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Accounting Policies of TVS Electronics Ltd. Company

Mar 31, 2015

1 ACCOUNTING STANDARDS COMPLIANCE

The financial statements have been prepared in accordance with the norms and principles prescribed in the Accounting Standards issued by the Institute of Chartered Accountants of India which are itemised below.

AS - 1 Disclosure of accounting policies

The Company is following accrual basis of accounting on a going concern concept and the policies applied are consistent with those applied in the previous year.

AS - 2 Valuation of inventories

a Raw materials,components, stores and spares and other trading products are valued at cost determined on weighted average basis. Finished goods and traded goods are valued at the aggregate of material cost and applicable direct and indirect overheads or net realisable value whichever is lower.

b Excise Duty in respect of finished goods lying within the factory are included in the valuation of inventories.

c Goods-In-Transit, both Raw materials and Traded items sent by supplier on FOB basis are recognized based on Confirmation received from the Vendor regarding the despatch of goods. Goods-in-Transit available at Bonded Warehouses are recognized based on Bond Statement / Confirmation from authorities.

d As per practice consistently followed, Customs Duty and Countervailing Duty payable on raw materials, components and finished goods lying in customs bonded warehouses is accounted for on debonding. Non-provision of this duty will not affect the profit for the year.

AS - 3 Cash Flow Statement

Cash Flow Statement has been prepared under "Indirect Method".

AS - 4 Contingencies and Events occurring after the Balance Sheet date

There are no contingencies and events after the Balance Sheet date that affect the financial position of the Company. Contested liabilities and outstanding bank guarantees are disclosed by way of a note.

AS - 5 Net Profit or Loss for the year, prior period items and changes in accounting policies

Details of prior period items in the Statement of Profit and Loss :

as - 6 Depreciation Accounting

Depreciation has been provided on Straight Line Method on the basis of useful life of the assets as prescribed by Schedule II to the Companies Act, 2013.

i) Depreciation for the year is higher by Rs. 43.64 Lakhs on the implementation of the rates prescribed in Schedule II to the Companies Act, 2013.

ii) Based on the transitional provisions as per Note 7(b) of Schedule II, an amount of Rs. 122.52 Lakhs (net of Deferred Tax of Rs. 82.77 Lakhs) has been deducted from retained earnings, without retaining 5% residual value, pertaining to assets whose balance useful life as on 1st April, 2014 was NIL. The residual value of sucsh assets are NIL based on technical valuation.

iii) The useful life of the assets are arrived at by retaining 5% of the cost of asset as residual value except in the following where the residual value is arrived at on the basis of valuation :

a) On assets whose actual cost does not exceed Rs. 5,000 individually, depreciation has been provided at 100%.

b) In respect of Leasehold Land with a lease period of 99 years, depreciation has been amortised over the tenure of lease, effective 1st April, 2013.

c) Useful life of Tools & Moulds and Office Equipments are estimated at 3 years based on technical valuation.

d) In respect of Software, the useful life is estimated at 2 years.

e) Computers, Office Equipments, Furniture & Fixtures, Electrical Installations and Improvement to building taken on lease used in walk-in centres are depreciated over three years while the same category of assets in factory, branches, etc are depreciated as per Schedule II of the Companies Act, 2013.

AS - 7 Construction Contracts

This Accounting Standard is not applicable.

AS - 8 Research and Development

This Accounting Standard is withdrawn.

AS - 9 Revenue Recognition

a Income and Expenditure are accounted on a going concern basis.

b The Company's income consists of income from sale of manufactured equipments, traded goods, after sales service, warranty management & repair services, income from Information Technology (IT) related consultancy services and e-auction services.

c Sale is accounted net of Excise Duty, Service Tax and Sales Tax / Value Added Tax.

i) Income from consultancy services and annual maintenance contracts are considered on accrual basis.

ii) Income from services is recognised after rendering services.

iii) Income from InformationTechnology solutions are recognised depending upon the stage of completion of the project.

d Other income includes realised exchange fluctuation gain on Sale of products, Sale of services of Rs. 81.80 lakhs (Previous year Rs. 110.65 lakhs).

e Interest income is recognised on a time proportion basis taking into account the amount of outstanding and the rate applicable.

f Dividend Income is recognised when the Company in which shares are held, declares the dividend and when the right to receive the same is established.

g In respect of domestic sale of manufactured and traded items, the recognition is on the basis of delivery of goods to the designated transporters of the Customer, while in respect of export sales the recognition is on the basis of "LET Export" certificate issued by Customs Authorities

AS - 10 Fixed Assets

Fixed Assets are stated at cost of acquisition or construction cost net of CENVAT and includes expenditure incurred upto the date the asset is put to use, less accumulated depreciation.

Technical know-how fees paid is capitalised under Plant and Equipment.

Temporary constructions / alteration costs are charged off in the same year.

Lease hold land represents Rs. 199.15 lakhs(Previous year Rs. 199.15 Lakhs) paid to State Industrial Promotion Corporation of Tamil Nadu Limited (SIPCOT), Chennai for 6.16 acres of land in their Oragadam Special Economic Zone( SEZ),Tamil Nadu. The lease period is 99 years and accordingly the cost is amortised effective 1st April 2013.

During the year, cost of certain office equipments which were fully depreciated in earlier years and carried at NIL value in the books were removed with corresponding debit to accumulated depreciation reserve.

AS - 11 Effects of Changes in foreign exchange rates

a Purchase of imported raw materials, components, spare parts and capital goods are accounted based on retirement memos from banks. In respect of liabilities on import of raw materials, components, spare parts and capital goods which are in transit and where invoices / bills are yet to be received, the liability is accounted based on the market exchange rate prevailing on the date of the Balance Sheet.

b Year end foreign currency denominated liabilities and receivables are translated at exchange rates prevailing as at Balance Sheet date, the difference being charged/credited to respective revenue or capital account . Any difference between the forward rate and the exchange rate on the date of inception of forward contract is recognised as discount or premium over the period of the contract.

c Other income includes realised exchange fluctuation gain on Sale of products, Sale of services of Rs. 81.80 lakhs (Previous year Rs. 110.65 lakhs).

d Derivative transactions :

The Company uses forward exchange contracts to hedge its exposure in foreign currency in respect of Imports of Inputs. a) Forward exchange contracts outstanding as at 31st March, 2015

The company has not availed any External Commercial Borrowings.

AS - 12 Government Grants

The Company has not received any Government grants.

AS - 13 Accounting for Investments

All Investments are long term investments and are stated at cost. Provision for diminution in value is made only if such a decline is other than temporary in the opinion of the Management.

Cost of investments held in TVS Shriram Growth Fund, Chennai as on 31st March 2015 - Rs. 38.66 lakhs (3866.18 units). The market value (NAV) of these units is Rs. 46.32 lakhs as on 31st December, 2014, as per Account Statement from Investee.

AS - 14 Accounting for Amalgamation

This Standard is not applicable to the Company for the year under review.

AS - 15 Employee benefits

As per Accounting Standard 15 on "Employee Benefits", the disclosures of Employee benefits as defined in the Accounting Standard are furnished below :

(a) Short term Employee Benefits

Short term employee benefits payable within twelve months of rendering the service including accumulated leave encashment, at the Balance Sheet date, are recognised as an expense as per the Company's scheme based on expected obligations on undiscounted basis.

(b) Long term Employee Benefits

In case of long term compensated absences i.e. long term leave encashment, the same is provided for based on actuarial valuation as at the Balance Sheet date, using the Projected Unit Credit Method.

Post retirement benefits comprising of employees Provident Fund and Gratuity Fund are accounted for as follows :

(a) Provident Fund : This is a defined contribution plan and contributions paid to the Regional Provident Fund Commissioner, Tambaram, Chennai - 600 045, are charged to revenue during the period. The Company has no further obligations for future provident fund benefits other than regular contributions.

(b) Gratuity : This is a defined benefit plan and the Company's Scheme is administered by Trustees and funds managed by the Life Insurance Corporation of India (LIC). The liability for Gratuity to employees as at the Balance Sheet date is determined based on the actuarial valuation and on the basis of demand from Life Insurance Corporation of India.The contribution paid thereof is charged in the books of accounts.

AS - 16 Borrowing costs

All borrowing costs are charged to revenue except to the extent they are attributable to qualifying assets which are capitalised. During the year under review there was no borrowing attributable to qualifying assets and hence no borrowing cost was capitalised.

AS - 17 Segment Reporting

Since the group of products sold and services rendered by the Company pertains to Information Technology related products and services, the operations of the Company relate to a single reportable segment.

AS - 18 Related Party disclosure

Disclosure is made as prescribed by the Institute of Chartered Accountants of India.

AS - 19 Accounting for Leases

This Standard is not applicable as the Company does not have any lease transaction during the year.

AS - 20 - Earnings Per Share

Earnings per share (Basic and Diluted) has been calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period and disclosed on the face of statement of Profit and Loss in accordance with the Standard.

AS - 21 Consolidated Financial Statements

Consolidated Financial Statements of the Company and its wholly owned subsidiary, viz., Prime Property Holdings Limited, Chennai is enclosed.

AS - 22 Taxes on income

Income Tax payable under the normal computation of taxable income is NIL. However, tax is payable under the provisions of Section 115JB of the Income Tax Act, 1961, viz., Minimum Alternate Tax.

Deferred tax liability and asset are recognised based on timing differences using the tax rates substantively enacted on the Balance Sheet date.

AS - 23 Accounting for Investments in Associates in Consolidated Financial Statements

This Standard is not applicable to the Company for the year under review.

AS - 25 Interim Financial Reporting

Quarterly financial results are published in accordance with the requirement of Listing Agreement with Stock Exchanges. The recognition and measurement principles as laid down in the Standard have been followed in the preparation of these results.

AS - 26 Intangible Assets

The Company owns Intellectual Property Rights & Business Rights relating to its service business and the same is amortised over a period of ten years @ 9.5% per annum.

AS - 27 Financial Reporting of Interest in Joint Ventures

This Standard is not applicable to the Company for the year under review.

AS - 28 Impairment of Assets

As on the Balance Sheet date the carrying amounts of the assets net of accumulated depreciation is not less than the recoverable amount of such assets. Hence there is no impairment loss on the assets of the Company.

AS - 29 Provisions, Contingent Liabilities and Contingent Assets

Warranty cost on sale of products has been determined based on management estimates/ historical data and provided for - Rs. 280.08 lakhs (Previous Year - Rs. 227.46 Lakhs).

Contingent liabilities are disclosed in Note No.4 and Contested liabilities are disclosed in Note No. 5.

Contingent assets are neither recognised nor disclosed.

AS - 30 Financial Instruments : Recognition and Measurement

This Standard is not applicable.

AS - 31 Financial Instruments: Presentation

This Standard is not applicable.

AS - 32 Financial Instruments : Disclosures

This Standard is not applicable.


Mar 31, 2014

The financial statements have been prepared in accordance with the norms and principles prescribed in the Accounting Standards issued by the Institute of Chartered Accountants of India which are itemised below.

AS - 1 Disclosure of accounting policies

The Company is following accrual basis of accounting on a going concern concept and the policies applied are consistent with those applied in the previous year.

AS - 2 Valuation of inventories

a Raw materials,components, stores and spares and other trading products are valued at cost determined on weighted average basis. Work in process includes material cost and applicable direct overheads. Finished goods and traded goods are valued at the aggregate of material cost and applicable direct and indirect overheads or net realisable value whichever is lower.

b Excise Duty in respect of finished goods lying within the factory are included in the valuation of inventories.

c As per practice consistently followed, Customs Duty and Countervailing Duty payable on raw materials, components and finished goods lying in customs bonded warehouses is accounted for on debonding. Non-provision of this duty will not affect the profit for the year.

AS - 3 Cash Flow Statement

Cash Flow Statement has been prepared under "Indirect Method".

AS - 4 Contingencies and Events occurring after the Balance Sheet date

There are no contingencies and events after the Balance Sheet date that affect the financial position of the Company. Contested liabilities and outstanding bank guarantees are disclosed by way of a note.

AS - 5 Net Profit or Loss for the year, prior period items and changes in accounting policies

Details of prior period items in the Statement of Profit and Loss :

Rs. in Lakhs

As at / Year ended As at / Year ended 31.03.2014 31.03.2013

i) Expenses

Welfare 0.73 0.33

Repairs and Maintenance- Plant and Equipment 0.06 0.21

Repairs and Maintenance- Office Equipments 0.02 0.41

Other expenses 0.01 2.99

Consultancy - 1.07

0.82 5.01

ii) Income

Power & Fuel - 0.44

Repairs & Maintenance - Building - 0.61

Rent - 0.70

Lease rental - Computers - 0.84

Repairs & Maintenance - Assets - 0.15 - 2.74

AS - 6 Depreciation Accounting

a Depreciation on Fixed Assets is provided on straight line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 with applicable shift allowance except:

i) On computers (including printers, uninterruptible power supply systems and computer accessories) and vehicles acquired on or after 01-04-1998, depreciation has been charged at 30% and 18% respectively on Straight Line Method (SLM), which are higher than the rates prescribed in Schedule XIV.

ii) In respect of Improvements to Buildings taken on lease, depreciation has been charged at 20% on straight line method which is higher than the rate prescribed in Schedule XIV to the Companies Act,1956.

iii) On Intellectual Property Rights, depreciation has been charged at 9.5% per annum under straight line method for ten years.

iv) On Business Rights, depreciation has been charged at 9.5% per annum under straight line method for 10 years.

v) On Software, depreciation has been charged at 50% per annum on pro-rata basis under straight line method.

vi) On assets whose actual cost does not exceed Rs. 5,000 individually, depreciation has been provided at 100%.

vii) Moulds has been subject to depreciation @ 31.67% per annum as against normal rate of 16.21% per annum prescribed in Schedule XIV of the Companies Act, 1956.

viii) On certain class of assets, depreciation has been charged at 99% of its original cost on pro-rata basis, considering the useful life of asset as one year as against rate prescribed in Schedule XIV of the Companies Act, 1956.

AS - 7 Construction Contracts

This Accounting Standard is not applicable.

AS - 8 Research and Development

This Accounting Standard is withdrawn.

AS - 9 Revenue Recognition

a Income and Expenditure are accounted on a going concern basis.

b The Company''s income consists of income from sale of manufactured equipments, traded goods, after sales service, warranty management & repair services, income from Information Technology (IT) related consultancy services and e-auction services.

c Sales is accounted net of Excise Duty, Service Tax and Sales Tax / Value Added Tax.

i) Income from consultancy services and annual maintenance contracts are considered on accrual basis.

ii) Income from services is recognised after rendering services.

iii) Income from Information Technology solutions are recognised depending upon the stage of completion of the project. d Other income includes realised exchange fluctuation gain on Sale of products, Sale of services of Rs. 110.65 lakhs

(Previous year Rs. 96.30 lakhs).

e Interest income is recognised on a time proportion basis taking into account the amount of outstanding and the rate applicable.

f Dividend Income is recognised when the Company in which shares are held, declares the dividend and when the right to receive the same is established.

g In respect of domestic sale of manufactured and traded items, the recognition is on the basis of delivery of goods to the designated transporters of the Customer, while in respect of export sales the recognition is on the basis of "LET Export " certificate issued by Customs Authorities

AS - 10 Fixed Assets

Fixed Assets are stated at cost of acquisition or construction cost net of CENVAT and includes expenditure incurred upto the date the asset is put to use, less accumulated depreciation.

Technical know-how fees paid is capitalised under Plant and Equipment.

Temporary constructions / alteration costs are charged off in the same year.

Lease hold land represents Rs. 199.15 lakhs(Previous year Rs. 199.15 Lakhs) paid to State Industrial Promotion Corporation of Tamil Nadu Limited (SIPCOT), Chennai for 6.16 acres of land in their Oragadam Special Economic Zone (SEZ), Tamil Nadu. The lease period is 99 years and accordingly the cost is amortised effective 1st April 2013.

AS - 11 Effects of Changes in foreign exchange rates

a Purchase of imported raw materials, components, spare parts and capital goods are accounted based on retirement memos from banks. In respect of liabilities on import of raw materials, components, spare parts and capital goods which are in transit and where invoices / bills are yet to be received, the liability is accounted based on the market exchange rate prevailing on the date of the Balance Sheet.

b Year end foreign currency denominated liabilities and receivables are translated at exchange rates prevailing as at Balance Sheet date, the difference being charged/credited to respective revenue or capital account . Any difference between the forward rate and the exchange rate on the date of inception of forward contract is recognised as discount or premium over the period of the contract .

c Other income includes realised exchange fluctuation gain on Sale of products, Sale of services of Rs. 110.65 lakhs (Previous year Rs. 96.30 lakhs). d Derivative transactions :

The Company uses forward exchange contracts to hedge its exposure in foreign currency in respect of Imports of Inputs.

a) Forward exchange contracts outstanding as at 31st March, 2014

Rs. in Lakhs

As at / Year As at / Year ended ended 31.03.2014 31.03.2013

- Euro 2,74,562 (LY - 4,39,795) equivalent to Rs. 226.72 321.52

- JPY 17,94,450 (LY - 31,22,768) equivalent to Rs. 10.55 19.50

- USD 18,89,551 (LY - 17,63,961) equivalent to Rs. 1,199.49 982.31

b) Foreign currency exposures not covered by Forward exchange contracts as at 31st March, 2014

Rs. in Lakhs

As at / Year As at / Year ended ended 31.03.2014 31.03.2013

- Euro NIL (LY - 2,62,874) equivalent to Rs. - 192.33

- JPY NIL (LY - NIL) equivalent to Rs. - -

- USD NIL (LY - 6,62,408) equivalent to Rs. - 368.88

The company has not availed any External Commercial Borrowings.

AS - 12 Government Grants

The Company has not received any Government grants.

AS - 13 Accounting for Investments

All Investments are long term investments and are stated at cost. Provision for diminution in value is made only if such a decline is other than temporary in the opinion of the Management.

The cost of investments of 50,000 equity Shares in wholly owned subsidiary Tumkur Property Holdings Limited, Chennai is Rs. 5 lakhs and its net worth was Rs. (5.39) Lakhs as of 31st March 2013. Hence a provision for diminution in value of Rs. 5 lakhs had been made in the Statement of Profit and Loss for the financial year ended 31st March 2013.

Consequent to the dissolution of Tumkur Property Holdings Limited, Chennai effective 1st November 2013, the cost of investment of 50,000 equity shares in wholly owned subsidiary Tumkur Property Holdings Limited, Chennai of Rs. 5 lakhs is written off against the provision made.

During the year, out of the total cost of investment of Rs. 118.66 lakhs in TVS Shriram Growth Fund, Chennai, investment costing Rs. 80.00 lakhs was sold.The sum realised was Rs. 84.08 lakhs.Thus a profit of Rs. 4.08 lakhs was made.

Cost of investments held in TVS Shriram Growth Fund, Chennai as on 31st March 2014 - Rs. 38.66 lakhs (3866.18 units). The market value (NAV) of these units is Rs. 41.91 lakhs.

AS - 14 Accounting for Amalgamation

This Standard is not applicable to the Company for the year under review.

AS - 15 Employee benefits

As per Accounting Standard 15 on "Employee Benefits", the disclosures of Employee benefits as defined in the Accounting Standard are furnished below :

(a) Short term Employee Benefits

Short term employee benefits payable within twelve months of rendering the service including accumulated leave encashment, at the Balance Sheet date, are recognised as an expense as per the Company''s scheme based on expected obligations on undiscounted basis.

(b) Long term Employee Benefits

In case of long term compensated absences i.e. long term leave encashment, the same is provided for based on actuarial valuation as at the Balance Sheet date, using the Projected Unit Credit Method.

Post retirement benefits comprising of employees Provident Fund and Gratuity Fund are accounted for as follows :

(a) Provident Fund : This is a defined contribution plan and contributions paid to the Regional Provident Fund Commissioner, Tambaram, Chennai - 600 045, are charged to revenue during the period. The Company has no further obligations for future provident fund benefits other than regular contributions.

(b) Gratuity : This is a defined contribution plan and the Company''s Scheme is administered by Trustees and funds managed by the Life Insurance Corporation of India(LIC). The liability for Gratuity to employees as at the Balance Sheet date is determined based on the actuarial valuation and on the basis of demand from Life Insurance Corporation of India.The contribution paid thereof is charged in the books of accounts.

Disclosure as per AS15 (Revised) - Defined Benefit Plans

Rs. in Lakhs

As at / Year As at / Year ended ended 31.03.2014 31.03.2013

Past Service benefit 153.31 146.58

Present Value of the obligation as at the beginning of the year 146.58 155.17

Interest Cost 11.21 11.77

Current Service Cost 22.07 20.83

Benefits Paid (21.52) (41.92)

Acquisitions - -

Plan amendment cost - -

Actuarial Gain/(Loss) on obligation (5.03) 0.73

Present Value of the obligation as at Balance Sheet date 153.31 146.58

Rs. in Lakhs

As at / Year As at / Year ended ended 31.03.2014 31.03.2013

Fair value of planned assets as at the beginning of the year 139.62 157.63 Expected Return on planned assets 13.48 13.51

Contributions 16.00 17.25

Accretion to planned assets 16.17 -

Benefits paid (21.52) (41.92)

Actuarial Gain/(Loss) on planned assets (2.31) (6.85)

Fair value of planned assets as at Balance Sheet date 161.44 139.62

Amounts recognized in the Balance Sheet

Present Value of the obligation as at Balance Sheet date 153.31 146.58

Fair value of planned assets as at Balance Sheet date 161.44 139.62

Funded status of the plan - (assets) / Liability 8.13 (6.96)

Amounts recognized in the statement of Profit and Loss

Current Service cost 22.07 20.83

Interest cost 11.21 11.77

Expected Return on planned assets (13.48) (13.51)

Net actuarial gain or loss recognized in the year (7.34) 7.57

Expenses recognized in the statement of Profit and Loss 12.46 26.66

Principal actuarial assumptions

Discount Rate 9.21% 8.27%

Salary escalation 5.00% 5.00%

Expected return on planned assets 9.30% 9.30%

AS - 16 Borrowing costs

All borrowing costs are charged to revenue except to the extent they are attributable to qualifying assets which are capitalised. During the year under review there was no borrowing attributable to qualifying assets and hence no borrowing cost was capitalised.

AS - 17 Segment Reporting

Since the group of products sold and services rendered by the Company pertains to Information Technology related products and services, the operations of the Company relate to a single reportable segment.

AS - 18 Related Party disclosure

Disclosure is made as per the requirements of the Standard and as per the clarifications issued by the Institute of Chartered Accountants of India.

AS - 19 Accounting for Leases

This Standard is not applicable as the Company does not have any lease transaction during the year.

AS - 20 - Earnings Per Share

Earnings per share (Basic and Diluted) has been calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period and disclosed on the face of statement of Profit and Loss in accordance with the Standard.

Rs. in Lakhs

As at / Year As at / Year ended ended 31.03.2014 31.03.2013

Profit after tax 40.02 (800.60)

Weighted average number of equity shares 1,79,75,832 1,76,72,818

Nominal value of the shares Rs. 10/- Rs. 10/-

(i) Earnings per share - Basic 0.22 (4.53)

(ii) Earnings per share - Diluted 0.22 (4.48)

AS - 21 Consolidated Financial Statements

Consolidated Financial Statements of the Company and its wholly owned subsidiary, viz., Prime Property Holdings Limited, Chennai is enclosed.

AS - 22 Taxes on income

Income Tax payable under the normal computation of taxable income is NIL. However, tax is payable under the provisions of Section 115JB of the Income Tax Act, 1961, viz., Minimum Alternate Tax.

Deferred tax liability and asset are recognised based on timing differences using the tax rates substantively enacted on the Balance Sheet date.

Deferred Tax Liability (Net) consists of :

A) Liabilities:- Tax on Depreciation 389.85 348.46 Less:

B) Assets:- Tax on provisions inadmissible under the Income Tax Act, 1961 5.07 3.67

Net Deferred Tax Liability 384.78 344.79

AS - 23 Accounting for Investments in Associates in Consolidated Financial Statements

This Standard is not applicable to the Company for the year under review.

AS - 24 Discontinuing Operations

In respect of Contract Manufacturing Services business which was sold during 2007, the details of liabilities carried over in the financial statements are furnished below:

Liabilities in respect of discontinued operations

Balance at the beginning of the year 20.46 20.46

Less: Discharged during the year 20.46 -

Balance at the close of the year - 20.46

AS - 25 Interim Financial Reporting

Quarterly financial results are published in accordance with the requirement of Listing Agreement with Stock Exchanges. The recognition and measurement principle as laid down in the Standard have been followed in the preparation of these results.

AS - 26 Intangible Assets

The Company owns Intellectual Property Rights & Business Rights relating to its service business and the same is amortised over a period of ten years @ 9.5% per annum.

AS - 27 Financial Reporting of Interest in Joint Ventures

This Standard is not applicable to the Company as there is no Joint Venture as on 31.03.2014 AS - 28 Impairment of Assets

As on the Balance Sheet date the carrying amounts of the assets net of accumulated depreciation is not less than the recoverable amount of such assets. Hence there is no impairment loss on the assets of the Company.

AS - 29 Provisions, Contingent Liabilities and Contingent Assets

Warranty cost on sale of products has been determined based on management estimates/ historical data and provided for - Rs. 227.46 lakhs (Previous Year - Rs. 312.90 Lakhs)

Contingent liabilities are disclosed in Note No. 5 and Contested liabilities are disclosed in Note No. 6.

Contingent assets are neither recognised nor disclosed.

AS - 30 Financial Instruments : Recognition and Measurement

This Standard is not applicable.

AS - 31 Financial Instruments: Presentation

This Standard is not applicable.

AS - 32 Financial Instruments : Disclosures

This Standard is not applicable.


Mar 31, 2013

1 ACCOUNTING STANDARDS COMPLIANCE

The fnancial statements have been prepared in accordance with the norms and principles prescribed in the Accounting Standards issued by the Institute of Chartered Accountants of India which are itemised below.

AS - 1 Disclosure of accounting policies

The Company is following accrual basis of accounting on a going concern concept and the policies applied are consistant with those applied in the previous year.

AS - 2 Valuation of inventories

a Raw materials,components, stores and spares and other trading products

are valued at cost determined on weighted average basis. Work in process includes material cost and applicable direct overheads. Finished goods and traded goods are valued at the aggregate of material cost and applicable direct and indirect overheads or net realisable value whichever is lower.

b Excise Duty in respect of fnished goods lying within the factory are included in the valuation of inventories.

c As per practice consistently followed, Customs Duty and Countervailing

Duty payable on raw materials, components and fnished goods lying in customs bonded warehouses is accounted for on debonding. Non-provision of this duty will not affect the proft for the year.

AS - 3 Cash Flow Statements

Cash Flow Statement has been prepared under " Indirect Method".

AS - 4 Contingencies and Events occurring after the Balance Sheet date

There are no contingencies and events after the Balance Sheet date that affect the fnancial position of the Company. Contested liabilities and outstanding bank guarantees are disclosed by way of a note.

AS - 6 Depreciation accounting

a Depreciation on Fixed Assets is provided on straight line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 with applicable shift allowance except:

i) On computers (including printers, uninterruptible power supply systems and computer accessories) and vehicles acquired on or after 01-04-1998, depreciation has been charged at 30% and 18% respectively on Straight Line Method (SLM), which are higher than the rates prescribed in Schedule XIV.

ii) In respect of Buildings acquired on lease, depreciation has been charged at 20% on straight line method which is higher than the rate prescribed in Schedule XIV to the Companies Act,1956.

iii) On Intellectual Property Rights, depreciation has been charged at 9.5% per annum under straight line method for ten years. iv) On Business Rights, depreciation has been charged at 9.5% per annum under straight line method for 10 years.

v) On Software, depreciation has been charged at 50% per annum on pro- rata basis under straight line method.

vi) On assets whose actual cost does not exceed Rs. 5,000 individually, depreciation has been provided at 100%.

vii) Moulds has been subject to depreciation @ 31.67% per annum as against normal rate of 16.21% per annum prescribed in Schedule XIV of the Companies Act, 1956.

viii) On certain class of assets, depreciation has been charged at 99% of its original cost on pro-rata basis, considering the useful life of asset as one year as against rate prescribed in Schedule XIV of the Companies Act, 1956.

b In respect of assets depreciated on straight line method which have been acquired on amalgamation / business transfer, depreciation is provided on the original cost of acquisition as appearing in the books of transferor companies.

AS - 7 Accounting for Construction Contracts

This Accounting Standard is not applicable.

AS - 8 Accounting for Research and Development

This Accounting Standard is withdrawn.

AS - 9 Revenue Recognition

a Income and Expenditure are accounted on a going concern basis.

b The Company''s income consists of income from sale of manufactured equipments, traded goods, after sales service, warranty management & repair services and income from Information Technology (IT) related consultancy services.

c Sales is accounted net of Excise Duty, Service Tax and Sales Tax / Value

Added Tax.

i) Income from consultancy services and annual maintenance contracts are considered on accrual basis.

ii) Income from services is recognised after rendering services.

iii) Income from InformationTechnology solutions are recognised depending upon the stage of completion of the project.

d Other income includes realised exchange fuctuation gain on Sale of products, Sale of services ofRs. 96.30 lakhs (Previous year Rs.84.56 lakhs).

e Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

f Dividend Income is recognised when the Company in which shares are held, declares the dividend and when the right to receive the same is established.

g In respect of domestic sale of manufactured and traded items, the recognition is on the basis of delivery of goods to the designated transporters of the Customer, while in respect of export sales the recognition is on the basis of "LET Export " certifcate issued by Customs Authorities.

AS - 10 Accounting for Fixed Assets

Fixed Assets are stated at cost of acquisition or construction cost net of CENVAT and includes expenditure incurred upto the date the asset is put to use, less accumulated depreciation.

Technical know-how fees paid is capitalised under Plant and Equipment.

Temporary constructions / alteration costs are charged off in the same year.

Lease hold land represents Rs.199.15 lakhs(Previous year Rs.199.15 Lakhs) paid to State Industrial Promotion Corporation of Tamil Nadu Limited (SIPCOT), Chennai for 6.16 acres of land in their Oragadam Special Economic Zone( SEZ),Tamil Nadu. The lease period is 99 years.The plant at Oragadam has commenced the commercial production on 31st August 2012.

The full scale production is expected in the next fnancial year from which the cost of lease hold land will be amortised.

AS - 11 Accounting for effects in foreign exchange rates

a Purchase of imported raw materials, components, spare parts and capital goods are accounted based on retirement memos from banks. In respect of liabilities on import of raw materials, components, spare parts and capital goods which are in transit and where invoices / bills are yet to be received, the liability is accounted based on the market exchange rate prevailing on the date of the Balance Sheet.

b Year end foreign currency denominated liabilities and receivables are translated at exchange rates prevailing as at Balance Sheet date, the difference being charged/credited to respective revenue or capital account. Any difference between the forward rate and the exchange rate on the date of inception of forward contract is recognised as discount or premium over the period of the contract .

c Other income includes realised exchange fuctuation gain on Sale of products, Sale of services of Rs. 96.30 lakhs ( Previous year Rs.84.56 lakhs).

d Derivative transactions :

The Company uses forward exchange contracts to hedge its exposure in foreign currency in respect of Imports of Inputs.

AS - 12 Accounting for Government Grants

The Company has not received any Government grants.

AS - 13 Accounting for Investments

Investments are stated at cost. Provision for diminution in value is made only if such a decline is other than temporary in the opinion of the Management.

The cost of investments of 50,000 equity shares in wholly owned subsidiary Tumkur Property Holdings Limited, Chennai is Rs. 5 lakhs and its net worth is Rs. (5.39) lakhs as of 31st March, 2013. Hence the provision for diminution in value of Rs. 5 lakhs has been made in Statement of Proft & Loss.

During the year, out of the total cost of investment of Rs.710.50 lakhs in TVS Shriram Growth Fund, Chennai, investment costing Rs.570.00 lakhs was sold.The sum realised was Rs.599.07 lakhs.

Thus a proft of Rs. 29.07 lakhs was made. Further investment of Rs.21.84 lakhs was redeemed by TVS Shriram Growth Fund for a sum of Rs.37.31 lakhs, resulting a proft of Rs.15.47 lakhs.

Cost of investments held in TVS Shriram Growth Fund as on 31st March 2013 - Rs.118.66 lakhs (11866.18 units). The market value (NAV) of these units is Rs. 121.63 lakhs.

AS - 14 Accounting for amalgamation

This Standard is not applicable to the Company for the year under review.

AS - 15 Accounting for Retirement benefts

As per Accounting Standard 15 on "Employee Benefts", the disclosures of Employee benefts as defned in the Accounting Standard are given below:

(a) Short term Employee Benefts

Short term employee benefts payable within twelve months of rendering the service including accumulated leave encashment, at the Balance Sheet date, are recognised as an expense as per the Company''s scheme based on expected obligations on undiscounted basis.

(b) Long term Employee Benefts

In case of long term compensated absences i.e. long term leave encashment, the same is provided for based on actuarial valuation as at the Balance Sheet date, using the Projected Unit Credit Method.

Post retirement benefts comprising of employees Provident Fund and Gratuity Fund are accounted for as follows:

(a) Provident Fund : This is a defned contribution plan and contributions are paid to to the Regional Provident Fund Commissioner, Tambaram, Chennai-600045, are charged to revenue during the period. The Company has no further obligations for future provident fund benefts other than regular contributions.

AS - 16 Borrowing cost

All borrowing costs are charged to revenue except to the extent they are attributable to qualifying assets which are capitalised. During the year under review there was no borrowing attributable to qualifying assets and hence no borrowing cost was capitalised.

AS - 17 Segment reporting

Since the group of products sold and services rendered by the Company pertains to Information Technology related products and services, the operations of the Company relate to a single reportable segment.

AS - 18 Related Party disclosure

Disclosure is made as per the requirements of the Standard and as per the clarifcations issued by the Institute of Chartered Accountants of India.

AS - 19 Leases

This Standard is not applicable as the Company does not have any fnance lease agreement in force.

AS - 20 - Earnings Per Share

Earnings per share (Basic and Diluted) has been calculated by dividing the net proft for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period and disclosed on the face of statement of Proft and Loss in accordance with the Standard.

AS - 21 Consolidated Financial Statements

Consolidated Financial Statements of the Company and its wholly owned below mentioned Subsidiaries are enclosed.

(i) Tumkur Property Holdings Limited, Chennai

(ii) Prime Property Holdings Limited, Chennai

AS - 22 Accounting for taxes on income

Income Tax payable under the normal computation of taxable income and also under the provisions of Section 115JB, viz., Minimum Alternate Tax is "NIL".

Deferred tax liability resulting from timing differences between book and taxable proft including depreciation on acquired Business Rights, is accounted for, using the tax rates in force as on the Balance Sheet date.

AS - 23 Accounting for Investments in Associates in Consolidated Financial Statements

This Standard is not applicable to the Company for the year under review.

AS - 24 Discontinuing Operations

In respect of Contract Manufacturing Services business which was sold during 2007, the details of liabilities carried over in the fnancial statements are furnished below:

AS - 25 Interim Financial Reporting

Quarterly fnancial results are published in accordance with the requirement of Listing Agreement with Stock Exchanges. The recognition and measurement principle as laid down in the Standard have been followed in the preparation of these results.

AS - 26 Intangible Assets

The Company owns Intellectual Property Rights & Business Rights relating to its service business and the same is amortised over a period of ten years @9.5% per annum.

AS - 27 Financial Reporting of Interest in Joint Ventures

This Standard is not applicable to the Company.

AS - 28 Impairment of Assets

As on the Balance Sheet date the carrying amounts of the assets net of accumulated depreciation is not less than the recoverable amount of such assets. Hence there is no impairment loss on the assets of the Company.

AS - 29 Provisions, Contingent Liabilities and Contingent Assets

Warranty cost on sale of products has been determined based on management estimates/ historical data and provided for - Rs. 312.90 lakhs ( Previous Year - Rs. 328.17 Lakhs)

Contingent liabilities are disclosed in Note No.5 and Contested liabilities are disclosed in Note No.6.

Contingent assets are neither recognised nor disclosed.

AS - 30 Financial Instruments: Recognition and Measurement

This Standard is not applicable.

AS - 31 Financial Instruments: Presentation

This Standard is not applicable.

AS - 32 Financial Instruments: Disclosures

This Standard is not applicable.

 
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