Company''s financial assets, liabilities or expected future cash flows.
1. Commodity Risk
The principal raw materials for the Company products are alloy steel bars, tubes and wire rods, which are purchased by the Company''s vendors from the approved list of global suppliers, in order to leverage The Timken Company''s economies of scale. Most of the input materials such as rings and cages are procured from domestic vendors. Raw material procurement is subject to price negotiation.
In order to mitigate the risk associated with raw material and components prices, the Company manages its procurement through grading, sourcing of raw material and constant pricing negotiation with vendors. It renegotiates the prices with its customers in case there is more than normal deviation in the prices of its major raw materials.
2. 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 risk of fluctuations in foreign currency exchange rates on its financial liabilities including trade and other payables etc, which are mainly in US Dollars are mitigated through the natural hedge alignment, as Company''s export sales are predominantly in US dollars and such economic exposure through trade and other receivables in US dollars provide natural alignment. Hence, a reasonable variation in the Foreign exchange rate would not have much impact on the profit/ equity of the Company.
VI) Actuarial Assumptions
The estimates of rate of escalation in salary considered in actuarial valuation has taken into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary.
The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Company''s policy for plan assets management.
Each year, the Board of Trustees reviews the level of funding in the Gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy.
Footnotes to the reconciliation
a. Property, Plant & equipment
Under Indian GAAP Government grants in the form of exemption of duties on imported assets were netted off with the value of the respective cost of the assets. Upon adoption of Ind-AS, these Government grants are added to cost of respective assets and correspondingly held as deferred income to be released to the Statement of Profit & Loss over the useful life of such assets. There is no impact on the total equity and profits due to the said change.
b. Security Deposits
Under Indian GAAP, interest free security deposits were recorded at transaction value. Under Ind-AS, these financial assets have been recorded at their amortized cost with difference being recorded as pre-paid rent-to be amortized in the Statement of Profit and Loss over the period of lease.
c. Trade Receivables
Expected credit loss on trade receivables is recognized based on the trend of historical default rates upon adoption of Ind AS.
d. Reclassifications
The Company has done the following reclassifications as per the requirements of Ind AS:
i) Assets/liabilities which do not meet the definition of a financial asset/liability have been reclassified to other asset/liability.
ii) Re-Measurement gains/ losses on long term employee defined benefit plans are re-classified from profit and loss to other comprehensive income.
iii) Company used to record sale of raw materials to its forgers and vendors made in the course of transit as sale and purchase of goods under the Indian GAAP. Upon adoption of Ind-AS such transactions are recorded on net basis since the Company does not have the intention to make profits on such transactions as these would only add to its processing costs.
iv) Security Deposits received from customers have been re-classified from non-current liabilities to current financial liabilities as the Company does not have an unconditional right to defer settlement of the liability beyond twelve months after the reporting date.
v) Excise duty collected on sales was earlier netted off with Revenue from operations under previous GAAP, now grossed up with sales and presented as an expense in accordance with Ind AS 18.
vi) Cash Discount earlier grouped under other expenses is netted off with sales.
vii) Retention money held by customers has been classified from current trade receivables to non-current trade receivables as it is not expected to be realized within twelve months after the reporting date.
viii) Provision for compensated absences, which was hitherto classified into non-current/ current on the basis of actuarial valuation report has been entirely reclassified to current as the Company does not have an unconditional right to defer settlement of the liability beyond twelve months after the reporting date.
e. Deferred tax
The various transitional adjustments lead to temporary differences which the Company has accounted for. Deferred tax adjustments are recognized in correlation to the underlying transactions either in retained earnings or in the Statement of Profit & Loss.
f. Dividend
Under Indian GAAP, proposed final dividends including Dividend Distribution Taxes (DDT) are recognized as a liability in the period to which they relate, irrespective of when they are approved. Under Ind AS, such dividend is recognized as a liability when approved by shareholders.
g. Other comprehensive income
Ind-AS requires preparation of Statement of Other Comprehensive Income in addition to Statement of Profit and Loss.
NOTE 10 : Significant accounting judgments, estimates and assumptions
The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions as described below that affect the reported amounts and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
a) Defined benefit plans
The cost of the defined benefit plans and the present value of the defined benefit obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. For further details refer to Note 40.
b) Decommissioning cost
Decommissioning cost for leasehold land at Jamshedpur has not been recognized based on management''s decision that the Company will leave the leased property in as is condition at the expiry of the term of lease. As per the terms of the agreement, in such case the Company is not obligated for any decommissioning or site restoration activity.
NOTE 11: First-time adoption of Ind AS
Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied following exemptions:
a) The Company has elected to continue with carrying value as recognized in its Indian GAAP Financial Statements of following items as deemed cost at the transition date, viz., 1 April 2015 in accordance with Ind-AS 101- First-time Adoption of Indian Accounting Standards.
i) Property Plant and Equipment
ii) Intangible Assets
b) The Company has designated unquoted equity instruments and investments in mutual funds held at April 1, 2015 as fair value through profit or loss.
Mar 31, 2015
1. CORPORATE INFORMATION
Timken India Limited ('the Company') was incorporated on 15th June,
1987. The Company is primarily into manufacture and distribution of
tapered roller bearings, components and accessories for the automotive
sector and the railway industry. It also provides maintenance contract
services and refurbishment services. The Company also has a gear box
repairing facility at Raipur where it provides repair and maintenance
services of industrial gear boxes.
A Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of
Rs. 10 per share. Each holder of equity shares is entitled to one vote
per share.
The Company declares and pays dividends in Indian rupees. The dividend
proposed by Board of Directors is subject to the approval of the
shareholders in the ensuing Annual General Meeting.
The Company has paid, subject to approval of the shareholders at the
next Annual General Meeting, interim dividend of Rs.3 (interim dividend
of Rs.6.5/- ) per equity share of Rs.10 each fully paid. This dividend
was paid to all the eligible shareholders whose names appeared on the
Register of Members of the Company as on November 21, 2014 (being the
record date fixed for the purpose) on November 28, 2014.
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.
B Details of shareholders holding more than 5% shares in the company
(Refer note (i) & (ii) below)
Notes:
(i) Out of the total shares issued, 50,999,988 fully paid-up Equity
shares of Rs. 10/- each are held by Timken Singapore PTE Limited.
However, the Timken Company,USA happens to be the Ultimate Holding
Company.
(ii) As per records of the company, including its register of
shareholders/ members, the above shareholding represents legal
ownerships of shares.
Note i.
a) The Company had in the previous year issued 4,265,134 equity shares
of Rs.10/- each through an Institutional Placement Programme (IPP) to
qualified institutional buyers at a premium of Rs.110/- per share to
generate funds for long term capital requirements, working capital
requirements and general corporate purposes. The total sum received
aggregated Rs.511,816,080 including Rs.469,164,740 towards securities
premium.
b) As at March 31,2015, the Company has fully utilised the funds
towards the purchase of fixed assets.
Note : The above are interest bearing deposits accepted from dealers /
distributors which are repayable only upon termination of the
dealership / distributor agreement.
a) Provision for Indirect Taxes includes a liability of Rs.221,693,462
(Rs.181,558,334) towards custom duty on imports for various years.The
Company has provided these liabilities based on the most recent
assessments. Further, the management is of the view that this liability
shall be payable only at the time of final assessment, pending which,
the Company has also deposited Rs.152,882,698 (Rs.125,096,839) with
customs authorities. The net provision is included in Provision for
Indirect Taxes above.
b) The Company has reviewed the various liabilities/claims relating to
indirect taxes and estimated the provision for contingencies based on
assessment of its probability.
c) There are also provisions against Income Tax claims amounting to
Rs.12,333,741 (Rs.12,333,741) which is included in Note 13 and netted
off with Advance Income Tax.
* These are bills discounted with banks with recourse to the Company
with various maturity dates. Interest payable ranges between 11.25% to
12.75% p.a for overdue payables.
Note :
Balance with scheduled banks on unpaid dividend account represents
monies that can be utilised only to pay dividend to equity shareholders
against dividend warrants issued to them.
Commission expense includes payments made for logistics and warehouse
management services rendered by a third party service provider.
Contribution made to Prime Minister Relief Fund as part of CSR
Expenditure.
Other Expenses include:
NOTE 2 : LEASES Asset taken on lease
Office premises are obtained on operating leases which are generally
cancellable in nature except two premises for which disclosures are
given below.
The lease term is for various number of years and renewable for further
periods as per the lease agreements at the option of the company. In
few lease agreements, escalation clauses are present consequent to
which straight lining of lease rental is done and accounted for
accordingly. There are no restrictions imposed by the lease
arrangements. There are no subleases.
Leases which are non-cancellable in nature
The details of non-cancellable lease rentals payable are given below :
The Company has paid Rs.40,751,895 (Rs.29,803,693) towards lease rent.
Other Leases
Lease of Land and Building
The Company has taken on lease, land and building thereon, for the
purposes of its facility in Raipur relating to servicing of
gears/related accessories. The significant lease terms are as follows:
a. The land lease is for a period of 30 years cancellable with six
months prior notice and total lease payments during the lease term
amounts to Rs.239,179,851. The lease does not involve upfront payment
and has terms of renewal and escalation clauses.
b. The building lease is for a period of 7 years cancellable with six
months prior notice and total lease payments during the lease term
amounts to Rs.95,261,499. The lease does not involve upfront payment
and has terms of renewal and escalation clauses.
NOTE 3 : SEGMENT INFORMATION Business Segment:
The Company has reviewed the disclosure of business segment wise
information and is of the view that it manufactures and trades in
bearings and related components, and provides services in connection
with or incidental to such sales ('Bearings and components').This
segment operates out of Jamshedpur, Chennai, Mysore, Gurgaon and Pune.
The Company also provides repair and maintenance services of industrial
gear boxes at its gear box repairing facility at Raipur.
'Bearings and Components' is the only reportable segment in terms of
AS-17 : Segment Reporting and Related disclosures are as follows:
Geographical segments:
Revenue and receivables are specified by location of customers while
the other geographic information is specified by location of the
assets.
The following table presents revenue and certain asset information
regarding the company's geographical segments:
Note: Since the Company has all fixed assets in India only, separate
figures for additions to fixed assets for domestic and overseas
segments are not furnished.
NOTE 4 - DISCLOSURES AS PER REVISED ACCOUNTING STANDARD -15 Gratuity
and other post-employment benefit plans:
The Company has a defined benefit gratuity plan (funded). Every
employee who has completed five years or more of service gets a
gratuity on departure at 15 days salary (last drawn salary) for each
completed year of service.
The Company also has a Death Benefit Scheme (unfunded) for its
employees where the immediate beneficiaries are entitled to a monthly
fixed sum till the date of superannuation, for death in harness.
The Company has a separate Provident Fund Trust (funded) whereby, all
the employees are entitled to benefits as per Provident Fund Act /
Trust Deed. Any shortfall for the Trust is borne by the Company, hence
the same is treated as a defined benefit scheme. The actuary has
provided a valuation and determined the fund assets and obligations as
at March 31, 2015. The corresponding disclosures mentioned below are to
the extent of the shortfall in the interest guaranteed on the provident
fund vis-a-vis the interest rate notified by the Government.
The following tables summarise the components of net benefit expense
recognised in the statement of profit and loss and the funded status
and amounts recognised in the balance sheet for the respective plans.
Statement of profit and loss :
Net employee benefit expense (recognised in Employee Cost)
The overall expected rate of return on assets is determined based on
the market prices prevailing on that date, applicable to the period
over which the obligation is to be settled. Gratuity fund and Provident
fund are 100% invested with approved funds as per the relevant Act/
trust deed. The Company expects to contribute Rs.24,550,000
(Rs.2,200,000) to the Gratuity Fund in the next year.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
As at As at
March 31, 2015 March 31,2014
Rupees Rupees
i) Sales tax matters under dispute / appeal 18,764,268 15,575,963
ii) Income tax demands under appeal 86,070,124 75,274,238
iii) Excise and customs demand under
dispute / appeal 33,795,277 33,795,277
iv) Other Claims against the Company
not acknowledged as debts 8,309,615 8,309,615
Based on the discussions with the solicitors/favourable decisions in
similar cases/legal opinions taken by the Company on above matters,
no provision there against is considered necessary.
NOTE 5 : CAPITAL & OTHER COMMITMENTS :
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs. 127,556,829 (Rs. 106,653,878) [Net of
advances paid Rs. 44,769,464 (Rs. 15,000)].
(b) In terms of the Memorandum of Agreement dated 9th May, 2011 entered
between the Company and Timken Engineering and Research India Pvt. Ltd.
(TERI), TERI manufactures goods using the assets owned by the Company
and leased out to TERI (as disclosed in Note 9) and the Company in
consideration of purchase of such goods from TERI would give an agreed
mark up on the cost incurred by TERI for manufacturing such goods. This
agreement is valid for a period of 5 years with renewal option.
(c) For commitments relating to lease arrangements, please refer note
26.
NOTE 6 : CONSUMPTION OF IMPORTED AND INDIGENOUS RAW MATERIALS &
COMPONENTS AND STORES & SPARE PARTS
Value of consumption of imported and indigenously obtained raw
materials, components, stores and spare parts and percentage of each to
the total consumption :
NOTE 7 : RELATED PARTY DISCLOSURE:
Name of the Holding Company - Timken Singapore PTE. Limited (with
effect from March 26, 2012)
Name of the Ultimate Parent Company - The Timken Company, USA
List of related parties where control exists and transactions with such
related parties and other related parties with whom transaction have
taken place during the year/period, along with related balances as at
March 31,2015 and for the year then ended are presented in the
following table:
Excise duty and cess on stock represent differential excise duty and
cess thereon paid/provided on opening and closing stock of finished
goods.
NOTE 8
Subsequent to the balance sheet date, on May 10, 2015 the Pune
warehouse of the Company caught fire damaging all the inventories and
fixed assets at the warehouse.The Company is in the process of
quantifying the losses suffered for necessary action and insurance
claims.The financial statements have not been adjusted to give effect
of the event.
NOTE 9
Previous year figures have been regrouped / reclassified, where
necessary, to conform to this year's classification.
Notes : (i) EBIT/BIC i,e Beginning invested capital, a type of return
on asset ratio, used internally to measure the company's performance.
In broad terms, invested capital is total assets minus non
interest-bearing current liabilities.
(ii) Return on Net Worth is profit after tax divided by net worth as at
the end of the year.
(iii) Equity includes preference share capital net off accumulated
losses and miscellaneous expenditure to the extent not written off.
(iv) Fixed Asset Turnover is net sales divided by net fixed assets as
at the end of the year.
(v) Working Capital Turnover is net sales divided by net cuurent asset
as at the end of the year.
(vi) Current ratio is current assets divided by current liabilities
including current portion of long term loans, if any, repayable within
one year.
(vii) Interest Cover is profit before interest and taxation divided by
net interest expenses.
Mar 31, 2014
NOTE 1 : LEASES
Asset taken on lease
Office premises are obtained on operating leases which are generally
cancellable in nature except one premise for which disclosures are
given below.
The lease term is for various number of years and renewable for further
periods as per the lease agreements at the option of the company. In
few lease agreements, escalation clauses are present consequent to
which straight lining of lease rental is done and accounted for
accordingly. There are no restrictions imposed by the lease
arrangements. There are no subleases.
Leases which are non-cancellable in nature
Other Leases
Lease of Land and Building
The Company has also taken on lease, land and building thereon, for the
purposes of its new facility in Raipur relating to servicing of
gears/related accessories which has begun operations in this year. The
significant lease terms are as follows:
a. The land lease is for a period of 30 years cancellable with six
months prior notice and total lease payments during the lease term
amounts to Rs.239,179,851. The lease does not involve upfront payment
and has terms of renewal and escalation clauses.
b. The building lease is for a period of 7 years cancellable with six
months prior notice and total lease payments during the lease term
amounts to Rs.95,261,499. The lease does not involve upfront payment
and has terms of renewal and escalation clauses.
NOTE 2 : SEGMENT INFORMATION
Business Segment:
The Company has reviewed the disclosure of business segment wise
information and is of the view that it manufactures and trades in
bearings and related components, and provides services in connection
with or incidental to such sales (''Bearings and components'').This
segment operates out of Jamshedpur, Chennai, Mysore, Gurgaon and Pune.
In addition, during the year, the Company has also commissioned a new
gear box repairing facility at Raipur where it provides repair and
maintenance services of industrial gear boxes.
NOTE 3 - DISCLOSURES AS PER REVISED ACCOUNTING STANDARD -15
Gratuity and other post-employment benefit plans:
The Company has a defined benefit gratuity plan (funded). Every
employee who has completed five years or more of service gets a
gratuity on departure at 15 days salary (last drawn salary) for each
completed year of service.
The Company also has a Death Benefit Scheme (unfunded) for its
employees where the immediate beneficiaries are entitled to a monthly
fixed sum till the date of superannuation, for death in harness.
The Company has a separate Provident Fund Trust (funded) whereby, all
the employees are entitled to benefits as per Provident Fund Act /
Trust Deed. Any shortfall for the Trust is borne by the Company, hence
the same is treated as a defined benefit scheme. The actuary has
provided a valuation and determined the fund assets and obligations as
at March 31, 2014. The corresponding disclosures mentioned below are to
the extent of the shortfall in the interest guaranteed on the provident
fund vis-a-vis the interest rate notified by the Government.
The following tables summarise the components of net benefit expense
recognised in the statement of profit and loss and the funded status
and amounts recognised in the balance sheet for the respective plans.
NOTE 4 : CONTINGENT LIABILITIES
As at As at
March 31, 2014 March 31, 2013
Rupees Rupees
i) Sales tax matters
under dispute / appeal 15,575,963 16,545,755
ii) Income tax demands
under appeal 75,274,238 75,173,399
iii) Excise and customs
demand under dispute /
appeal 33,795,277 27,787,040
iv) Other Claims against
the Company not acknowledged
as debts 8,309,615 8,309,615
Based on the discussions with the solicitors/favourable decisions in
similar cases/legal opinions taken by the Company on above matters, no
provision there against is considered necessary.
NOTE 5 : CAPITAL & OTHER COMMITMENTS :
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for - Rs.106,653,878 (Rs.96,838,177) [Net of
advances paid Rs.15,000 (Rs.30,249,177)]
(b) In terms of the Memorandum of Agreement dated 9th May, 2011 entered
between the Company and Timken India Manufacturing (P) Ltd, (TIMPL),
TIMPL will manufacture goods using the assets owned by the Company and
leased out to TIMPL (as disclosed in Note 9) and the Company in
consideration of purchase of such goods from TIMPL would give an agreed
mark up on the cost incurred by TIMPL for manufacturing such goods.
This agreement is valid for a period of 5 years with renewal option.
(c) For commitments relating to lease arrangements, please refer note
26.
NOTE 6 : RELATED PARTY DISCLOSURE:
Name of the Holding Company  Timken Singapore PTE. Limited (with
effect from March 26, 2012)
Name of the Ultimate Parent
Company  The Timken Company, USA
List of related parties where control exists and transactions with such
related parties and other related parties with whom transaction have
taken place during the year/period, along with related balances as at
March 31, 2014 and for the year then ended are presented in the
following table:
NOTE 7
Excise duty and cess on stock represent differential excise duty and
cess thereon paid/provided on opening and closing stock of finished
goods.
NOTE 8
Previous year figures have been regrouped / reclassified, where
necessary, to conform to this year''s classification.
Mar 31, 2013
1: CORPORATE INFORMATION
Timken India Limited (''the Company'') was incorporated on 15th June
1987. The Company is primarily into manufacture and distribution of
tapered roller bearings, components and accessories for the automotive
sector and the railway industry. It also provides maintenance contract
services and refurbishment services.
NOTE 2 : LEASES
Asset taken on lease
Office premises are obtained on operating leases which are generally
cancellable in nature except two premises for which disclosures are
given below. The lease term is for various number of years and
renewable for further periods as per the lease agreements at the option
of the company. In few lease agreements, escalation clauses are present
consequent to which straight lining of lease rental is done and
accounted for accordingly. There are no restrictions imposed by the
lease arrangements. There are no subleases.
Lease of Land
The Company has taken land on lease during the year for the purposes of
its new project in Raipur relating to servicing of gears/related
accessories which is under implementation. The lease is for a period of
30 years cancellable with six months prior notice and total lease
payments during the lease term amounts to Rs. 239,179,851. The lease
does not involve upfront payment and has terms of renewal and
escalation clauses.
NOTE 3 : SEGMENT INFORMATION
Business Segment :
The Company has reviewed the disclosure of business segment wise
information and is of the view that it manufactures and trades in
bearings and related components which is a single business segment in
accordance with AS-17, Segment Reporting. Accordingly, no separate
business segment information is furnished herewith.
Geographical Segments :
Revenue and receivables are specified by location of customers while
the other geographic information is specified by location of the
assets.
NOTE 4 : DISCLOSURES AS PER REVISED ACCOUNTING STANDARD 15
Gratuity and other post-employment benefit plans:
The Company has a defined benefit gratuity plan (funded). Every
employee who has completed five years or more of service gets a
gratuity on departure at 15 days salary (last drawn salary) for each
completed year of service.
The Company also has a Death Benefit Scheme (unfunded) for its
employees where the immediate beneficiaries are entitled to a monthly
fixed sum till the date of superannuation, for death in harness.
The Company has a separate Provident Fund Trust (funded) whereby, all
the employees are entitled to benefits as per Provident Fund Act /
Trust Deed. Any shortfall for the Trust is borne by the Company, hence
the same is treated as a defined benefit scheme.
The following tables summarise the components of net benefit expense
recognised in the statement of profit and loss and the funded status
and amounts recognised in the balance sheet for the respective plans.
NOTE 5 : CONTINGENT LIABILITIES
As at March
31, 2013 As at March
31, 2012
Rupees Rupees
i) Sales tax matters under dispute / appeal 16,545,755 242,091,776
ii) Income tax demands under appeal 75,173,399 74,778,129
iii) Excise and customs demand under
dispute / appeal 27,787,040 19,468,903
iv) Other Claims against the Company not
acknowledged as debts 8,309,615 8,309,615
Based on the discussions with the solicitors/favourable decisions in
similar cases/legal opinions taken by the Company on above matters, no
provision there against is considered necessary.
NOTE 6 : CAPITAL & OTHER COMMITMENTS
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for - Rs. 96,838,177 (Rs. 10,090,944) [Net of
advances paid Rs.30,249,177 (Rs.2,311,019)]
(b) In terms of the Memorandum of Agreement dated 9th May, 2011 entered
between the Company and Timken India Manufacturing (P) Ltd, (TIMPL),
TIMPL will manufacture goods using the assets owned by the Company and
leased out to TIMPL (as disclosed in Note 9) and the Company in
consideration of purchase of such goods from TIMPL would give an agreed
mark up on the cost incurred by TIMPL for manufacturing such goods.
This agreement is valid for a period of 5 years with renewal option.
(c) For commitments relating to lease arrangements, please refer note
26.
NOTE 7: RELATED PARTY DISCLOSURES
Name of the Holding Company - Timken Singapore PTE. Limited (with
effect from March 26, 2012) - Timken (Mauritius) Limited (with effect
from October 5, 2010 till March 25, 2012) Name of the Ultimate Parent
Company - The Timken Company, USA
NOTE 8
Excise duty and cess on stock represent differential excise duty and
cess thereon paid/provided on opening and closing stock of finished
goods.
NOTE 9
The Company has applied to the Central Government for approval of the
appointment of the Managing Director with effect from 26th October 2012
in terms of Part I of Schedule XIII to the Companies Act, 1956. Such
appointment is also subject to the approval of the Company''s
shareholders.
NOTE 10
Capital work-in-progress includes direct costs consisting of Salaries,
Wages and Bonus Rs. 1,636,844 (Rs. Nil), Insurance Rs. 66,670 (Rs.
Nil), Legal & Professional Fees Rs. 178,000 (Rs. Nil.) and Rent Rs.
162,800 (Rs. Nil) relating to the Company''s project at Raipur.
Consequently, expenses disclosed under the respective notes are net of
amounts capitalized by the company.
NOTE 11
Till the fifteen months period ended 31 March 2012, the company was
using pre-revised Schedule VI to the Companies Act 1956, for
preparation and presentation of its financial statements. During the
year ended 31 March 2013, the revised Schedule VI notified under the
Companies Act 1956, has become applicable to the company. The company
has reclassified previous year figures to conform to this year''s
classification. The adoption of revised Schedule VI does not impact
recognition and measurement principles followed for preparation of
financial statements. However, it significantly impacts presentation
and disclosures made in the financial statements, particularly
presentation of balance sheet.
Further, current year''s figures are not comparable with previous
period''s figures which were for 15 months due to change of the
accounting year by the company in the previous period.
Mar 31, 2012
1) Licensed Capacity is not furnished as it is not applicable in terms
of Government of India's Notification No.S.O.477(E) dated 25th July,
1991.
2) The above installed capacity represents existing manufacturing
facilities for respective products and are certified by the Management.
3) The above installed capacity is fixed with reference to the specific
bearing size. Actual production may vary depending on the sizes that
are produced in specific year.
Notes:
* Excludes free samples to customers.
** Sale of Products is stated net of excise duty and trade discount.
# Purchases are for resale and inclusive of stock in transit.
@ Quantitative information not furnished due to nature and large volume
of such items with small values. None of the individual items included
therein are 10% or more of the total value.
Note : In view of the fact that the company also manufactures and
purchases number of similar components that are used in the manufacture
of the final products, and the fact that individual identification of
which is not possible, raw materials and components include both the
class of materials.
As at As at
March 31, 2012 December 31, 2010
i) CONTINGENT LIABILITIES NOT
PROVIDED FOR Rupees Rupees
A. Demands raised by Sales Tax/Income
Tax/Excise authorities
i) Demand of sales tax for
non-availability/non-consideration
238,852,264 225,219,371
by Assessing Officer of various sales
tax declaration forms.
ii) Demand of sales tax on account
of non-deduction of various 2,017,843 2,017,843
allowances and consequent enhancement
of Gross turnover.
iii) Demand of sales tax on method
of valuation of Goods. 1,221,669 1,221,669
iv) Demand for Denial of Input
Credit Nil 2,425,800
v) Demand of income Tax due to
disallowance of certain business
74,778,129 73,714,229
expenses & incentives by the
Assessing Officer.
vi) Demand of excise duty on CVD
credit for imported components of Nil 5,245,045
railway bearings.
vii) Denial of Cenvat credit of
service tax on outward transportation
of 1,441,114 1,441,114
goods beyond the place of removal
viii) Demand of Service tax consequent
to change in service classification 18,027,789 Nil
A. Other Claims against the Company
not acknowledged as debts
i) Demand towards ESI contribution on
employees at Kolkata office of
2,001,562 613,737
the Company. The Company has contested
on the applicability of ESI for such
employees and the issue is pending
before the Assistant Regional Director,
ESI Corporation, Kolkata.
ii) Demands arising out of suits filed
by Shareholders on account of
508,351 508,351
short / non refund of Application Money
for which shares have not been allotted
and / or non-receipt of Share Certificates
etc. Company's appeals against these
issues are pending before relevant
District Forums / State Commission /
Civil Courts.
iii) Claims for recovery arising out of
suit filed by a Contractor before
the Calcutta High Court. 5,799,702 5,799,702
Based on discussions with the solicitors
/ favorable decisions in similar cases /
legal opinions taken by the Company,
the management believes that the Company
has a good chance of success in
above-mentioned cases (both under
(A) & (B) categories) and hence, no
provision there against is considered
necessary.
B) ESTIMATED AMOUNT OF CONTRACTS
REMAINING TO BE EXECUTED 12,401,963 35,684,755
ON CAPITAL ACCOUNT AND NOT PROVIDED
FOR (NET OF ADVANCES PAID)
Note: As the liabilities for gratuity and leave encashment are provided
on an actuarial basis for company as a whole, the amounts pertaining to
the directors are not included above.
C) The company carries a liability of Rs.136,394,921 (Rs.84,359,586)
being provision towards custom duty on imports for various years. The
company has made these provisions based on most recent assessments.
Further, the management is of the view that this liability shall be
payable only at the time of final assessment. Pending such final
assessment, the company has also deposited Rs.90,646,461 (Rs.
54,342,319) with customs authorities. The net liability is included in
other liabilities in Schedule 10.
D) i) No Equity shares have been allotted during 15 months ended 31st
March, 2012 out of 15,150 shares of Rs. 10/- each kept in abeyance as
at 31st March, 1998.
ii) Out of the total shares issued, 50,999,988 fully paid-up Equity
shares of Rs. 10/- each were held by Timken (Mauritius) Limited till
25th March 2012. On 26th March 2012, such shares were transferred to
Timken Singapore PTE Limited. Consequent thereto, Timken Singapore PTE
Limited is the Holding Company as at 31st March 2012.
iii) Calls in arrears of Rs.122,500 (Rs.139,500) have been computed on
the basis of information certified by the Registrar & Share Transfer
Agent of the Company.
E) Excise Duty and Cess on Stock represents differential excise duty
and cess thereon paid/provided on opening and closing stock of Finished
goods.
F) Disclosures as per Revised Accounting Standard -15 Gratuity and
other post-employment benefit plans:
The Company has a defined benefit gratuity plan (funded). Every
employee who has completed five years or more of service gets a
gratuity on departure at 15 days salary (last drawn salary) for each
completed year of service.
The Company also has a Death Benefit Scheme (unfunded) for its
employees where the immediate beneficiaries are entitled to a monthly
fixed sum till the date of superannuation, for death in harness.
The Company has a separate Provident Fund Trust (funded) whereby, all
the employees are entitled to benefits as per Provident Fund Act /
Trust Deed. Any shortfall for the T rust is borne by the Company, hence
the same is treated as a defined benefit scheme. The following tables
summarise the components of net benefit expense recognised in the
profit and loss account and the funded status and amounts recognised in
the balance sheet for the respective plans.
G) Segment Information Business Segment:
The Company has reviewed the disclosure of business segment wise
information and is of the view that it manufactures bearings and
related components which is a single business segment in accordance
with AS-17, Segment Reporting. Accordingly, no separate business
segment information is furnished herewith.
Geographical Segments:
The Geographical segments have been identified on the basis of the
location of the major customers of the Company.
H) Excise duty expense (net of recovery) represents duty paid/provided
for stocks written off, burnt stock, free samples etc.
aa) Prior period expenses include Rs.Nil (Rs.16,029,050) towards
gratuity on account of change in the estimate of one of the actuarial
assumptions used in past actuarial valuations.
ad) Previous year's figures (including those in brackets) have been
regrouped / rearranged, wherever necessary to correspond to current
period's classifications. Further, due to change of the accounting year
by the Company, current period's figures being for 15 months are not
comparable with the previous year's figures of 12 months.
Dec 31, 2010
As at As at
December 31, 2010 December 31, 2009
i) CONTINGENT LIABILITIES NOT
PROVIDED FOR Rupees Rupees
A. Demands raised by Sales Tax/Income
Tax/Excise authorities
i) Demand of sales tax for non-
availability/non-consideration 225,219,371 224,268,896
by Assessing Officer of various
sales tax declaration forms.
ii) Demand of sales tax on account of
non-deduction of various allowances 2,017,843 5,856,165
and consequent enhancement of
Gross turnover.
iii) Demand of sales tax on method of
valuation of Goods. 1,221,668 1,221,668
iv) Demand for Denial of Input Credit 2,425,800 Nil
v) Demand of Additional Income Tax
due to non-consideration of TDS Nil 1,476,649
Certificates by the Assessing Officer.
vi) Demand of Income Tax due to
disallowance of certain business 73,714,229 85,254,317
expenses & incentives by the
Assessing Officer.
vii) Demand of excise duty on CVD credit
for imported components of 5,245,045 5,245,045
railway bearings.
viii) Denial of Cenvat credit of service
tax on outward transportation of 1,441,114 Nil
goods beyond the place of removal
p) i) No Equity shares have been allotted during the year ended 31st
December, 2010 out of 15,150 shares of Rs. 10/- each kept in abeyance
as at 31st March, 1998.
ii) Out of the total shares issued, 50,999,988 fully paid-up Equity
shares of Rs. 10/- each were held by The Timken Company, USA till 4th
October 2010. On 5th October 2010, such shares were transferred to
Timken (Mauritius) Limited. Consequent thereto, Timken (Mauritius)
Limited is the Holding Company as at 31st December 2010.
iii) Calls in arrears of Rs.139,500 (Rs.141,000) have been computed on
the basis of information certified by the Registrar & Share Transfer
Agent of the Company.
q) Excise Duty and Cess on Stock represents differential excise duty
and cess paid/provided on opening and closing stock of Finished goods.
v) Disclosures as per Revised Accounting Standard -15 Gratuity and
other post-employment benefit plans:
The Company has a defined benefit gratuity plan (funded). Every
employee who has completed five years or more of service gets a
gratuity on departure at 15 days salary (last drawn salary) for each
completed year of service.
The Company also has a Death Benefit Scheme (unfunded) for its
employees where the immediate beneficiaries are entitled to a monthly
fixed sum till the date of superannuation, for death in harness.
The Company has a separate Provident Fund Trust (funded) whereby, all
the employees are entitled to benefits as per Provident Fund Act /
Trust Deed. Any shortfall for the Trust is borne by the Company, hence
the same is treated as a defined benefit scheme.
The following tables summarise the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the respective plans.
w) Segment Information
Business Segment:
The Company has reviewed the disclosure of business segmentwise
information and is of the view that it manufactures bearings and
related components which is a single business segment in accordance
with AS-17, segment reporting. Accordingly, no separate business
segment information is furnished herewith.
z) Excise duty expense (net of recovery) represents duty paid/provided
for stocks written off, burnt stock, free samples etc.
aa) Prior period expenses include Rs. 16,029,050 (Rs. Nil) towards
gratuity on account of change in the estimate of one of the actuarial
assumptions used in past actuarial valuations and Rs. Nil (Rs. 219,840)
towards service tax charge for earlier year.
ac) Previous years figures (including those in brackets) have been
regrouped / rearranged, wherever necessary.
Dec 31, 2009
I) Segment Information
Business Segment:
The Company reviewed the disclosure of business segmentwise information
and is of the view that it manufactures bearings and related components
which is single business segment in accordance with AS-17. Accordingly,
no separate business segment information is furnished herewith.
ii) Disclosures as per Revised Accounting Standard -15 Gratuity and
other post-employment benefit plans:
The Company has a defined benefit gratuity plan (funded). Every
employee who has completed five years or more of service gets a
gratuity on departure at 15 days salary (last drawn salary) for each
completed year of service.
The Company also has a Death Benefit Scheme (unfunded) for its
employees where the immediate beneficiaries are entitled to a monthly
fixed sum till the date of superannuation, for death in harness.
The Company has a separate Provident Fund Trust (funded) whereby, all
the employees are entitled to benefits as per Provident Fund Act /
Trust Deed. Any shortfall for the Trust is borne by the Company, hence
the same is treated as a defined benefit scheme.
The following tables summarise the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the respective plans.
iii) Excise duty expense (net of recovery) represents duty paid/provided
for stocks written off, burnt stock, free samples etc.
aa) Prior period expense of Rs. 219,840 pertains to Service tax charge
for earlier year.
ab) Previous Wage Agreement with Associatesà Union has expired in April
2008 and the management is in the final stage of negotiation for a new
wage agreement, pending finalisation of which the liabilities for
differential wages, as per managementÃs estimate has been provided and
included in ÃSalaries, Wages and Bonusà under item 3(a) of Schedule 15
without any separate allocation of such provision towards CompanyÃs
contribution to Provident and other funds. Adjustment if any, required
consequent on finalisation of such negotiation, will be provided in the
year of conclusion thereof.
ac) Previous yearÃs figures (including those in brackets) have been
regrouped / rearranged, wherever necessary.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
More Information on Timken India Ltd.
-
Timken India Ltd. Tools
- Bulk Deals
- Block Deals
-
Timken India Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
-
Company History
- Rights
- BSE Price History
- NSE Price History
-
Timken India Ltd. Key Financial Ratios
- Ratios
-
Timken India Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
-
Timken India Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
-
Timken India Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
-
Timken India Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
