Home  »  Company  »  TVS Motor Co. Ltd.  »  Quotes  »  Accounting Policy
Enter the first few characters of Company and click 'Go'

Accounting Policies of TVS Motor Company Ltd. Company

Mar 31, 2017

The accounting policies mentioned herein are relating to the standalone financial statements of the Company.

a) Brief description of the Company

TVS Motor Company Limited (‘the Company’) is a public limited company incorporated and domiciled in India whose shares are publicly traded. The registered office is located at “Jayalakshmi Estates”, 29, Haddows Road, Nungambakkam, Chennai - 600006, Tamil Nadu, India.

The Company manufactures two-wheelers, three-wheelers, parts and accessories thereof. The Company has manufacturing plants located at Hosur in Tamil Nadu, Mysuru in Karnataka and Nalagarh in Himachal Pradesh.

b) Basis of preparation

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

The financial statements have been prepared on the historical cost convention under accrual basis of accounting except for certain financial assets and liabilities (as per the accounting policy below), which have been measured at fair value.

The financial statements upto year ended March 31, 2016 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.

These financial statements are the first financial statements of the Company under Ind AS. Refer Note 31 and 32 for an explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position and financial performance.

c) Use of estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. The management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future period.

This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in the relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

d) Significant Estimates and judgments

The areas involving critical estimates or judgments are:

i) Estimation of fair value of unlisted securities- (Refer Note 28)

ii) Defined benefit obligation - (Refer Note 33)

iii) Estimation of useful life of Property, Plant and Equipment - Refer Note 1(f) and 1(g)

iv) Estimation and evaluation of provisions and contingencies relating to tax litigations - Refer Note 39(a).

e) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and net of returns, trade allowances, rebates and amounts collected on behalf of third parties. It includes Excise Duty but excludes Value Added Tax, Sales Tax and Service tax.

Sale of products:

Revenue from sale of products is recognised, when significant risks and rewards of ownership pass to the dealer / customer, as per terms of contract and it is probable that the economic benefits associated with the transaction will flow to the Company.

f) Property, Plant and Equipment

Freehold Land is carried at historical cost. All other items of Property, Plant and Equipment are stated at cost of acquisition or construction less accumulated depreciation / amortization and impairment, if any. Cost includes purchase price, taxes and duties, labour cost and directly attributable overheads incurred upto the date the asset is ready for its intended use. However, cost excludes Excise Duty, Value Added Tax and Service Tax, to the extent credit of the duty or tax is availed of.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as separate asset is derecognized when replaced. All other repairs and maintenance are charged to Profit or Loss during the reporting period in which they are incurred.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other gains/(losses).

g) Depreciation and amortization

i) Depreciation on tangible fixed assets is charged over the estimated useful life of the asset or part of the asset (after considering double/triple shift) as evaluated by a Chartered Engineer, on straight line method, in accordance with Part A of Schedule II to the Companies Act, 2013.

ii) Keeping in mind the rigorous and periodic maintenance programme followed by the Company, the estimated useful life of the tangible fixed assets as assessed by the Chartered Engineer and followed by the Company is given below:

iii) Tools and dies used for two wheelers are depreciated based on quantity of components manufactured and the life of tools and dies, subject to a maximum of 5 years. Tools and dies used for three wheeler operations are depreciated at 11.31 per cent.

iv) Residual values and useful lives are reviewed, and adjusted, if appropriate, for each reporting period.

v) On tangible fixed assets added / disposed off during the year, depreciation is charged on pro-rata basis from the date of addition / till the date of disposal.

vi) Depreciation in respect of tangible assets costing less than Rs.5,000/- is provided at 100%.

h) Intangible assets

Intangible assets acquired are recorded at their acquisition cost and are amortised on straight line basis over its useful life, viz., 2 years in the case of software and 6 to 10 years in the case of Design, Development and Technical knowhow.

i) Impairment

Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

j) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (‘the functional currency’). i.e in Indian rupee (INR) and all values are rounded off to nearest crores except otherwise indicated.

(ii) Transactions and balances

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction.

i) Foreign currency monetary assets and liabilities such as cash, receivables, payables, etc., are translated at year end exchange rates.

ii) Non-monetary items denominated in foreign currency such as investments, fixed assets, etc., are valued at the exchange rate prevailing on the date of transaction.

iii) Exchange differences arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise.

k) Hedge accounting

Derivatives are initially recognised at fair value on the date when a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Company designates certain derivatives as either:

- hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges)

- hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedges), or

- hedges of a net investment in a foreign operation (net investment hedges).

The Company documents at the inception of the hedging transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of various derivative financial instruments used for hedging purposes are disclosed in Note 28. Movements in the hedging reserve in shareholders’ equity are shown in Note 29. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the other comprehensive income in cash flow hedging reserve within equity, limited to the cumulative change in fair value of the hedged item on a present value basis from the inception of the hedge. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, within other gains/(losses).

When forward contracts are used to hedge forecast transactions, the Company generally designates only the change in fair value of the forward contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of the change in the spot component of the forward contracts are recognised in other comprehensive income in cash flow hedging reserve within equity. In some cases, the entity may designate the full change in fair value of the forward contract (including forward points) as the hedging instrument. In such cases, the gains and losses relating to the effective portion of the change in fair value of the entire forward contract are recognised in the cash flow hedging reserve within equity.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place).

When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss within other gains/(losses).

l) Inventories

Inventories are valued at the lower of cost and net realisable value.

i) Cost of raw materials, components, stores, spares, work-in-progress and finished goods are ascertained on a moving average basis.

ii) Cost of finished goods and work-in-progress comprises of direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Materials and supplies held for use in production of inventories are not written down if the finished products in which they will be used are expected to be sold at or above cost. Slow and non-moving material, obsolescence, defective inventories are duly provided for.

m) Employee benefits

i) Short term obligations:

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees’ services upto the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

ii) Other long term employee benefit:

The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are, therefore, measured at the present value of the expected future payments to be made in respect of services provided by employee upto the end of reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income.

The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

iii) Post-employment obligation:

The Company operates the following post-employment schemes:

a) Defined benefit plans such as gratuity for its eligible employees, pension plan for its senior managers; and

b) Defined contribution plans such as provident fund.

Pension and gratuity obligation:

The liability or asset recognised in the balance sheet in respect of defined benefit pension and gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by Actuaries using the projected unit credit method.

The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on the Government Bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income (net-off deferred tax). They are included in retained earnings in the statement of changes in equity and in the balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.

Provident fund:

The eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees’ salary. The contributions as specified under the law are made to the provident fund set up as irrevocable trust by the Company. The Company is generally liable for annual contributions and any shortfall in the fund assets based on the Government specified minimum rates of return and recognises such contributions and shortfall, if any, as an expense in the year in which it is incurred.

iv) Bonus plans:

The Company recognises a liability and an expense for bonuses. The Company recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

n) Taxes on income

Tax expense comprises of current and deferred taxes.

The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. The management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Where the Company is entitled to claim special tax deductions for investments in qualifying assets or in relation to qualifying expenditure (the Research and Development or other investment allowances), the Company accounts for such allowances as tax credits, which means that the allowance reduce income tax payable and current tax expense. A deferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred tax assets.

o) Government Grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.

Government grants receivable as compensation for expenses or financial support are recognized in profit or loss of the period in which it becomes available.

Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.

p) Provisions and contingent liabilities

i) Provision:

A provision is recorded when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated. The estimated liability for product warranties is recorded when products are sold based on technical evaluation.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expenses.

ii) Contingent liabilities:

Wherever there is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognised because (a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or (b) the amount of the obligation cannot be measured with sufficient reliability. Show cause notices are not considered as Contingent Liabilities unless converted into demand.

q) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker.

r) Leases

Leases of property, plant and equipment where the Company, as a lessee, has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the inception of lease at fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term, if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating lease. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

s) Cash and Cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

t) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

u) Investments and Other financial assets

i) Classification

The Company classifies its financial assets in the following categories:

- Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

- Those measured at amortized cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flow.

ii) Measurement

At Initial recognition, the Company measures a financial asset at its fair value plus (in the case of a financial asset not a fair value through profit or loss) transaction cost that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Debt Instruments:

Subsequent measurement of debt instruments depends on the company’s business model for managing the asset and the cash flow characteristics of the asset. There are two measurement categories into which the Company classifies its debt instruments.

Amortised Cost:

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is de-recognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.

Fair Value through profit or loss:

Assets that do not meet the criteria for amortised cost or Fair Value through Other Comprehensive Income (FVOCI) are measured at Fair Value Through Profit or Loss (FVTPL). A gain or loss on a debt investment that is subsequently measured at FVTPL and is not part of a hedging relationship is recognised in profit or loss and presented in the statement of profit and loss within other gains/(losses) in the period in which it arises.Interest income from these financial assets is included in other income.

Equity instruments:

The Company subsequently measures all investments in equity (except of the subsidiaries/associate) at fair value. Where the company’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Company’s right to receive payments is established.

Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately. Where the Company elects to measure fair value through profit and loss, changes in the fair value of such financial assets are recognised in the statement of profit and loss.

Investment in subsidiaries / associates:

Investment in subsidiaries / associates are measured at cost less provision for impairment.

iii) Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment mythology applied depends on whether there has been significant increase in credit risk. Note29 details how the company determines whether there has been a significant increase in credit risk.

For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected credit losses to be recognised from initial recognition of the receivables.

iv) Derecognition of financial assets

A financial asset is derecognised only when:

a) the Company has transferred the rights to receive cash flows from the financial asset or

b) the Company retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized, if the Company has not retained control of the financial asset. Where the company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

v) Income recognition Interest Income:

Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying value of a financial asset. While calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options), but does not consider the expected credit losses.

Dividends:

Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of dividend can be reliably measured.

v) Borrowings

Borrowings are initially recognised at fair value, net of transaction cost incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction cost) and the redemption amount is recognised in profit or loss over the period of the borrowings, using the effective interest method. Fees paid on the established loan facilities are recognised as transaction cost of the loan, to the extent that it is probable that some or all the facility will be drawn down.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other gain / (loss).

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

w) Current and Non-current classification

The Company presents assets and liabilities in the balance sheet based on current / non-current classification.

Cash or cash equivalent is treated as current, unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. In respect of other assets, it is treated as current when it is:

- expected to be realized or intended to be sold or consumed in the normal operating cycle

- held primarily for the purpose of trading

- expected to be realized within twelve months after the reporting period.

All other assets are classified as non-current.

A liability is treated as current when:

- it is expected to be settled in the normal operating cycle

- it is held primarily for the purpose of trading

- it is due to be settled within twelve months after the reporting period, or

- there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.


Mar 31, 2015

(a) Basis of preparation

The financial statements are prepared on a going concern basis under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles and Accounting Standards notified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014.

(b) Use of estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. The management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future period.

(c) Revenue recognition

The Company recognises revenue from the sale of products net of trade discounts, when the products are delivered to the dealer / customer or when delivered to the carrier, when risks and rewards of ownership pass to the dealer / customer. Export incentives are accounted on accrual basis.

Sales include income from services. Sale of products and services is presented gross of excise duty and service tax where applicable, and excludes other indirect taxes.

Dividend from investments is recognised when the right to receive the payment is established. Interest income is recognised on time proportion basis, determined by the amount outstanding and the rate applicable.

(d) Fixed assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation / amortization and impairment, if any.

Cost includes purchase price, taxes and duties, labour cost and directly attributable overhead expenditure incurred upto the date the asset is ready for its intended use. However, cost excludes Excise duty, VAT & Service tax, wherever credit of the duty or tax is availed of.

(e) Borrowing costs

Borrowing cost incurred for qualifying assets is capitalised upto the date the asset is ready for intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset. Borrowing costs also include exchange differences relating to long term foreign currency borrowings attributable to the acquisition of depreciable asset w.e.f. April 1,2007.

All other borrowing costs are recognised as an expense in the period for which they relate to.

(f) Depreciation and amortisation

(i) Depreciation on tangible fixed assets is charged over the estimated useful life (after consdering double/ triple shift) as evaluated by a Chartered Engineer, on straight line method, in accordance with Part A of Schedule II to the Companies Act 2013.

(ii) Keeping in mind the rigorous and periodic maintenance programme followed by the Company, the estimated useful life of the tangible fixed assets as assessed by the Chartered Engineer and followed by the Company is given below:

(iii) Tools and dies - for two wheelers based on quantity of components manufactured and the life of tools and dies, subject to a maximum of 3 years. Tools and dies used for three wheeler operations are depreciated at 11.31 per cent.

(iv) On tangible fixed assets added / disposed of during the year, depreciation is charged on pro-rata basis from the date of addition/till the date of disposal.

(v) Depreciation in respect of tangible assets costing less than Rs.5,000/- is provided at 100%.

1 SIGNIFICANT ACCOUNTING POLICIES - (continued)

(g) Intangible assets

Intangible assets in the form of Software acquired are recorded at their acquisition cost and are amortised over 2 years. Other intangible assets are recorded at their acquisition cost and are amortised over their useful life or 10 years, whichever is earlier.

(h) Impairment

At each Balance Sheet date, the Company ascertains whether there is any impairment of the fixed / intangible assets based on internal/external factors. An impairment loss is recognised, wherever the carrying amount of the assets exceeds its recoverable amount. Any such impairment loss is recognised by charging it to the Profit and Loss Statement.

(i) Transactions in foreign currencies

(i) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

(ii) Foreign currency monetary assets and liabilities such as cash, receivables, payables, etc., are translated at year end exchange rates.

(iii) Non-monetary items denominated in foreign currency such as investments, fixed assets, etc., are valued at the exchange rate prevailing on the date of transaction.

(iv) Exchange differences arising on settlement of transactions and translation of monetary items other than those covered by (v) below are recognised as income or expense in the year in which they arise.

(v) Exchange differences relating to long term foreign currency monetary assets / liabilities are accounted for with effect from April 1,2007 in the following manner:

- Differences relating to borrowings attributable to the acquisition of the depreciable capital asset are added to / deducted from the cost of such capital assets.

- Other differences are accumulated in Foreign Currency Monetary Item Translation Difference Account, to be amortized over the period till the date of maturity or March 31, 2020, whichever is earlier in accordance with the notification issued by the Ministry of Corporate Affairs on December 29, 2011.

(vi) Exchange differences relating to forward exchange contracts entered into for hedging i.e for mitigating the foreign currency fluctuation risk on an underlying asset or liability other than those covered under (v) above are recognised in the Profit and Loss Statement. Premium or discount on forward contracts other than those covered in (v) above is amortised over the life of such contracts and is recognised as income or expense.

(j) Hedge accounting

With effect from 1st April 2008, the Company has adopted the principles of hedge accounting prescribed by Accounting Standard (AS30) - "Financial Instruments Recognition and Measurement". Accordingly, the company designates certain pre shipment credit limits (PCFC) as hedging instruments and uses foreign currency derivative contracts to hedge its risks associated with foreign currency fluctuations relating to highly probable forecast transactions.

Recognition and Measurement

These derivative contracts are stated at fair value at each reporting date. Changes in the fair value of these contracts that are designated and effective as hedges of future cash flows are recognized directly in Hedging Reserve Account under Reserves and Surplus, net of applicable deferred income taxes and the ineffective portion is recognised immediately in the Profit and Loss Statement. Amounts accumulated in Hedging Reserve Account are transferred to Profit and Loss Statement in the respective periods in which the forecasted transactions are consummated.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. For forecasted transactions, any cumulative gain or loss on the hedging instrument recognised in Hedging Reserve Account is retained there until the forecasted transaction is consummated.

(k) Inventories

Inventories are valued at the lower of cost and net realisable value.

Cost of raw materials and consumables are ascertained on a moving weighted average basis. Attributable costs are allocated to work-in-process, stock-in-trade and finished goods.

(l) Investments

Long term investments are stated at cost. The carrying amount is reduced to recognise a decline, other than temporary, in the value of the investment. Current investments are stated at lower of cost and market value.

(m) Employee benefits

(i) Provident fund

The eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees'' salary. The contributions as specified under the law are made to the provident fund set up as irrevocable trust by the Company. The Company is generally liable for annual contributions and any shortfall in the fund assets based on the Government specified minimum rates of return and recognises such contributions and shortfall, if any, as an expense in the year in which it is incurred.

(ii) Pension

The Company has a pension plan which is a defined benefit plan, for its senior managers of the company. The liability for the pension benefits payable in future under the said plan, is provided for based on an independent actuarial valuation as at Balance Sheet date.

(iii) Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The Company has created an Employees'' Group Gratuity Fund which has taken a Group Gratuity Assurance Scheme with the Life Insurance Corporation of India. Company''s contributions are based on actuarial valuation arrived at the end of each year and charged to Profit and Loss Statement.

(iv) Leave encashment

The Company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilised leave at each balance sheet date on the basis of an independent actuarial valuation.

(n) Taxes on income

Tax expense comprises of current and deferred taxes.

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961. Current tax is net of credit for entitlement for Minimum Alternative Tax (MAT), which is recognised where there is a convincing evidence that the Company will pay normal Income tax during the specified period.

Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses, if any, are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets and liabilities are measured based on the tax rates that are expected to be applied in the period when asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted by the Balance Sheet date.

(o) Government Grants

Government grants are recognised on receipt. Grants identifiable to specific fixed assets are shown as a deduction from the gross value of the asset concerned in arriving at its book value. Where the government grants cannot be identified with any specific identifiable fixed assets, such amount is credited to capital reserve.

(p) Provisions and contingent liabilities

(i) Provision

A provision arising out of a present obligation, is recognised only when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated. The estimated liability for product warranties is recorded when products are sold based on technical evaluation.

(ii) Contingent liabilities

Wherever there is a possible obligation that may, but probably will not require an outflow of resources, the same is disclosed by way of contingent liability. Show cause notices are not considered as Contingent Liabilities unless converted into demand.


Mar 31, 2012

(a) AS - 14 Accounting for amalgamations

During the year, there was no amalgamation.

(b) AS - 15 Accounting for Employee benefits

Disclosure is made as per the requirements of the standard and the same is furnished below:

A Defined contribution plan

Contribution to provident fund is in the nature of defined contribution plan and is made to a recognised trust.

B Defined benefit plans

(i) The Company extends defined benefit plan in the form of leave salary to employees. In addition, the Company also extends defined benefit plan in the form of pension to senior managers of the Company. Provision for leave salary and pension is made on actuarial valuation basis.

(ii) The Company also extends defined benefit plan in the form of gratuity to employees. Contribution to gratuity is made to Life Insurance Corporation of India in accordance with the scheme framed by the Corporation.


Mar 31, 2011

1 Accounting Standards

(a) AS - 1 Disclosure of accounting policies

The accounts are maintained on accrual basis. The revenue and expenditure are accounted on a going concern basis.

(b) AS - 2 Valuation of inventories

Inventories are valued in accordance with the method of valuation prescribed by The Institute of Chartered Accountants of India at weighted average cost or net realisable value, whichever is less.

(c) AS - 3 Cash flow statements

The cash flow statement is prepared under "indirect method" and the same is annexed.

(d) AS - 4 Contingencies and events occuring after Balance Sheet date

An amount of Rs.22.52 crores was invested in PT. TVS Motor Company Indonesia, Jakarta, on 8th March 2011. The share certificate was issued on 9th April 2011 by the investee company, after completing the local formalities.

(f) AS - 6 Depreciation accounting

Depreciation has been provided under the straight line method at the rates prescribed under Schedule XIV of the Companies Act,1956 with the applicable shift allowance.

In respect of assets added / assets sold during the year, pro-rata depreciation has been provided at the rates prescribed under Schedule XIV.

(f) AS - 6 Depreciation accounting (continued)

Depreciation in respect of computers and vehicles has been provided at 30% and 18% respectively, which is higher than the rates prescribed under Schedule XIV. Depreciation in respect of tools and dies has been provided based on the quantity of components manufactured and the life of tools and dies.

Tools and dies relating to three wheeler operations have been capitalised and applicable depreciation provided thereon, considering the lower volume as compared to two wheelers.

Depreciation in respect of assets acquired during the year whose cost does not exceed Rs. 5,000/- has been provided at 100%.

(g) AS - 7 Construction contracts

This Accounting Standard is not applicable.

(h) AS - 8 Research & Development

This Accounting Standard is withdrawn.

(i) AS - 9 Revenue recognition

The income of the Company is derived from sale (net of trade discounts) of automotive vehicles, parts thereof, lubricant oil, machinery and equipment and provision of technical know-how, and includes realised exchange gain on exports of Rs.1.65 crores (last year gain of Rs.0.55 crores). Sale of goods is recognised on despatch of goods to customers.

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

Dividend from investments in shares / units is recognised when the Company / Mutual Fund, in which they are held, declares the dividend and the right to receive the same is established.

The interim dividend declared in July 2011 by the wholly owned subsidiary of the Company viz., Sundaram Auto Components Limited, Chennai for the year ended 31st March 2011 is recognised as revenue only in the year 2011-12.

(k) AS - 11 Accounting for effects of changes in foreign exchange rates 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 advance copies of documents at the market exchange rate prevailing on the date of the Balance Sheet.

Sales include realised exchange fluctuation on exports.

In terms of the Companies (Accounting Standards) Amendment Rules, 2009, on Accounting Standard - 11, notified by the Government of India on 31st March 2009, the Company has opted to adjust the changes in foreign exchange rates relating to long term foreign currency monetary items to the carrying cost of fixed assets and to Foreign Currency Monetary Item Translation Difference Account. The impact is set out below:

Derivative Instruments

Derivative contracts are entered into by the Company only based on underlying transactions. The Company has not entered into any derivative contracts of a speculative nature.

Currency swaps - The Company had earlier entered into seven currency swap contracts covering the total external commercial borrowings of USD 100 mn. (last year seven contracts covering USD 100 mn.), fixing the repayment liability of the Company in Indian Rupees. Consequent to repayment of part of the above loans, currency swap contracts outstanding at year end are only to the extent of USD 13 mn. (last year USD 45 mn.)

Interest Rate Swap (IRS) - The Company had earlier entered into seven derivative contracts in respect of total external commercial borrowings amounting to USD 100 mn. (last year seven contracts in respect of USD 100 mn.) to convert floating interest rate to fixed interest. Consequent to repayment of part of the above loans, interest rate swap contracts outstanding at the end of the year are only to the extent of USD 13 mn. (last year USD 45 mn.)

(I) AS - 12 Accounting for Government Grants

The Company has not received any grant.

(m) AS - 13 Accounting for Investments

Investments are valued at cost. Provision for diminution in the carrying cost of investments is made if such diminution is other than temporary in nature in the opinion of the management. Accordingly, a sum of Rs.3.36 crores has been provided during the year.

(n) AS - 14 Accounting for amalgamations During the year, there was no amalgamation.

(o) AS - 15 Accounting for Employee benefits

Disclosure is made as per the requirements of the standard and the same is furnished below:

A Defined contribution plan

Contribution to provident fund is in the nature of defined contribution plan and is made to a recognised trust.

B Defined benefit plans

(i) The Company extends defined benefit plan in the form of leave salary to employees. In addition, the Company also extends defined benefit plan in the form of pension to senior managers of the Company. Provision for leave salary and pension is made on actuarial valuation basis.

(ii) The Company also extends defined benefit plan in the form of gratuity to employees. Contribution to gratuity is made to Life Insurance Corporation of India in accordance with the scheme framed by the Corporation.

(p) AS - 16 Borrowing costs

The borrowing costs have been treated in accordance with Accounting Standard on borrowing costs issued by The Institute of Chartered Accountants of India.

(q) AS - 17 Segment reporting

The Company operates in only one segment viz., automotive vehicles. Hence the Accounting Standard on segment reporting is not applicable.

(r) AS - 18 Related party disclosures

Disclosure is made as per the requirements of the standard and the same is furnished below:

List of Related Parties as per clause 3(a) of the standard where control exists.

Reporting entity : TVS Motor Company Limited, Chennai

Period From To

Holding company Sundaram-Clayton Limited, Chennai 01-04-2010 31-03-2011

Ultimate holding company

T V Sundram Iyengar & Sons Limited, Madurai 01-04-2010 31-03-2011

Subsidiaries

Sundaram Auto Components Limited, Chennai 01-04-2010 31-03-2011

TVS Motor Company (Europe) B.V, Amsterdam 01-04-2010 31-03-2011

TVS Motor (Singapore) Pte. Limited, Singapore 01-04-2010 31-03-2011

PT. TVS Motor Company Indonesia, Jakarta 01-04-2010 31-03-2011

TVS Energy Limited, Chennai 01-04-2010 31-03-2011

TVS Housing Limited, Chennai 21-06-2010 31-03-2011

TVS Wind Power Limited, Chennai 16-02-2011 31-03-2011

TVS Wind Energy Limited, Chennai 16-02-2011 31-03-2011

Fellow subsidiaries

Anusha Investments Limited, Chennai 01-04-2010 31-03-2011

TVS Investments Limited, Chennai 01-04-2010 31-03-2011

Sundaram Investment Limited, Chennai 01-04-2010 31-03-2011

TVS Electronics Limited,Chennai 01-04-2010 31-03-2011

Tumkur Property Holdings Limited, Chennai 01-04-2010 31-03-2011

Prime Property Holdings Limited, Chennai 01-04-2010 31-03-2011

TVS-E Access (India) Limited, Chennai 01-04-2010 31-03-2011

TVS-E Servicetec Limited, Chennai 01-04-2010 31-03-2011

TVS Capital Funds Limited, Chennai 01-04-2010 31-03-2011

Sravanaa Properties Limited, Chennai 01-04-2010 31-03-2011

Southern Roadways Limited, Madurai 01-04-2010 31-03-2011

Sundaram Industries Limited, Madurai 01-04-2010 31-03-2011

The Associated Auto Parts Limited, Mumbai 01-04-2010 31-03-2011

TVS Interconnect Systems Limited, Madurai 01-04-2010 31-03-2011

TVS Logistics Services Limited, Madurai 01-04-2010 31-03-2011

Lucas-TVS Limited, Chennai 01-04-2010 31-03-2011

Sundaram Textiles Limited, Madurai 01-04-2010 31-03-2011

NSM Holdings Limited, Madurai 01-04-2010 31-03-2011

TVSNet Technologies Limited, Madurai 01-04-2010 31-03-2011

TOR Projects & Services Limited, Madurai 01-04-2010 31-03-2011

NK Telecom Products Limited, Madurai 01-04-2010 31-03-2011

NK Telesystems Limited, Madurai 01-04-2010 31-03-2011

TVS Automotive Europe Limited, UK 01-04-2010 31-03-2011

TVS C J Components Limited, UK 01-04-2010 31-03-2011

TVS Logistics Iberia S.L., Spain 01-04-2010 31-03-2011

TVS Logistics Siam Limited, Thailand 01-04-2010 31-03-2011

TVS Autoserv GmbH, Germany 01-04-2010 31-03-2011

TVS Logistics Investment UK Limited, UK 01-04-2010 31-03-2011

YeleStre Holdings Limited, UK 01-04-2010 31-03-2011

Multipart (Holdings) Limited, UK 01-04-2010 31-03-2011

Multipart Solutions Limited, UK 01-04-2010 31-03-2011

Multipart Limited, UK (formerly IH Crick Property Co Limited, UK) 01-04-2010 31-03-2011

Msys Software Solutions Limited, UK 01-04-2010 31-03-2011

Globe Dynamics Limited, UK 01-04-2010 31-03-2011

Globe Transport Products Limited, UK 01-04-2010 31-03-2011

TVS Dynamic Global Freight Services Limited, Chennai 01-04-2010 31-03-2011

TVS Commutation Solutions Limited, Madurai 01-04-2010 31-03-2011

Lucas Indian Service Limited, Chennai 01-04-2010 31-03-2011

TVS Automotive Systems Limited, Chennai 01-04-2010 31-03-2011

Fellow subsidiaries (continued)

Iranian Automotive Systems, Iran 01-04-2010 31-03-2011

TVS Automobile Solutions Limited, Madurai 01-04-2010 31-03-2011

Sundaram Lanka Tyres Limited, Sri Lanka 01-04-2010 31-03-2011

TVS Logistics Investments USA Inc., USA 01-04-2010 31-03-2011

TVS America Inc., USA 01-04-2010 31-03-2011

Manufacturers Equipments & Supply Co., USA 01-04-2010 31-03-2011

TVS RHR Finished Vehicles Logistics Solutions Limited, Chennai (formerly RHR Car Transportation Solutions Limited, Chennai) 01-04-2010 31-03-2011

TVS GMR Aviation Logistics Limited, Madurai 01-04-2010 31-03-2011

Associate company

TVS Lanka (Private) Limited, Colombo, Sri Lanka 01-04-2010 31-10-2010

Joint venture

TVS Andina S.A., Colombia 01-04-2010 28-03-2011

List of Related Parties as per clause 3(c) of the standard.

Key Management Personnel

Mr. Venu Srinivasan, Chairman & Managing Director

Enterprise over which key management personnel and his relatives have significant influence

Harita-NTI Limited, Chennai 01-04-2010 31-03-2011

(w) AS - 23 Accounting for investments in associates in consolidated financial statements

There is no associate company. TVS Lanka (Private) Limited, Colombo, Sri Lanka ceased to be an associate with effect from 01-11-2010.

(x) AS - 24 Discontinuing operations

During the year, the Company has not discontinued any of its operations.

(y) AS - 25 Interim financial reporting

The Company has elected to publish quarterly financial results which were subject to limited review by the statutory auditors.

(aa) AS - 27 Financial Reporting of interests in joint venture

The joint venture agreement of the Company with Motor Andina S.A., by which TVS Andina S.A., Colombia, came into existence stands terminated with effect from 28th March 2011.

(ab) AS - 28 Impairment of assets

In respect of tools and dies meant for manufacture of certain slow moving models, accelerated depreciation amounting to Rs.10.39 crores (last year Rs.11.77 crores) has been provided during the year.

(ac) AS - 29 Provisions, contingent liabilities and contingent assets


Mar 31, 2010

1 Accounting Standards

(a) AS -1 Disclosure of accounting policies

The accounts are maintained on accrual basis. The revenue and expenditure are accounted on a going concern basis.

(b) AS - 2 Valuation of inventories

Inventories are valued in accordance with the method of valuation prescribed by The Institute of Chartered Accountants of India at weighted average rates.

(c) AS - 3 Cash flow statements

The cash flow statement is prepared under "indirect method" and the same is annexed.

(d) AS - 4 Contingencies and events after Balance Sheet date

Amount of Rs.22.75 Crores was invested in TVS Motor (Singapore) Pte. Ltd.,

Singapore on 18th March, 2010.The share allotment was made on

19th March, 2010 and the share certificate was issued on 6th April, 2010.

(i) New Product Launch Expenses:

Until and including last year, the expenditure under this head was charged off over 36 months (vide. Sch no. XV). Out of expenditure treated as pending to be written off as on 31.03.2009 viz., Rs.67.87 crores, a sum of Rs.38.14 crores has been written off as per accounting policy followed upto 31.03.2009 and the balance of Rs.29.73 crores will be written off as per earlier accounting practice of charging over 36 months. However, from this accounting year the expenditure on new product launch namely Rs. 10.69 crores incurred during the current year is fully charged off. This has the effect of reducing the profit of the current year by Rs.9.21 crores.

(ii) Voluntary Retirement Scheme:

The expenditure incurred under Voluntary Retirement Scheme (VRS) was written off over a period of 5 years until 31.03.2009. However, the expenditure incurred during this year viz., Rs.2.20 crores and the balance of expenditure as on 01.04.2009 that was not written off viz., Rs.5.15 crores aggregating to Rs.7.35 crores is fully charged off during the year in line with the requirements of AS 15.

(f) AS - 6 Depreciation accounting

Depreciation has been provided under the straight line method at the rates prescribed under Schedule XIV of the Companies Act, 1956 with the applicable shift allowance.

In respect of assets added / assets sold during the year, pro-rata depreciation has been provided at the rates prescribed under Schedule XIV.

(f) AS - 6 Depreciation accounting (Contd.)

Depreciation in respect of Computers and Vehicles has been provided at 30% and 18% respectively, which is higher than the rates prescribed under Schedule XIV.

Depreciation in respect of tools and dies has been provided based on the quantity of components manufactured.

Tools and dies relating to three wheeler operations have been capitalised and applicable depreciation provided thereon, considering the lower volume as compared to two wheelers.

Depreciation in respect of assets acquired during the year whose cost does not exceed Rs.5,000/- has been provided at 100%.

(g) AS - 7 Construction contracts

This Accounting Standard is not applicable.

(h) AS - 8 Research & Development

This Accounting Standard is withdrawn.

(i) AS - 9 Revenue recognition .

The income of the Company is derived from the sale of automotive vehicles, parts thereof, lubricant oil, machinery and equipment (net of trade discounts) and provision of technical know-how, and includes realised exchange fluctuations on exports (gain of Rs.0.55 crores). Sale of goods is recognised on despatch of goods to customers.

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

Dividend from investments in shares / units is recognised when the Company / Mutual Fund, in which they are held, declares a dividend and the right to receive the same is established.

(j) AS -11 Accounting for effects of changes in foreign exchange rates

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 advance copies of documents at the market exchange rate prevailing on the date of the Balance Sheet.

Sales include realised exchange fluctuation on exports.

In terms of the Companies (Accounting Standards) Amendment Rules, 2009, on Accounting Standard AS 11, notified by the Government of India on 31st March 2009, the Company has opted to adjust the changes in foreign exchange rates relating to long term foreign currency monetary items to the carrying cost of fixed assets and to Foreign Currency Monetary Item Translation Difference Account. The impact is set out below:

Consequential charge / credit to depreciation has been effected in the current year.

Derivative Instruments

Derivative contracts are entered into by the Company only based on underlying transactions. The Company has not entered into any derivative contracts of a speculative nature.

Currency swaps - The Company entered into seven currency swap contracts covering the total external commercial borrowings of USD 100 mn. (last year seven contracts covering USD 100 mn.), fixing the repayment liability of the Company in Indian Rupees. Consequent to repayment of part of the above loans, currency swap contracts outstanding at the year end are only to the extent of USD 45 mn.

Interest Rate Swap (IRS) - The Company entered into seven derivative contracts in respect of total external commercial borrowings amounting to USD 100 mn. (last year seven contracts in respect of USD 100 mn.) to convert floating interest rate to fixed interest. Consequent to repayment of part of the above loans, interest rate swap contracts outstanding at the end of the year is only to the extent of USD 45 mn.

(l) AS -12 Accounting for Government Grants

The Company has not received any grants.

(m) AS-13 Accounting for Investments

Investments are valued at cost. Provision for diminution in the carrying cost of investments is made if such diminution is other than temporary in nature in the opinion of the management.

(n) AS -14 Accounting for amalgamations

During the year, there was no amalgamation.

(0) AS -15 Accounting for Employee benefits

Disclosure is made as per the requirements of the standard and the same is furnished below:

A Defined contribution plan

Contribution to provident fund is in the nature of defined contribution plan and are made to a recognised trust.

B Defined benefit plans

(i) The Company extends defined benefit plan in the form of leave salary to employees. In addition, the Company also extends defined benefit plan in the form of pension to senior managers of the Company. Provision for leave salary and pension is made on actuarial valuation basis.

(ii) The Company also extends defined benefit plan in the form of gratuity to employees. Contribution to gratuity is made to Life Insurance Corporation of India in accordance with the scheme framed by the Corporation.

(q) AS -17 Segment reporting

The Company operates in only one segment viz., automotive vehicles. Hence the Accounting Standard on segment reporting is not applicable.

(r) AS -18 Related party disclosures

Disclosure is made as per the requirements of the standard and the same is furnished below:

List of related parties

Reporting entity TVS Motor Company Limited, Chennai

Subsidiary companies 1. Sundaram Auto Components Limited, Chennai

2. TVS Motor Company (Europe) B.V., Amsterdam

3. TVS Motor (Singapore) Pte. Limited, Singapore

4. PT. TVS Motor Company Indonesia, Jakarta

5. TVS Energy Limited, Chennai

Holding company Sundaram-Clayton

Limited, Chennai

Ultimate holding company TV Sundram Iyengar & Sons Limited, Madurai

Fellow subsidiaries 1 Anusha Investments Limited, Chennai

2 TVS Investments Limited, Chennai

3 TVS Electronics Limited, Chennai

4 TVS Capital Funds Limited, Chennai

5 TVS-E Access India Limited, Chennai

6 TVS-E Servicetec Limited, Chennai

7 Sravanaa Properties Limited, Chennai

8 Tumkur Property Holdings Limited, Chennai

9 Prime Property Holdings Limited, Chennai

10 Southern Roadways Limited, Madurai

11 Sundaram Industries Limited, Madurai

12 The Associated Auto Parts Limited, Mumbai

13 TVS Interconnect Systems Limited, Madurai

14 TVS Logistics Services Limited, Madurai

15 Lucas-TVS Limited, Chennai

16 Sundaram Textiles Limited, Madurai

17 NSM Holdings Limited, Madurai

18 TVS Net Technologies Limited, Madurai

19 TOR Projects & Services Limited, Madurai

20 NK Telecom Products Limited, Madurai

21 NK Telesystems Limited, Madurai

22 TVS Automotive Europe Limited, United Kingdom

23 TVS C J Components Limited, United Kingdom

24 TVS Logistics Iberia S.L., Spain

25 TVS Logistics Siam Limited, Thailand

26 TVS Autoserve GmbH, Germany

27 TVS Logistics Investment UK Limited, United Kingdom

28 YeleStre Holdings Limited, United Kingdom

29 Multipart (Holdings) Limited, United Kingdom

30 Multipart Solutions Limited, United Kingdom

31 IH Crick Property Co Limited, United Kingdom

32 Msys Software Solutions Limited, United Kingdom

33 Globe Dynamics Limited, United Kingdom

34 Globe Transport Products Limited, United Kingdom

35 TVS Dynamic Global Freight Services Limited, Chennai

36 TVS Commutation Solutions Limited, Madurai

37 Lucas Indian Service Limited, Chennai

38 TVS Automotive Systems Limited, Chennai

39 Iranian Automotive Systems, Iran

Associate companies a) TVS Lanka (Private) Limited, Colombo

b) TVS Finance and Services Limited, Chennai (upto 03.03.2010)

Joint Venture TVS Andina S.A., Colombia

Key management personnel Mr.Venu Srinivasan, Chairman & Managing Director

Enterprises over which Key 1 Harita-NTI Limited, Chennai

management personnel and 2 TVS Motor Foundation, Chennai

his relatives have significant influence

(w) AS - 23 Accounting for investments in associates in consolidated financial statements

Equity method of accounting is followed in the consolidated accounts in respect of investments in associate company, viz., TVS Lanka (Private) Limited, Colombo.

(x) AS - 24 Discontinuing operations

During the year the Company has not discontinued any of its operations.

(y) AS - 25 Interim financial reporting

The Company has elected to publish quarterly financial results which were subject to limited review by the statutory auditors.

(aa) AS - 27 Capital commitments of reporting entity in joint venture

The assets, liabilities, income and expenses of the jointly controlled entity (TVS Andina S.A, Colombia) have been recognised on a proportionate consolidation basis in the consolidated financial statements as prescribed in the Accounting Standard.

(ab) AS - 28 Impairment of assets

In respect of tools and dies meant for manufacture of certain slow moving models, accelerated depreciation amounting to Rs. 11.77 crores (last year Rs. 3.27 crores) has been provided during the year.

(ac) AS - 29 Provisions, contingent liabilities and contingent assets

(i) Provisions

In respect of warranty obligations, provision is made in accordance with terms of sale of vehicles vide schedule XIV (c) to the Balance Sheet.

(ii) Contingent liabilities

The amount for which the Company is contingently liable is disclosed in note no. 11.

(iii) Contested liabilities are detailed in note no. 12.

Find IFSC