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, 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