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Notes to Accounts of Tube Investments of India Ltd.

Mar 31, 2015

1. Terms/Rights a ached to class of shares:

The Company has only one class of shares referred to as Equity Shares having a par value of ''2 each. The holders of Equity Shares are entitled to one vote per share. Dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. Repayment of capital will be in proportion to the number of Equity Shares held.

2. Status on Global Depository Receipts (GDRs):

The aggregate number of GDRs outstanding as at 31 March 2015 is 48,30,630 (As at 31 March 2014 49,30,630) each representing one Equity Share of Rs. 2 face value. GDR % against total number of shares is 2.58% (As at 31 March 2014 2.64%). The GDRs carry the same terms/rights attached to Equity Shares of the Company.

3. Stock Options

The Company has granted Stock Options to certain employees in accordance with the Employees Stock Option Scheme, the details of which are as follows:

a) Represents the amount transferred, for a sum equal to the face value of the Equity Shares, at the time of Buy-back of shares.

b) Subsequent to the Balance Sheet date of 31 March 2014 and before the book closure date for declaration of the final dividend for the year 2013-14, 50,558 (Previous Year 68,636) Equity Shares were allotted under the Employee Stock Option Scheme to employees and dividend of Rs. 0.0025 Cr. (Previous Year Rs. 0.0034 Cr.) on these Shares were paid. The total amount of Rs. 0.0030 Cr. (Previous Year Rs. 0.0034 Cr.) including dividend distribution tax, have been appropriated from the opening surplus in the Statement of Profit and Loss.

c) Represents amount written back on account of set-off of Dividend Distribute on Tax paid by Subsidiaries on dividend distributed to the Company, against Dividend Distribution Tax payable by the Company on Dividend declared and paid during the year.

4. Nature of Security

Secured, Listed and Rated Non-Convertible Debentures (NCDs)

All NCDs'' are secured by a pari passu first charge on certain immovable properties of the Company.

Foreign Currency Long Term Buyers Credit Loans (LTBC)

All LTBCs are secured by a pari passu first charge on all the Plant & Machinery of the Company.

Sales Tax Deferral

The Company had availed benefit for establishing capacities in certain states in the form of Sales Tax Deferral which was originally repayable over a period of time upto 2020-21. During the year, the Company has prepaid the amount outstanding and the discount on prepayment amounting to Rs. 1.86 Cr. has been recognised under Other Operating Revenue for the year ended 31 March 2015.

Based on, and to the extent of information received from the suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), and relied upon by the Auditors, the relevant

Notes:

(a) The 9.4570% Debentures are secured by a pari passu first charge on certain immovable properties of the Company. The Debentures were issued for a tenor of 371 days and are redeemable at par, on 25 September 2015.

(b) The 11.0500% Debentures were secured by a pari passu first charge on certain immovable properties of the Company. The Debentures were redeemed at par, on 26 September 2014.

(c) The 8.5000% Debentures were secured by a pari passu first charge on certain immovable properties of the Company. The Debentures were redeemed at par, on 27 November 2014.

(d) The 10.9500% Debentures were secured by a pari passu first charge on certain immovable properties of the Company. The Debentures were redeemed at par, on 15 December 2014.

(e) External Commercial Borrowing - USD 9.32 Mio. (Outstanding as at 31 March 2014 - USD 3.10 Mio.) was secured by a pari passu first charge on all the Plant & Machinery and certain immovable properties of the Company. The Borrowing was repaid on 10 February 2015.

(f) External Commercial Borrowing - USD 15.00 Mio. was secured by a pari passu first charge on all the Plant & Machinery of the Company. The Borrowing was repaid on 2 March 2015.

Notes:

a. Depreciation/Amortisation for the year includes depreciation amounting to Rs. 0.02 Cr. (Previous Year Rs. 5.10 Cr.) charged additionally on certain assets.

b. Net Block of Buildings includes Improvement to Buildings Rs. 17.89 Cr. (Previous Year Rs. 10.22 Cr.) constructed on leasehold land.

c. All the above assets are owned by the Company unless otherwise stated as leased asset.

d. Previous Year Figures are given in brackets.

a) During the year, the Company subscribed to 1,75,00,000 Equity Shares of Rs. 10 each of TI Tsubamex Private Limited (TTPL), a Joint Venture Company at Rs. 10 per share amounting to Rs. 17.50 Cr. and the Company''s share holding in TTPL has increased from 50% to 75%. As a result, TTPL has become a subsidiary of the Company from 26 February 2015.

b) During the year, LG Balakrishna & Bros. Ltd. has issued Bonus Equity Shares in the ratio of 1:1.

Notes:

During the year, the Company has invested an aggregate amount of Rs. 720.64 Cr. (Previous Year Rs. 716.00 Cr.) in the units of various Cash Management Schemes of Mutual Funds, for the purpose of deployment of temporary cash surpluses. The total consideration on sale of these units during the year was Rs. 720.68 Cr. (Previous Year Rs. 717.51 Cr.)

Rs. in Crores As at As at Particulars 31.03.2015 31.03.2014

5. Contingent Liabilities

a) Disputed Income-Tax demands from A.Y. 1993-94 to 2011-12 under appeal/remand pending before various appellate/assessing 36.56 26.63 authorities against which Rs. 30.44 Cr. (Previous Year Rs. 26.15 Cr.) has been deposited.The Balance of Rs. 6.12 Cr. (Previous Year Rs. 0.48 Cr.) is not deposited for which rectification petitions/appeals have been filed. The Management is of the opinion that the above demands are arbitrary and are notsustainable.

b) Disputed Service Tax, Excise and Customs duty demand amounting to Rs. 1.67 Cr.(Previous Year Rs.1.69 Cr.) and penalty of Rs. 1.30 Cr.(Previous Year 2.97 2.91 Rs. 1.22 Cr.) pertaining to financial years 1999-00 to 2012-13 under appeal pending before the Appellate Tribunal against which Rs. 0.10Cr.(Previous Year Rs. 0.10 Cr.) has been deposited. The Management is of the opinion that the above demands are arbitrary and are not sustainable.

c) Other Claims against the Company not 0.81 0.62 acknowledged as debts

d) Bills drawn on Customers and Discounted 1.83 1.55 with Banks

II. Commitments

a) Estimated amount of contracts remaining 17.40 46.99 to be executed on capital expenditure and not provided for

b) Export obligation under EPCG/Advance License Scheme to be fulfilled.The Company 44.82 63.53 is confident of meeting its obligations under the Schemes within the Stipulated Period.

c) Committed revenue contracts outstanding 50.92 45.13 under Letter of Credit

Notes:

a) Draft Assessment Orders received from Income Tax Authorities and Show Cause Notices received from various other Government Authorities, pending adjudication, have not been considered as Contingent Liabilities.

b) The uncertainties and possible reimbursement in respect of the above mentioned contingent liabilities are dependent on the outcome of various legal proceedings and therefore, cannot be predicted accurately.

i. The entire Plan Assets are managed by Life Insurance Corporation of India (LIC). In the absence of the relevant information from the LIC/Actuary, the above details do not include the composition of plan assets.

ii. The expected/actual return on Plan Assets is as furnished by LIC.

iii. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.

b) Provident Fund

The Company''s Provident Fund is exempted under Section 17 of the Employees'' Provident Fund Act, 1952. Conditions for the grant of exemption stipulate that the employer shall make good the deficiency, if any, in the interest rate declared by the Trust over the statutory limit. As at 31 March 2015, the Company does not have additional obligation in respect of the same.

c) Long Term Compensated Absences

The assumption used for computing the long term accumulated compensated absences on actuarial basis are as follows:

d) Contributions to Defined Contribution Plans

During the year, the Company recognised Rs. 9.65 Cr. (Previous Year Rs. 9.10 Cr.) for Contributions to Provident Fund, Rs. 4.56 Cr. (Previous Year Rs. 4.34 Cr.) for Contributions to Superannuation Fund and Rs. 0.97 Cr. (Previous Year Rs. 0.82 Cr.) for Contributions to Employee State Insurance Scheme in the Statement of Profit and Loss.

6. Disclosure in respect of Related Parties pursuant to Accounting Standard 18 a)

List of Related Parties

I. Subsidiary Companies

a. Shanthi Gears Limited

b. Cholamandalam MS General Insurance Company Limited

c. Cholamandalam Investment and Finance Company Limited and its Subsidiaries namely

i. Cholamandalam Distribution Services Limited

ii. Cholamandalam Securities Limited

d. TI Financial Holdings Limited

e. TI Tsubamex Private Limited (Joint Venture upto 25 February 2015 and Subsidiary w.e.f. 26 February 2015)

f. Financiere C10 SAS and its Subsidiaries namely

i. Sedis SAS

ii. Societe De Commercialisation De Composants Industriels - SARL (S2CI)

iii. Sedis Co. Ltd.

II. Entity having Significant Influence Murugappa Holdings Limited

III. Joint Venture Company Cholamandalam MS Risk Services Limited

IV. Key Management Personnel (KMP)

Mr. L. Ramkumar - Managing Director

Note: Related party relationships are as identified by the Management and relied upon by the Auditors.

a. Managing Director''s remuneration excludes Provision for Gratuity and Compensated Absences since the amount cannot be ascertained individually.

b. The incentive payable to the Managing Director is provisional and subject to determination by the Board and the same will be paid after the adoption of Financial Statements by the shareholders at the Annual General Meeting.

36. Operating Leases

The Company has Operating Lease agreements for certain office space and residential accommodation generally which are cancellable in nature. As per the lease terms, an amount of Rs. 14.36 Cr. (Previous Year Rs. 12.14 Cr.) has been recognised in the Statement of Profit and Loss.

Stock Options

The Company has granted Stock Options to certain employees in line with the Employees Stock Option Scheme. The Fair Value of Options used to compute proforma net profit and earnings per Equity Share have been estimated on the date of the grants using Black-Scholes model by an independent consultant.

The key assumptions used in Black-Scholes model for calculating the fair value as on the date of the grants are:

7. Segment Information

The Company''s operations are organised into three major divisions - Cycles and Components, Engineering and Metal Formed Products which comprise the primary basis of segmental information. Secondary segmental reporting is based on geographical location of customers and assets.

8. Accounting for Derivatives

Pursuant to the announcement of the Institute of Chartered Accountants of India (ICAI) in respect of "Accounting for Derivatives", the Company had opted to follow the recognition and measurement principles relating to derivatives as specified in AS 30 "Financial Instruments, Recognition and Measurement", issued by the ICAI, from the year ended 31 March 2008.

Consequently, as at 31 March 2015, the Company has recognised a net Mark to Market (MTM) Gain of Rs. 2.01 Cr. (Previous Year Loss Rs. 0.44 Cr.) relating to Derivative Contracts entered into to hedge the foreign currency risk of highly probable forecast transactions that are designated as effective cash flow hedges, in the Hedge Reserve Account as part of the Shareholders'' Funds.

9. Previous Year''s Figures

The Company has reclassified/regrouped previous year figures to conform to this year''s classification.


Mar 31, 2014

1. Research and Development Expenses

Research and Development Expenses incurred by the Company

i. The ent re Plan Assets are managed by Life Insurance Corporat on of India (LIC). In the absence of the relevant informat on from the LIC/Actuary, the above details do not include the composit on of plan assets.

ii. The expected/actual return on Plan Assets is as furnished by LIC.

iii. The est mate of future salary increase takes into account infl at on, likely increments, promot ons and other relevant factors.

iv. The details of Experience adjustments have been disclosed to the extent of the informat on available.

b) Provident Fund

The Company''s Provident Fund is exempted under Sect on 17 of the Employees'' Provident Fund Act, 1952. Condit ons for the grant of exempt on st pulate that the employer shall make good the defi ciency, if any, in the interest rate declared by the Trust over the statutory limit.

2. Segment Information

The Company''s operat ons are organised into three major divisions - Cycles/Components/E-Scooters, Engineering and Metal Formed Products which comprise the primary basis of segmental informat on. Secondary segmental report ng is based on geographical locat on of customers and assets.

3. Disclosure in respect of Related Parties pursuant to Accounting Standard 18 a) List of Related Parties

I. Subsidiary Companies

a. Shanthi Gears Limited

b. Cholamandalam MS General Insurance Company Limited

c. Cholamandalam Investment and Finance Company Limited and its Subsidiaries namely i. Cholamandalam Distribut on Services Limited

ii. Cholamandalam Securit es Limited

d. TI Financial Holdings Limited

e. TICI Motors (Wuxi) Company Limited (Refer Note 11 (b))

f. Financiere C10 SAS and its Subsidiaries namely i. Sedis SAS

ii. Societe De Commercialisat on De Composants Industriels - SARL (S2CI) iii. Sedis Co. Limited

II. Associate - Investing Company

Murugappa Holdings Limited

III. Joint Venture Company

a. Cholamandalam MS Risk Services Limited

b. TI Tsubamex Private Limited (w.e.f. 3 January 2014)

IV. Key Management Personnel (KMP)

Mr. L Ramkumar - Managing Director

Note: Related party relat onships are as identified by the Management and relied upon by the Auditors.

c) Details of remuneration to Key Management Personnel is given below:

a. Managing Director''s remunerat on excludes Provision for Gratuity and Compensated Absences since the amount cannot be ascertained individually.

b. The incent ve payable to the Managing Director is provisional and subject to determinat on by the Board and the same will be paid after the adopt on of accounts by the Shareholders at the Annual General Meet ng.

4. Operating Leases

The Company has Operat ng Lease agreements for office space and resident al accommodat on generally which are cancellable in nature. As per the lease terms, an amount of Rs. 9.13 Cr. (Previous YearRs. 9.14 Cr.) has been recognised in the Statement of profit and Loss.

Stock Options

The Company has granted Stock Opt ons to certain employees in line with the Employees Stock Opt on Scheme. The Fair Value of Opt ons used to compute proforma net profit and earnings per Equity Share have been est mated on the date of the grants using Black-Scholes model by an independent consultant.

Had compensat on cost for the Stock Opt ons granted under the Scheme been determined based on fair value approach, the Company''s profit and earnings per share would have been as per the pro forma amounts indicated below:

5. Information on Joint Venture Entities

The part culars of the Company''s Joint Venture Entities as at 31 March 2014 including its percentage holding and its proport onate share of assets, liabilit es, income and expenditure of the Joint Venture Ent ty are given below:

a) Figures in brackets are for the previous year.

b) The above Joint Venture Entities are located in India.

c) TI Tsubamex Private Limited was incorporated on 3 January 2014.

6. Accounting for Derivatives

Pursuant to the announcement of the Inst tute of Chartered Accountants of India (ICAI) in respect of "Account ng for Derivat ves", the Company had opted to follow the recognit on and measurement principles relating to derivat ves as specifi ed in AS 30 "Financial Instruments, Recognit on and Measurement", issued by the ICAI, from the year ended 31 March 2008.

Consequently, as of 31 March 2014, the Company has recognised Mark to Market (MTM) Loss of Rs.0.44 Cr. (Previous Year Loss Rs.0.32 Cr.) relating to Derivat ve Contracts entered into, to hedge the foreign currency risk of highly probable forecast transact ons that are designated as eff ect ve cash flow hedges, in the Hedge Reserve Account as part of the Shareholders'' Funds.

There was no undesignated/ineffective Derivat ve Contracts as on 31 March 2014.

The movement in the Hedge Reserve Account during the year for derivat ves designated as Cash Flow Hedges is as follows:

The Contracts in Hedge Reserve Account are expected to be recognised in the Statement of profit and Loss on occurrence of transact ons which are expected to take place over the next 12 months.

7. Previous Year''s Figures

The Company has reclassified, regrouped previous year figures to conform to this year''s classificant on.


Mar 31, 2013

1. Share Application Money Pending Allotment

Pursuant to Options granted under Employees Stock Option Scheme, the Company had received Rs.0.03 Cr. towards share application money for 5,296 Equity Shares of Rs.2 each with a premium of Rs.54.80 per share during the year ended 31 March 2012. The shares were allotted as per the Scheme during the year ended 31 March 2013 and until the date of allotment of shares, the said amount was held in a designated bank account and was not available for use by the Company.

2. Segment Information

The Company''s operations are organised into three major divisions - Cycles/Components/E-Scooters, Engineering and Metal Formed Products which comprise the primary basis of segmental informati on. Secondary segmental reporting is based on geographical location of customers and assets.

3. Disclosure in respect of Related Parties pursuant to Accounting Standard 18

a) List of Related Parties

I. Subsidiary Companies

a. Shanthi Gears Limited (Associate from 3 September 2012 to 18 November 2012 and Subsidiary with effect from 19 November 2012)

b. Cholamandalam MS General Insurance Company Limited

c. Cholamandalam Investment and Finance Company Limited and its Subsidiaries namely

i. Cholamandalam Distribution Services Limited

ii. Cholamandalam Factoring Limited and

iii. Cholamandalam Securities Limited

d. TI Financial Holdings Limited

e. TICI Motors (Wuxi) Company Limited (Refer Note 12 (c))

f. Financiere C10 SAS and its Subsidiaries namely

i. Sedis SAS

ii. Societe De Commercialisation De Composants Industriels - SARL (S2CI) and

iii. Sedis Co. Ltd.

II. Associate - Investing Company

Murugappa Holdings Limited

III. Joint Venture Company

Cholamandalam MS Risk Services Limited

IV. Key Management Personnel (KMP)

Mr. L Ramkumar - Managing Director

Note: Related party relationships are as identified by the Management and relied upon by the Auditors.

4. Operating Leases

The Company has operating lease agreements for office space and residential accommodation generally which are cancellable in nature. As per the lease terms, an amount of Rs.9.14 Cr. (Previous Year Rs. 6.51 Cr.) has been recognised in the Statement of Profit and Loss.

5. Accounting for Derivatives

Pursuant to the announcement of the Institute of Chartered Accountants of India (ICAI) in respect of "Accounting for Derivatives", the Company had opted to follow the recognition and measurement principles relating to derivatives as specified in AS 30 "Financial Instruments, Recognition and Measurement", issued by the ICAI, from the year ended 31 March 2008.

Consequently, as of 31 March 2013, the Company has recognised Mark to Market (MTM) Loss of Rs. 0.32 Cr. (Previous Year Gain Rs. 0.46 Cr.) relating to Derivative Contracts entered into, to hedge the foreign currency risk of highly probable forecast transactions that are designated as effective cash flow hedges, in the Hedge Reserve Account as part of the Shareholders''Funds.

There was no undesignated/ineffective Derivative Contracts as on 31 March 2013.

6. Previous Year''s Figures

The Company has reclassified regrouped previous year figures to conform to this year''s classification.


Mar 31, 2012

A) Terms/Rights attached to class of shares

The Company has only one class of shares referred to as Equity Shares having a par value of Rs2. The holders of equity shares are entitled to one vote per share.

b) Status on Global Depository Receipts

The aggregate number of Global Depository Receipts (GDRs) outstanding as at 31 March 2012 is 64,23,460 (Previous Year 65,30,630) each representing one Equity Share of Rs2 face value. GDR % against total number of shares is 3.45% (Previous Year 3.52%).

c) Final Dividend including Dividend Distribution Tax

Subsequent to the date of Balance Sheet and before the book closure date, 1,29,721 (Previous Year 1,18,296) equity shares were allotted under the Tube Investments of India Limited Employees Stock Option Scheme to employees and dividend of Rs0.02 Cr. (Previous year Rs0.02 Cr.) on these shares were paid. The total amount of Rs0.02 Cr. (Previous year Rs0.02 Cr.) including tax on dividend, have been appropriated from the opening balance of the Statement of Profit and Loss.

d) Amalgamation of erstwhile TIDC India Limited with the Company

In accordance with the Scheme of Arrangement, approved by the Honourable High Court of Madras vide its Order dated 30 November 2004, all the assets, liabilities and business of TIDC India Ltd. (TIDC), (formerly a subsidiary of the Company) were transferred to and vested in the Company, as a going concern, effective from 1 April 2004. Accordingly, 20,30,374 Equity Shares of Rs10 each (Post-Split 1,01,51,870 Equity Shares of Rs2 each) held in the Company by TIDC was vested in a Trust, namely, TII Shareholding Trust, created for the purpose.

Pursuant to an application by the Company, the said Honourable High Court vide its order dated 11 February 2009 granted an extension of time till 14 December 2010 for the sale/disposal of the balance shares held by the Trust.

The Trust had sold 57,50,000 Equity Shares in 2007-08 and the balance quantity of 44,01,870 shares were sold during the previous year 2010-11. The net surplus on sale of shares was credited to Securities Premium Account.

Since the beneficiary of the Trust is the Company itself, the dividend distributed to the Trust relating to the Company's shares held by the Trust, was credited back to the Statement of Profit and Loss on receipt of the same from the Trust in the year of sale.

e) Represents set-off of Dividend Distribution Tax paid by Subsidiary on dividend distributed to the Company against Dividend Distribution Tax payable by the Company.

1. Share application money pending allotment

Pursuant to Options granted under Grant 3 of Employees Stock Option Scheme, the Company has received Rs0.03 Cr. (Previous Year Rs Nil) towards Share Application money for 5,296 (Previous Year Rs Nil) Equity Shares of Rs2 each with a premium of Rs54.80 per share.

Pending allotment of shares, the said amount was held in a designated bank account and was not available for use by the Company. The shares have since been allotted as per the Scheme.

Notes:

a) The 9.90% Debentures are secured by a pari passu first charge on certain immovable properties of the Company. The Debentures are redeemable at par, five years from the date of allotment, i.e., on 11 August 2016. The Debentures also carry a put and call option at the end of three years from the date of allotment, i.e., on 11 August 2014.

b) The 11.70% Debentures are secured by a pari passu first charge on all the Plant & Machinery and certain immovable properties of the Company. The Debentures are redeemable at par, five years from the date of allotment, i.e., on 25 February 2014.

c) The 8.75% Debentures are secured by a pari passu first charge on certain immovable properties of the Company. The Debentures are redeemable at par, five years from the date of allotment, i.e., on 7 May 2015. The Debentures also carry a put and call option at the end of three years from the date of allotment, i.e., on 7 May 2013.

d) The 8.60% Debentures are secured by a pari passu first charge on all the Plant & Machinery and certain immovable properties of the Company. The Debentures are redeemable at par, five years from the date of allotment, i.e., on 9 March 2015. The Debentures also carry a put and call option at the end of three years from the date of allotment, i.e., on 9 March 2013 and has been reported under the head "Other Current Liabilities" (Refer Note 9).

e) The 8.50% Debentures are secured by a pari passu first charge on all the Plant & Machinery and certain immovable properties of the Company. The Debentures are redeemable at par, five years from the date of allotment, i.e., on 27 November 2014. The Debentures also carry a put and call option at the end of three years from the date of allotment, i.e., on 27 November 2012 and has been reported under the head "Other Current Liabilities" (Refer Note 9).

f) External Commercial Borrowing is to be secured by a pari passu first charge on all the Plant & Machinery. Interest at the rate of 3 Months USD LIBOR plus 2.00% p.a. is payable quarterly. The said Loan is fully hedged and repayable at the end of three years from the date of drawdown, i.e., on 2 March 2015.

g) External Commercial Borrowing is secured by a pari passu first charge on all the Plant & Machinery and certain immovable properties of the Company. Interest at the rate of 3 Months USD LIBOR plus 2.40% p.a. is payable quarterly. The said Loan is fully hedged and repayable equally in three instalments on 10 February 2013, 2014 and 2015. The first instalment of Rs14.49 Cr. has been reported under the head "Other Current Liabilities" (Refer Note 9).

h) The Company has availed benefit for establishing capacities in various states in the form of Sales Tax Deferral. The repayment under the Schemes is over the period and the final instalment is in the year 2020-21. An amount of Rs2.98 Cr. to be repaid in 2012-13 has been reported under the head "Other Current Liabilities" (Refer Note 9).

Notes:

a) During the year, the Company invested a further sum of Rs0.56 Cr. in TICI Motors (Wuxi) Company Ltd., a wholly owned Overseas Subsidiary.

b) During the year, the Company subscribed to 1,23,46,869 equity shares of Rs10 each of Cholamandalam MS General Insurance Company Ltd., a Subsidiary, offered on Rights basis at Rs30 per share amounting to Rs37.05 Cr.

c) During the year, the Company invested a further sum of Rs0.04 Cr. in TI Financial Holdings Ltd., a wholly owned Subsidiary.

d) During the year, Carborundum Universal Ltd., sub-divided their equity shares from Rs2 per share to Rs1 per share. Consequenty number of shares held by the Company increased by 3,000.

Note : During the year, the Company has invested an aggregate of Rs507.91 Cr. (Previous Year Rs820.89 Cr.) and sold an aggregate of Rs525.87 Cr. (Previous Year Rs994.45 Cr.) of units in various Cash Management Schemes of Mutual Funds, invested for the purpose of deployment of temporary cash surpluses.

Notes:

i. The entire Plan Assets are managed by Life Insurance Corporation of India (LIC).

ii. The expected return on Plan Assets is as furnished by a Qualified Actuary.

iii. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.

b) Provident Fund

The Company's Provident Fund is exempted under Section 17 of the Employees' Provident Fund Act, 1952. Conditions for the grant of exemption stipulate that the employer shall make good the deficiency, if any, in the interest rate declared by the Trust over the statutory limit.

2. Disclosure in respect of Related Parties pursuant to Accounting Standard 18

a) List of Related Parties

I. Subsidiary Companies

a. Cholamandalam MS General Insurance Company Limited

b. Cholamandalam Investment and Finance Company Limited (With effect from 8 April 2010)

i. Cholamandalam Distribution Services Limited

ii. Cholamandalam Factoring Limited and

iii. Cholamandalam Securities Limited

(Subsidiaries of Cholamandalam Investment and Finance Company Limited)

c. TI Financial Holdings Limited

d. Tubular Precision Products (Suzhou) Company Limited (Company liquidated)

e. TICI Motors (Wuxi) Company Limited

f. Financiere C10 SAS

i. Sedis SAS

ii. Societe De Commercialisation De Composants Industriels - SARL (S2CI) and

iii. Sedis Co. Ltd.

(Subsidiaries of Financiere C10 SAS)

II. Associate Company

Murugappa Holdings Limited (Investing Company)

III. Joint Venture Company

Cholamandalam MS Risk Services Limited

IV. Key Management Personnel (KMP)

Mr. L. Ramkumar - Managing Director

Note: Related party relationships are as identified by the Management and relied upon by the auditors.

Notes:

a. Managing Director's remuneration excludes Provision for Gratuity and Compensated Absences since the amount cannot be ascertained individually.

b. The incentive payable to the Managing Director is provisional and subject to determination by the Board and the same will be paid after the adoption of accounts by the shareholders at the Annual General Meeting.

Note:

Earnings per Share calculations are done in accordance with Accounting Standard 20 (AS 20) "Earnings per Share".

Stock Options

The Company has granted Stock Options to certain employees in line with the Employees Stock Option Scheme. The Fair Value of Options used to compute proforma net profit and earnings per Equity Share have been estimated on the date of the grants using Black-Scholes model by an independent consultant.

Notes:

a) Figures in brackets are for the previous year.

b) The above Joint Venture Entity is located in India.

39. Accounting for Derivatives

Pursuant to the announcement of the Institute of Chartered Accountants of India (ICAI) in respect of "Accounting for Derivatives", the Company had opted to follow the recognition and measurement principles relating to derivatives as specified in AS 30 "Financial Instruments, Recognition and Measurement", issued by the ICAI, from the year ended 31 March 2008.

Consequently, as of 31 March 2012, the Company has recognised Mark to Market (MTM) Gain of Rs0.46 Cr. (Previous Year Loss of Rs0.36 Cr.) relating to forward contracts and other derivatives entered into to hedge the foreign currency risk of highly probable forecast transactions that are designated as effective cash flow hedges, in the Hedge Reserve Account as part of the Shareholders Funds.

The MTM net loss on undesignated/ineffective forward contracts amounting to Rs Nil (Previous Year Rs Nil) has been recognised in the Statement of Profit and Loss.

3. Operating Leases

The Company has operating lease agreements for office space and residential accommodation generally for a period of 3 to 8 years with option to renew with escalation. As per the lease terms a sum of Rs6.51 Cr. (Previous Year Rs5.22 Cr.) has been recognised in the Statement of Profit and Loss.f

 
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