Mar 31, 2023
(a) Includes borrowing cost capitalised to the extent of J 214.50 Million (H 442.12 Million) including J 116.95 Million (Nil) capitalised from CWIP of previous year.
(b) Buildings include buildings constructed on leasehold land with gross book value of J 13,974.22 Million (H 13,488.13 Million) and net book value of J 9,334.21 Million (H 9,325.37 Million).
(c) Refer note B13 (a) for details on pledges and securities.
(d) Freehold land includes land of J 528.30 Million (H Nil) acquired by the Company through the agreement to sale and is in the process of getting the title deeds transferred to its name.
(f) The rights, preferences and restrictions attached to equity shares of the Company
The Company has only one class of issued shares referred to as equity shares having a par value of H 1 each. The holder of equity shares are entitled to one vote per share.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(g) Over the period of five years immediately preceding March 31, 2023 and March 31, 2022, neither any bonus shares were issued nor any shares were allotted for consideration other than cash. Further, no shares were bought back during the said period.
Borrowing costs capitalized / transferred to capital work in progress during the year is J 97.55 Million (H 559.07 Million) and the capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the Company''s general borrowings during the year, in this case 6.77% p.a. (7.58% p.a.).
The amount of write-down of inventories to net realizable value recognized as an expense was J 292.26 Million (H 187.52 Million).
3 Description of nature and purpose of each reservei. Securities premium reserve
Securities premium reserve is used to record the premium on issue of shares. The reserve will be utilised in accordance with provisions of the Act.
General reserve is created from time to time by way of transfer of profits from retained earnings for appropriation purposes. General reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income.
iii. Capital reserve on Apollo (Mauritius) Holdings Private Limited ("AMHPL") merger
AMHPL erstwhile (subsidiary company) was merged with the Company resulting in a capital reserve.
iv. Debenture redemption reserve
The Company is required to create a debenture redemption reserve out of the profits which are available for redemption of debentures.
This balance represents subsidy received in earlier years under New Industrial Policy 2007 of the Government of Tamil Nadu for expansion and employment generation within SIPCOT Industrial park.
vi. Capital redemption reserve
This balance has been created in accordance with provision of the Act for the buy back of equity shares from the market.
vii. Capital reserve on forfeiture of shares
This reserve was created on forfeiture of shares by the Company. The reserve is not available for the distribution to the shareholders.
Retained earnings are created from the profit of the Company, as adjusted for distribution to owners, transfer to other reserve, remeasurement of defined benefit plan, etc.
It represents mark-to-market valuation of effective hedges as required by Ind AS 109 - Financial Instruments.
Revaluation surplus represents increase in carrying amount arising on revaluation of land and building recognised in other comprehensive income and accumulated in reserves.
4 Leasesi Nature of leasing activities
The Company has entered into lease arrangements for various warehouses, plant and equipments, and offices that are renewable on a periodic basis with approval of both lessor and lessee.
ii The Company does not have any lease commitments towards variable rent as per the contract.
iii Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset to another party, the right-of-use asset can only be used by the Company. Leases are either noncancellable or may only be cancelled by incurring a substantive termination fee. The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over office buildings and factory premises the Company must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease.
7 Government grants(a) Investment promotion subsidy
The Government of Tamil Nadu (GoTN) has sanctioned a structured package of assistance to the Company for setting up/expansion of their project in the state of Tamil Nadu, pursuant to which a Memorandum of Understanding (MoU) executed between GoTN and the Company.
The Company is entitled, interalia, for refund of an amount equal to Net Output (VAT CST)/SGST paid by the Company to GoTN in the form of Investment Promotion Subsidy (referred to as Phase I). As the Company has fulfilled the relevant obligations, the Company has recognized subsidy income of J 801.35 Million (H 995.08 Million) as other operating income,
being the eligible amount of refund of Net Output (VAT CST) /SGST paid by the Company to GoTN.
In addition to above, the Company is entitled, for refund of an amount equal to 1% of the capital investment for a period of 12 years to be payable in equal annual instalments in the form of Investment Promotion Capital Subsidy (referred to as Phase II). Accordingly, the Company has recognised grant receivable at its fair value, amounting to J 1,686.66 Million (H 1,812.72 Million) under non-current financial assets and J 270 Million (H 270 Million) under current financial assets. Deferred grant income amounting J 1,492.14 Million (H 1,627.79 Million) is recognised under other noncurrent liabilities and J 135.65 Million (H 135.65 Million) under other current liabilities. Deferred income will be recognised in the statement of profit or loss on a
systematic basis over the useful life of the asset (15 years). During the year, the Company has recorded grant income amounting to J 135.65 Million (H 135.65 Million) under Other operating income and accretion of grant recoverable as finance income amounting to J 144.94 million (H 154.20 million) under Other income.
Also, the Government of Andhra Pradesh (GoAP) has sanctioned a structured package of assistance to the Company for setting up of their project in the state of Andhra Pradesh, pursuant to which a Memorandum of Understanding (MoU) executed between GoAP and the Company. The Company is entitled, interalia, for refund of an amount equal to Net SGST paid by the Company to GoAP in the form of Investment Promotion Subsidy. As the Company has fulfilled the relevant obligations, the Company has recognized subsidy income of J 169.04 Million (H 80.79 Million) as other operating income, being the eligible amount of refund of Net SGST paid by the Company to GoAP.
(b) Export Promotion Capital Goods
The Company had imported Property, plant and equipment under the Export Promotion Capital Goods (EPCG) scheme wherein the Company is allowed to import capital goods including spares without payment of customs duty, subject to certain export obligations which should be fulfilled within specified time period. During the year, the custom duty benefit received amounts to J 281.46 Million (H 2,591.06 Million) with a corresponding increase in the value of property, plant and equipment and Capital Work in Progress. The grant amounting to J 2,266.57 Million (H 1,540.68 Million) where export obligations have been met, have been recognized in Statement of Profit and Loss as other
operating income. At the year end, the portion of grant for which the export obligation has not been met is retained in deferred revenue under other current & non current liabilities.
8 Employee benefit liability A. Defined contribution plans
a. Superannuation plan: The Company contributes a sum equivalent to 15% of the eligible employees'' basic salary to a superannuation fund administered and maintained by the Life Insurance Corporation of India (LIC). The Company has no liability for future superannuation fund benefits other than its annual contribution and recognizes such contributions as an expense in the year incurred. The amount of contribution made by the Company to Superannuation Fund is J 132.40 Million (H 152.71 Million).
b. Provident fund: Contributions are made to the Company''s employees'' provident fund trust / regional provident fund in accordance with the fund rules. The interest rate payable to the beneficiaries every year is being notified by the Government.
In the case of contributions to the trust, the Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate and recognises such obligation as an expense.
The amount of contributions made by the Company to employees'' provident fund trust / regional provident fund is J 360.46 Million (H 326.44 Million).
Gratuity
The Company operates a defined benefit gratuity plan. Every employee who has completed five years or more of service receives gratuity on leaving the Company as per the Payments of Gratuity Act, 1972. The scheme is funded with LIC.
The following table summarizes the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the balance sheet for the respective plan:
9 Financial instrument A. Capital risk management
The capital structure of the Company consists of debt, cash and cash equivalents and equity attributable to equity shareholders of the Company which comprises issued share capital (including premium) and accumulated reserves disclosed in the Statement of Changes in Equity.
The Company''s capital management objective is to achieve an optimal weighted average cost of capital while continuing to safeguard the Company''s ability to meet its liquidity requirements (including its commitments in respect of capital expenditure) and repay loans as they fall due.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is debt divided by total equity. The Company''s policy is to keep an optimum gearing ratio. The Company includes within debt, interest bearing loans and borrowings.
a. Market risk
The Company''s activities expose it primarily to the financial risk of changes in foreign currency exchange rates and changes in interest rates. The Company enters into a variety of derivate financial instrument to manage its exposure to foreign currency and interest rates. There have been no changes to the Company''s exposure to market risk or the manner in which it manages and measures the risk in recent past.
i) Currency risk
The Company''s exposure arises mainly on import of raw material and capital items and export of finished goods. The Company follows a policy of matching of import and export exposures (natural hedge) to reduce the net exposure in any foreign currency. Whenever the natural hedge is not available or is not fully covering the foreign currency exposure of the Company, management uses certain derivative instruments to manage its exposure to the foreign currency risk. Foreign currency transactions are managed within approved policy parameters.
The Company is exposed to interest rate risk as the Company borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. The use of interest rate swaps are also entered into, especially to hedge the floating rate borrowings or to convert the foreign currency floating interest rates to the domestic currency floating interest rates.
Interest on variable rate borrowings are converted at fixed rate since company had hedged interest rate risk fully and effectively with the hedging instruments.
b) Credit risk
Credit risk is the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company had adopted a policy of only dealing with creditworthy customers.
In many cases an appropriate advance or letter of credit / bank guarantee is taken from the customers to cover the risk. In other cases credit limit is granted to customer after assessing the credit worthiness based on the information supplied by credit rating agencies, publicly available financial information or its own past trading records and trends.
At the year end, the Company did not consider there to be any significant concentration of credit risk which had not been adequately provided for. The carrying amount of the financial assets recorded in the financial statements, grossed up for any allowances for losses, represents the maximum exposure to credit risk.
c) Liquidity risk
The Company manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities for the Company.
The Company had established an appropriate liquidity risk management framework for it''s short term, medium term and long term funding requirement.
d) Commodity risk
The Company has risk of price volatility and supply against its major raw materials and management is mitigating this risk by taking strategic decision on regular basis.
The Company had an interest rate swap agreement whereby the Company receives a fixed rate of interest of 6.5% to 7.5% and pays interest at a variable rate. The swap is being used to hedge the exposure to changes in the fair value of its fixed rate secured loan. The decrease in fair value of the interest rate swap had been recognised in finance costs and offset with a similar gain on the bank borrowings. The ineffectiveness recognised in March 31, 2023 was immaterial.
Foreign exchange forward contracts
While the Company entered into other foreign exchange forward contracts with the intention of reducing the foreign exchange risk of expected sales and purchases, these other contracts are not designated in hedge relationships and are measured at fair value through profit or loss.
iii. Fair value of financial assets / liabilities (other than investment in subsidiaries) that are not measured at fair value
The management considers that the carrying amount of financial assets and financial liabilities recognised at amortised cost in the balance sheet approximates their fair value.
* Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
* Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
* Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
12 Contingent liabilities a H Million |
||
Particulars |
For the year ended March 31, 2023 |
For the year ended March 31, 2022 |
Sales tax |
65.23 |
60.77 |
Income tax |
1,771.63 |
1,670.51 |
Claims against the Company not acknowledged as debts - employee related |
116.51 |
160.29 |
- others |
35.80 |
32.30 |
Excise duty, Custom duty and Service tax * |
671.42 |
661.81 |
* Show-cause notices received from various Government Authorities pending formal demand notices have not been considered as contingent liabilities.
In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the ground that there are fair chances of successful outcome of appeals.
b The Competition Commission of India (''CCI'') on February 2, 2022 had released its order dated August 31, 2018 on the Company, other Tyre Manufacturers and Automotive Tyre Manufacturer Association alleging contravention of the provisions of the Competition Act, 2002 in the year 2011-12 and imposed a penalty of H 4,255.30 Million on the Company. The Company had filed an appeal against the CCI Order before the Honourable National Company Law Appellate Tribunal (NCLAT). NCLAT in its order dated December 1, 2022, had remanded the matter back to the CCI to hear the parties again and review its findings. CCI has filed an Appeal before the Supreme Court against the Order passed by the NCLAT. The Company is also a Respondent in the said Appeal. Pending disposal of the matter and based on legal advice the Company believes that it has a strong case and accordingly no provision is considered in these consolidated financial statements.
13 Capital and other commitments |
H Million |
|
Particulars |
For the year ended March 31, 2023 |
For the year ended March 31, 2022 |
A Capital commitments |
||
Estimated amount of contracts remaining to be executed on capital account and not provided for |
747.46 |
3,963.51 |
B Other commitments |
||
Corporate guarantee given* (refer note C24) |
1,471.39 |
1,849.54 |
*The company had provided corporate guarantee on behalf of its wholly owned subsidiary Apollo Tyres |
Cooperatief U.A. |
14 The Company conducts international transactions with associated enterprises. For the current year, the management maintained necessary documents as prescribed by the Income Tax Act, 1961 to establish that these international transactions are at arm''s length and that aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
17 Disclosure of related party transactions in accordance with Ind AS 24 - Related Party Disclosures (Contd..)
Certain KMPs also participate in post employment benefits plans provided by the Company. The amount in respect of these towards the KMPs can not be segregated as these are based on actuarial valuation for all employees of the Company.
*This represents undiscounted value.
18 Disclosure required by Regulation 34 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 regarding the related parties19 Segment reporting
The Company has opted to provide segment information in its consolidated Ind AS financial statements in accordance with para 4 of Ind AS 108 - Operating Segments.
20 Events after the balance sheet date
The Board of Directors have recommended a final dividend of J 4.00 per share amounting to J 2,540.40 Million and a Special Dividend of J 0.50 per share amounting to J 317.55 Million on occasion of 50th Annual General Meeting (AGM) of the Company, aggregating to J 4.50 (H 3.25) per share amounting to J 2,857.95 Million (H 2,064.08 Million) on equity shares of Re. 1/- each for the year, subject to approval from Shareholders.
The Company receives payment from customers based on a billing schedule, as established in the contracts with customers. Trade receivables are recognised when the right to consideration becomes unconditional. Contract liability relates to payments received in advance of performance under the contract. Contract liabilities are recognised as revenue as (or when) the Company performs under the contract.
28 The Company had carried out an employee re-organisation exercise for its employees. The amount paid to the employees who opted for this scheme aggregated to J Nil million (H 12.68 million) for the year ended March 31, 2023, has been disclosed as an exceptional item.
30 During the previous year, the Company had invested J 93.30 million by purchasing 11,66,250 equity shares and in current year further invested J 2.70 million by purchasing 33,750 equity shares of CSE Deccan Solar Private Limited, totalling an equity stake of 27.27% as on March 31, 2023, to get a guaranteed supply of 40 million units of electricity per annum for its Chennai Plant. This amount is refundable after the tenure. Consequent to this investment, CSE Deccan Solar Private Limited has been considered an Associate Company as per the requirement of Companies Act, 2013. However, as per the provisions of IND AS 28 - Investment in Associates and Joint Ventures, the said investment made by the Company is in the form of a deposit which will be returned to the Company at the end of the tenure with no residual interest. Therefore, this investment has been accounted for as per the provisions of IND AS 109 Financial Instruments.
31 Previous year''s figures has been regrouped and/ or reclassed wherever necessary to confirm to the current year''s groupings and classifications.
32 Other Statutory Information
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company do not have any transactions with companies struck off.
(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company has not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(viii) The company has not been declared a wilful defaulter by any bank or financial institution or any of the lenders.
(ix) The quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.
Mar 31, 2022
* Leasehold land is net of J 5.39 Million (H 5.39 Million) subleased to Classic Industries and Exports Limited (formerly known as Classic Auto Tubes Ltd.), a Company in which directors are interested since the year ended 2009-10.
** P lant and equipment include Jointly owned assets with gross book value of J 311.28 Million (H 311.28 Million) and net book value of J 200.55 Million (H 213.09 Million) which represents 50% ownership in the asset.
(a) Represents proportionate lease premium J 2.19 Million (H 2.19 Million) amortised.
(b) Buildings include J 15.61 Million (H 0.24 Million), plant and equipment include J 16.08 Million (H 292.12 Million), electrical installations include Nil (H 0.05 Million), furniture and fixtures include J 0.80 Million (Nil), vehicles include Nil (H 93.35 Million) and computer software include J 3.41 Million (H 18.13 Million) relating to research and development (refer note C14).
(c) Includes directly attributable expenses capitalised to the extent of J 293.41 Million (H 508.51 Million) including J 13.33 Million (H 15.39 Million) capitalised from CWIP of previous year and borrowing cost capitalised to the extent of J 442.12 Million (H 992.16 Million) including Nil (H 72.24 Million) capitalised from CWIP of previous year.
(d) Buildings include buildings constructed on leasehold land with gross book value of J 13,488.13 Million (H 13,311.18 Million) and net book value of J 9,325.37 Million (H 9,628.78 Million).
(e) Carrying amount of tangible assets are pledged as security for liabilities (refer note B13 (a)).
(f) Capital work-in-progress includes land of J 297.70 Million (H 297.70 Million) acquired by the Company and is in the process of getting the title deeds transferred to its name.
(f) The rights, preferences and restrictions attached to equity shares of the Company
The Company has only one class of issued shares referred to as equity shares having a par value of Re. 1 each. The holder of equity shares are entitled to one vote per share.
(g) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(h) Over the period of five years immediately preceding March 31, 2022 and March 31, 2021, neither any bonus shares were issued nor any shares were allotted for consideration other than cash. Further, no shares were bought back during the said period.
C2 Borrowing costs capitalized / transferred to capital work in progress during the year is J 559.07 Million (H 849.92 Million) and the capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the Company''s general borrowings during the year, in this case 7.58% p.a. (7.93% p.a.).
i. Out of the total inventories J 24,638.92 Million (? 20,766.00 Million), the carrying amount of inventories carried at fair value less costs to sell amounted to J 1,416.90 Million (H654.46 Million).
ii. The amount of write-down of inventories to net realizable value recognized as an expense was J 187.52 Million (H 144.56 Million).
iii. The cost of inventories recognised as an expense during the year in respect of continuing operations was J 101,017.78 Million (H 70,238.57 Million).
C4 Description of nature and purpose of each reserve
Securities premium reserve is used to record the premium on issue of shares. The reserve will be utilised in accordance with provisions of the Act.
General reserve is created from time to time by way of transfer of profits from retained earnings for appropriation purpose. General reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income.
iii. Dapital reserve on Apollo (Mauritius) Holdings Private Limited ("AMHPL") merger
AMHPL erstwhile (subsidiary company) was merged with the Company resulting in a capital reserve.
The Company is required to create a debenture redemption reserve out of the profits which are available for redemption of debentures.
This balance represents subsidy received under New Industrial Policy 2007 of the Government of Tamil Nadu for expansion and employment generation within SIPCOT Industrial park.
This balance has been created in accordance with provision of the Act for the buy back of equity shares from the market.
This reserve was created on forfeiture of shares by the Company. The reserve is not available for the distribution to the shareholders.
Retained earnings are created from the profit of the Company, as adjusted for distribution to owners, transfer to other reserve, remeasurement of defined benefit plan, etc.
The Company has entered into lease arrangements for various warehouses, plant and equipments, and offices that are renewable on a periodic basis with approval of both lessor and lessee.
ii The Company does not have any lease commitments towards variable rent as per the contract.
iii Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset to another party, the right-of-use asset can only be used by the Company. Leases are either non-cancellable or may only be cancelled by incurring a substantive termination fee. The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over office buildings and factory premises the Company must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease.
The Government of Tamil Nadu (GoTN) has sanctioned a structured package of assistance to the Company for setting up/expansion of their project in the state of Tamil Nadu, pursuant to which a Memorandum of Understanding (MoU) executed between GoTN and the Company.
The Company is entitled, interalia, for refund of an amount equal to Net Output (VAT CST)/SGST paid by the Company to GoTN in the form of Investment Promotion Subsidy (referred to as Phase I). As the Company has fulfilled the relevant obligations, the Company has recognized subsidy income of J 995.08 Million (H 1606.97 Million) as other operating income, being the eligible amount of refund of Net Output (VAT CST) /SGST paid by the Company to GoTN."
In addition to above, the Company is entitled, for refund of an amount equal to 1% of the capital investment for a period of 12 years to be payable in equal annual instalments in the form of Investment Promotion Capital Subsidy (referred to as Phase II). Accordingly, the Company has recognised grant receivable at its fair value, amounting to J 1,956.66 Million (H 1,811.72 Million) under non-current financial assets and J 125.06 Million (H 385.80 Million) under current financial assets. Deferred grant income amounting J 1,627.79 Million (H 1,763.44 Million) is recognised under other non-current liabilities and J 135.65 Million (H 135.65 Million) under other current liabilities. Deferred income will be recognised in the statement of profit or loss on a systematic basis over the useful life of the asset (15 years). During the year, the Company has recorded grant income amounting to J 135.65 Million (H 135.65 Million) under Other operating income and accretion of grant recoverable as finance income amounting to J 154.20 million (H 162.78 million) under Other income.
Also, the Government of Andhra Pradesh (GoAP) has sanctioned a structured package of assistance to the Company for setting up of their project in the state of Andhra Pradesh, pursuant to which a Memorandum of Understanding (MoU) executed between GoAP and the Company. The Company is entitled, interalia, for refund of an amount equal to Net SGST paid by the Company to GoAP in the form of Investment Promotion Subsidy. As the Company has fulfilled the relevant obligations, the Company has recognized subsidy income of J 80.79 Million (H 23.09 Million) as other operating income, being the eligible amount of refund of Net SGST paid by the Company to GoAP.
The Company had imported Property, plant and
equipment under the Export Promotion Capital Goods (EPCG) scheme wherein the Company is allowed to import capital goods including spares without payment of customs duty, subject to certain export obligations which should be fulfilled within specified time period. During the year, the custom duty benefit received amounts to J 2,591.06 Million (H 1,202.01 Million) with a corresponding increase in the value of property, plant and equipment and Capital Work in Progress. The grant amounting to J 1,540.68 Million (H 1,572.57 Million) where export obligations have been met, have been recognized in Statement of Profit and Loss as other operating income. At the year end, the portion of grant for which the export obligation has not been met is retained in deferred revenue under other non current liabilities.
a. Superannuation plan: The Company contributes a sum equivalent to 15% of the eligible employees'' basic salary to a superannuation fund administered and maintained by the Life Insurance Corporation of India (LIC). The Company has no liability for future superannuation fund benefits other than its annual contribution and recognizes such contributions as an expense in the year incurred. The amount of contribution made by the Company to Superannuation Fund is J 152.71 Million (H 117.83 Million).
b. Provident fund: Contributions are made to the Company''s employees'' provident fund trust / regional provident fund in accordance with the fund rules. The interest rate payable to the beneficiaries every year is being notified by the Government.
In the case of contributions to the trust, the Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate and recognises such obligation as an expense.
The amount of contributions made by the Company to employees'' provident fund trust / regional provident fund is J 326.44 Million (H 298.41 Million).
The Company operates a defined benefit gratuity plan. Every employee who has completed five years or more of service receives gratuity on leaving the Company as per the Payments of Gratuity Act, 1972. The scheme is funded with LIC.
The capital structure of the Company consists of debt, cash and cash equivalents and equity attributable to equity shareholders of the Company which comprises issued share capital (including premium) and accumulated reserves disclosed in the Statement of Changes in Equity.
The Company''s capital management objective is to achieve an optimal weighted average cost of capital while continuing to safeguard the Company''s ability to meet its liquidity requirements (including its commitments in respect of capital expenditure) and repay loans as they fall due.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is debt divided by total equity. The Company''s policy is to keep an optimum gearing ratio. The Company includes within debt, interest bearing loans and borrowings.
The Company''s activities expose it primarily to the financial risk of changes in foreign currency exchange rates and changes in interest rates. The Company enters into a variety of derivate financial instrument to manage its exposure to foreign currency and interest rates. There have been no changes to the Company''s exposure to market risk or the manner in which it manages and measures the risk in recent past.
The Company''s exposure arises mainly on import (of raw material and capital items) and export (of finished goods). The Company follows a policy of matching of import and export exposures (natural hedge) to reduce the net exposure in any foreign currency. Whenever the natural hedge is not available or is not fully covering the foreign currency exposure of the Company, management uses certain derivative instruments to manage its exposure to the foreign currency risk. Foreign currency transactions are managed within approved policy parameters.
The Company is exposed to interest rate risk as the Company borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. The use of interest rate swaps are also entered into, especially to hedge the floating rate borrowings or to convert the foreign currency floating interest rates to the domestic currency floating interest rates.
Interest on variable rate borrowings are converted at fixed rate since company has hedged interest rate risk fully and effectively with the hedging instruments.
Credit risk is the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy customers.
In many cases an appropriate advance or letter of credit / bank guarantee is taken from the customers to cover the risk. In other cases credit limit is granted to customer after assessing the credit worthiness based on the information supplied by credit rating agencies, publicly available financial information or its own past trading records and trends.
At the year end, the Company did not consider there to be any significant concentration of credit risk which had not been adequately provided for. The carrying amount of the financial assets recorded in the financial statements, grossed up for any allowances for losses, represents the maximum exposure to credit risk.
The Company manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities for the Company.
The Company has established an appropriate liquidity risk management framework for it''s short term, medium term and long term funding requirement.
The management considers that the carrying amount of financial assets and financial liabilities recognised at amortised cost in the balance sheet approximates their fair value.
* Level 1 - Quoted price in an active market.
* Level 2 - Inputs other than quoted prices included within liability Level 1 that are observable or the asset or liability, either directly or indirectly.
* Level 3 - Unobservable inputs for asset or liability.
I n the opinion of the management, no provision is considered necessary for the disputes mentioned above on the ground that there are fair chances of successful outcome of appeals.
(b) The Competition Commission of India (''CCI'') on February 02, 2022 has released its order dated August 31, 2018 on the Company, other Tyre Manufacturers and Automotive Tyre Manufacturer Association alleging contravention of the provisions of the Competition Act, 2002 in the year 2011-12 and imposed a penalty of H 4,255.30 Million on the Company. The Company has filed an appeal against the CCI Order before the Honourable National Company Law Appellate Tribunal (NCLAT). Based on legal advice the Company believes that it has a strong case and accordingly no provision is considered in these financial statements.
C17 "" he Company conducts international transactions with associated enterprises. For the current year, the management maintained necessary documents as prescribed by the Income tax Act, 1961 to establish that these international transactions are at arm''s length and the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
Notes: Related parties and their relationships are as identified by the management and relied upon by the auditors. All
transactions are conducted in the ordinary course of business and at arm''s length.
(a) In the process of liquidation.
(b) Liquidated during the year
(c) During the year under review, the Company had made an investment of H 93.30 million by purchasing 1,166,250 Equity Shares (27.20%) of CSE Deccan Solar Private Limited on January 14, 2022, to get a guaranteed supply of 40 million units of electricity per annum for its Chennai Plant. Consequent to this investment, CSE Deccan Solar Private Limited has become an Associate Company.
(d) As on March 31, 2022, the Company has an investment of H 45.01 million in the said associate.
(e) The investment in Pan Aridus LLC, has been fully impaired in the prior years and the Group discontinued recognizing further losses in accordance with Ind AS 28 Investments in Associates and Joint Ventures. The Group does not have any further obligations to satisfy with regard to this Joint venture.
* Ceased to be director during the year
** Appointed during the year
Certain KMPs also participate in post employment benefits plans provided by the Company. The amount in respect of these towards the KMPs can not be segregated as these are based on actuarial valuation for all employees of the Company.
The Company has opted to provide segment information in its consolidated Ind AS financial statements in accordance with para 4 of Ind AS 108 - Operating Segments.
C23 Events after the balance sheet date
The Board of Directors have recommended a final dividend of J 3.25 (H 3.50) per share amounting to J 2,064.08 Million (H 2,222.85 Million) on Equity Shares of Re. 1/- each for the year, subject to approval from Shareholders.
C24 Information on details of loans, guarantees and investments under section 186 of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014
i) Details of investments made are given in note B2.*
ii) Corporate guarantees issued for the loan taken by the subsidiary company and outstanding in accordance with Section 186 of the Act read with rules issued thereunder.
The Company has applied the practical expedient and has not disclosed the transaction price allocated to the remaining performance obligations as the Company does not have any open contract for which the expected duration is more than one year as at the reporting period.
C31 On February 26, 2020, the Company executed an agreement with Emerald Sage Investment Ltd (an affiliate of Warburg Pincus LLC) to issue 108,000,000 6.34% Compulsorily Convertible Preference Shares (CCPS) having a face value of H 100 each, at par, for cash, by way of preferential allotment on a private placement basis. The Members of the Company approved the issue of CCPS (Tranche 1) through its Extraordinary General Meeting held on March 23, 2020 and issue of CCPS (Tranche 2) through Postal Ballot held on September 24, 2020. The Company had allotted 54,000,000 CCPS (Tranche 1) and 54,000,000 CCPS (Tranche 2), for cash, for an aggregate amount of H 10,800 Million on April 22, 2020 and October 7, 2020 respectively. These CCPS were accounted for as compound instruments in the financial statements. On December 5, 2020, one of the conditions for conversion were met and accordingly the Company had issued 63,050,966 equity shares having a face value of Re 1 per share. After issue of the aforesaid equity shares, the paid-up equity share capital of the Company had increased by H 63.05 Million and securities premium account by H 10,450.95 Million, net of share issue expenses.
C32 The Company had carried out an employee re-organisation exercise for its employees. The amount paid to the employees who opted for this scheme aggregated to J 12.68 million (H 110.16 million) for the year ended March 31, 2022, has been disclosed as an exceptional item.
C33 Other Statutory Information
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Group for holding any Benami property.
(ii) The Company do not have any transactions with companies struck off.
(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company has not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961
(viii) T he quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.
C34 Previous year''s figures has been regrouped and/ or reclassed wherever necessary to confirm to the current year''s groupings and classifications.
Mar 31, 2017
vii. Notes to Ind AS 101 - First time Adoption of Indian
Accounting Standards reconciliation
a. Business Combination
Effect of retrospective application of Ind AS 103-Business Combinations for AMHPL merger during the year ended March 2016. (refer Note C4)
b. Under previous GAAP, there was no concept of Other Comprehensive Income. Under Ind AS, specified items of income, expense, gains or losses are required to be presented in Other Comprehensive Income, which is reported along with the other equity.
c. Under previous GAAP, other investments were carried at cost. As per Ind AS, these investments are carried at fair value through profit and loss.
d. Under previous GAAP, foreign currency borrowings were stated at historical rate and derivative contracts were accounted in accordance with AS 11 whereas under Ind AS, the borrowings are restated at closing rate and a corresponding derivative asset/ liability is recognized separately at fair value. The derivatives are accounted for based on mark to market value as on the balance sheet date.
e. Under previous GAAP, the company had accounted the proposed dividend and corresponding dividend tax in the financial year to which it relates as and when the same is proposed by the board of directors, however under Ind AS, the same has to be accounted and reported in the year in which it is approved by the shareholders and paid accordingly.
f. Under previous GAAP, excise duty and certain sales related obligations had been netted off with income from sale of tyres, tubes and flaps, however under Ind AS, these items have been shown under expenses.
g. Under previous GAAP, net interest cost on valuation of defined benefit obligation was recognized as part of employee benefit expense whereas the same is considered as part of finance cost under Ind AS.
h. Under previous GAAP, actuarial gains and losses arising on valuation of defined benefit obligations were recognized in Statement of Profit and Loss as part of employee benefit expense whereas the same has been recognized as a component of Other Comprehensive Income under Ind AS.
i. Under previous GAAP, security deposits were recognized based on historical cost. However under Ind AS, the same has been accounted for as per amortized cost using effective interest rate. Accordingly interest income on such deposits has been recognized as part of other income and unwinding of security deposits has been amortized as a part of expenses.
j. Under the previous gaap, the Export promotion capital goods (EPCG) benefit received was netted off with the value of property, plant & equipment (PPE). Under Ind AS, the value of PPE has been grossed up and the EPCG benefit is treated as deferred revenue to the extent the export obligations are not met. (refer Note C11)
k. Deferred tax has been recalculated in respect of above changes and the deferred tax impact as at the transition date has been recognized in opening reserves and for the year ended March 31, 2016 has been recognized in the Statement of Profit & Loss.
*Out of the above '' 147.37 Million ('' 4.19 Million) is included in capital work-in-progress.
1. Borrowing costs capitalized / transferred to capital work-in-progress during the year is '' 297.97 Million (Nil).
2. BUSINESS COMBINATION
The Honâble High Court of Kerala had sanctioned the Scheme of Amalgamation of AMHPL, a wholly owned subsidiary, with the Company on August 26, 2016. The appointed date of amalgamation is April 1, 2016 and has become effective from December 7, 2016. The merger has been accounted in line with principles prescribed under Ind AS 103 - Business Combinations.
3. INVENTORIES
i. Out of the total inventories Rs, 17,293.98 Million (Rs, 10,197.49 Million), the carrying amount of inventories carried at fair value less costs to sell Rs, 902.85 Million (Rs,121.21 Million).
ii. The amount of write-down of inventories to net realizable value recognized as an expense was Rs, 95.65 Million (Rs, 47.70 Million).
iii. The cost of inventories recognized as an expense during the year in respect of continuing operations was Rs, 52,924.14 Million (Rs, 50,568.33 Million).
4. CASH FLOW HEDGE RESERVE
The cash flow hedge reserve represents the cumulative effective portion of gain or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or losses arising on changes in fair value of the designated portion of the hedging instruments that are recognized and accumulated under the heading of cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item. For moment in the reserve, refer Statement of Changes in Equity.
5. GOVERNMENT GRANTS
(a) Investment promotion subsidy from Government of Tamilnadu
The Company has established radial tyre manufacturing facility in SIPCOT industrial park, Oragadam near Chennai and availed incentives from the state Government of Tamil Nadu for establishing such project. The construction of first phase of the new green field radial tyre plant was completed as per project schedule, which commenced operations from March 11, 2010. The truck/bus radial segment has commenced operations from May 11, 2010.
Pursuant to the Memorandum of Understanding (MoU) dated August 7, 2006 read along with a supplementary MoU dated January 11, 2011, executed between the Government of Tamil Nadu (GoTN) and the Company, GoTN sanctioned a Structured Package of Assistance to the Company in terms of the New Industrial Policy, 2007. As per this Structured Package of Assistance, the Company is entitled, interalia, for refund of an amount equal to net output VAT CST paid by the Company to GoTN in the form of investment promotion subsidy for a period of 14 years (which can be extended by another
4 years), from the date of commencement of commercial production or till the cumulative a ailment of the said subsidy reaches 50% of the investment made in eligible fixed assets during the approved investment period as defend by the MoU, whichever is earlier. This eligiblity is subject to fulfillment of certain obligations by the Company.
As the Company has fulfilled the relevant obligations, the Company has recognized subsidy income of Rs, 464.50 Million (Rs, 536.21 Million) as other operating income, being the eligible amount of refund of net output VAT CST paid by the Company to GoTN.
(b) Export promotion capital goods
The Company had imported property, plant and equipment under the export promotion capital goods (EPCG) scheme wherein the Company is allowed to import capital goods including spares without customs duty, subject to certain export obligations which should be fulfilled within specified time period. Since the Company has recomputed cost as per Ind AS 16, it has made the following adjustments to meet the requirements of Ind AS 16 - Property, Plant & Equipment and Ind AS 20 - Accounting for Government Grants and disclosure of Government assistance:
1) The custom duty benefit received as deferred revenue included in other noncurrent liabilities with a corresponding increase in the value of property, plant and equipment and capital work-in-progress is Rs, 2,466.55 Million (Rs, 397.97 Million as at March 31, 2016 and Rs, 2,946.58 Million as at April 1, 2015)
2) The grant of Rs, 2,445.51 Million for which the extent the export obligations were met by April 01, 2015 was recognized in the opening reserve and the grant of Rs, 329.87 Million (Rs, 234.40 Million) was recognized in Statement of Profit and Loss as other operating income. The portion of grant for which the export obligation has not been met is retained in deferred revenue under other noncurrent liabilities.
3) The additional depreciation of Rs, 809.52 Million on the increase in the value of property, plant and equipment till the transition date was recognized in the opening reserve and Rs, 184.68 Million (Rs, 132.73 Million) was charged to the Statement of Profit and Loss.
6. EMPLOYEE BENEFIT LIABILITY
A. Defined contribution plans
a. Superannuation plan: The Company contributes a sum equivalent to 15% of the eligible employees basic salary to a superannuation fund administered and maintained by Life Insurance Corporation of India (LIC). The Company has no liability for future superannuation fund benefits other than its annual contribution and amortized such contributions as an expense in the year incurred. The amount of contribution paid by the Company to superannuation fund is Rs, 69.05 Million (Rs, 62.58 Million).
b. Provident Fund: Contributions are made to the Companyâs employees provident fund trust/regional provident fund in accordance with the fund rules. The interest rate payable to the beneficiaries every year is being notified by the Government.
In the case of contribution to the trust, the Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate and amortized such obligation as an expense.
The amount of contribution made by the Company to employees provident fund trust/regional provident fund is '' 222.61 Million (''210.59 Million)
B. Defined Benefit Plans Gratuity
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service receives gratuity on leaving the Company as per the Payment of Gratuity Act, 1972. The scheme is funded with Life Insurance Corporation of India.
The following table summarizes the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the respective plan:
7. EMPLOYEES STOCK APPRECIATION RIGHTS (EMPLOYEES PHANTOM STOCK PLAN 2010)
a) During the year 2010-11, the Company had announced cash-settled employee share-based payment plan (Phantom stock plan) for the eligible employees of the Company. Under the scheme, 1,200,000 phantom stock units have been granted on April 1, 2010, 900,000 Phantom stock units have been granted on April 1, 2011 and another 75,000 Units have been granted on April 1, 2012 by the board appointed committee. All three options will be vested as per the following schedule:
Pursuant to the above scheme, the eligible employees are entitled to get cash compensation upon exercise of the phantom stock unit within seven years of the vesting date
The details of variables used for fair valuation under the Black-Scholes Model
The options from Vest 1, Vest 2, Vest 3 & Vest 4 of all the three grants have been completely exercised and therefore donât have to be valued.
8. FINANCIAL INSTRUMENT
A. Capital risk management
The capital structure of the Company consists of debt, cash and cash equivalents and equity attributable to equity shareholders of the Company which comprises issued share capital (including premium) and accumulated reserves disclosed in the Statement of Changes in Equity. The Companyâs capital management objective is to achieve an optimal weighted average cost of capital while continuing to safeguard the Companyâs ability to meet its liquidity requirements (including its commitments in respect of capital expenditure) and repay loans as they fall due.
B. Financial Risk Management a. Market risk
The Companyâs activities expose it primarily to the financial risk of changes in foreign currency exchange rates and changes in interest rates. The Company enters into a variety of derivate financial instrument to manage its exposure to foreign currency and interest rates. There have been no changes to the Companyâs exposure to market risk or the manner in which it manages and measures the risk in recent past.
i) Currency risk
The Companyâs exposure arises mainly on import (of raw material and capital items) and export (of finished goods). The Company follows a policy of matching of import and export exposures (natural hedge) to reduce the net exposure in any foreign currency. Whenever the natural hedge is not available
or is not fully covering the foreign currency exposure of the Company, management uses certain derivative instruments to manage its exposure to the foreign currency risk. Foreign currency transactions are managed within approved policy parameters.
ii) Interest rate risk
The Company is exposed to interest rate risk as the Company borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. The use of interest rate swaps are also entered into, especially to hedge the floating rate borrowings or to convert the foreign currency floating interest rates to the domestic currency floating interest rates.
b) Credit risk
Credit risk is the risk that counterparty will default on its contractual obligations resulting in financial loss to the company. The Company has adopted a policy of only dealing with creditworthy customers.
In many cases an appropriate advance or letter of credit / bank guarantee is taken from the customers to cover the risk . In other cases credit limit is granted to customer after assessing the credit worthiness based on the information supplied by credit rating agencies, publicly available financial information or its own past trading records and trends.
At March 31, 2017, the company did not consider there to be any significant concentration of credit risk which had not been adequately provided for. The carrying amount of the financial assets recorded in the financial statements, grossed up for any allowances for losses, represents the maximum exposure to credit risk.
c) Liquidity Risk
The Company manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities for the Company.
The Company has established an appropriate liquidity risk management framework for itâs short-term, medium term and long-term funding requirement.
iii. Fair value of financial assets/liabilities ( other than investment in subsidiaries) that are not measured at fair value
The management considers that the carrying amount of financial assets and financial liabilities recognized at amortized cost in the balance sheet approximates their fair value.
* Level 1 - Quoted price in an active market.
* Level 2 - Discounted cash flow. Future cash flows are estimated based on forward exchange rates and contract rates, discounted at a rate that reflects the credit risk of various counterparties.
* Level 3 - Discounted cash flow method is used to capture the present value of the expected future economic benefits that will flow to the company.
^Excludes amount of '' 441.66 Million ('' 441.66 Million as at March 31,2016 and '' 441.66 Million as at March 31,2015) in appeals which have been decided by Appellate authorities in Companyâs favour but on which the department has gone for further appeal and a demand of '' 663.70 Million relating to the adjustments made in MAT computation, which in the opinion of the Company, is not sustainable and the probability of cash outflow is considered remote.
*Excludes demand of '' 532.12 Million ('' 532.12 Million as at March 31,2016 and '' 532.12 Million as at March 31,2015) raised on one of the Companyâs units relating to issues which have been decided by the Appellate Authority in Companyâs favour in appeals pertaining to another unit of the Company. Show-cause notices received from various Government Agencies pending formal demand notices have not been considered as contingent liabilities.
In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the ground that there are fair chances of successful outcome of appeals.
*Includes '' 4.03 Million payable to NSL Wind Power Company towards additional 402,805 shares allotted and '' 0.06 Million payable to OPGS Power Gujarat Pvt. Ltd. towards additional 310,000 shares allotted under Group Captive Scheme. All the additional shares were allotted during FY 2016-17 but payments for additional shares are made after March 31, 2017. Total investment by the Company is 598,805 shares of NSL Wind Power Company and 930,000 shares of OPGS Power Gujarat Pvt. Ltd. as at March 31, 2017.
9. The Company has international transactions with related parties. For the current year, the management confirms that it maintains documents as prescribed by the Income tax Act, 1961 to prove that these international transactions are at armâs length and the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
10. EVENTS AFTER BALANCE SHEET DATE
The Board of Directors have recommended a final dividend of Rs, 3.00 per share amounting to Rs, 1,527.07 Million on Equity Shares of Rs, 1/- each for the year, subject to approval from Shareholders. Dividend distribution tax on the same amounts to Rs, 310.88 Million.
11. APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved for issue by the board of directors on May 5, 2017.
Mar 31, 2014
1. CORPORATE INFORMATION
The company''s principal business activity is manufacturing and sale of
automotive tyres. The company has started its operations in 1972 with
its first manufacturing plant at Perambra in Kerala.
The company''s largest operations are in India and comprise of four tyre
manufacturing plants - located two in Cochin and one each at Vadodara &
Chennai respectively and various sales & marketing offi ces spread
across the country. The company''s European subsidiary Apollo Vredestein
BV (AVBV) has a manufacturing plant in the Netherlands and sales &
marketing subsidiaries all over Europe. The company''s South African
subsidiary Apollo Durban (Pty) Ltd. (ADPL) has one manufacturing plant
in Durban and sales operations all over Africa. The company also has
sales and marketing subsidiaries in Middle East and ASEAN region.
2. CONTINGENT LIABILITIES
2013-14 2012-13
PARTICULARS Rs. Million Rs. Million
Sales Tax 111.92 204.94
Income Tax 180.46 -
Claims against the Company not
acknowledged as debts  Employee
Related 51.02 53.95
 Others 28.54 27.54
Provision of Security (Bank Deposits
pledged with a Bank against which
working capital loan has been availed
by Apollo Finance Ltd, an Associate
Company) 53.83 68.14
Excise Duty* 363.55 1,381.35
* Excludes demand of Rs. 532.12 Million (Rs. 532.12 Million) raised on one
of the Company''s units relating to issues which have been decided by
the Appellate Authority in Company''s favour in appeals pertaining to
another unit of the Company. Show-cause notices received from various
Government Agencies pending formal demand notices have not been
considered as contingent liabilities.
In the opinion of the management, no provision is considered necessary
for the disputes mentioned above on the ground that there are fair
chances of successful outcome of appeals.
Certain legal proceedings continue in the Court of Chancery in the US
in respect of uncrystallized demand towards break fee & damages. Based
on the discussions with the US legal counsel, the management is of the
view that such demands arising out of the ongoing litigation are
without merit and will be vigorously defended by the Company.
3. MAT CREDIT ENTITLEMENT
The company has made provision for tax as per normal provisions of the
Income tax Act, 1961 in the current year as well as previous year. In
view of the consistent profi ts over the years and also considering the
future profi t projections, the management believes that there is
convincing evidence with regard to the earning of future taxable income
and payment of tax under normal tax within the specifi ed period.
Accordingly, MAT Credit Entitlement of Rs. 450.13 Million (Rs. 508.65
Million) has been carried forward for adjustment against normal tax
liability in future years.
4. The Company has international transactions with related parties. For
the current year, the management confi rms that it maintains documents
as prescribed by the Income tax Act, 1961 to prove that these
international transactions are at arm''s length and the aforesaid
legislation will not have any impact on the financial statements,
particularly on the amount of tax expense and that of provision for
taxation.
5. INVESTMENT PROMOTION SUBSIDY FROM GOVERNMENT OF TAMILNADU
The Company has established radial tyre manufacturing facility in
SIPCOT Industrial Park, Oragadam near Chennai and availed incentives
from the State Government of Tamil Nadu for establishing such project.
The construction of first phase of the new green fi eld radial tyre
plant was completed as per project schedule, which commenced operations
from March 11, 2010. The Truck/ Bus radial segment has commenced
operations from May 11, 2010.
Pursuant to the Memorandum of Understanding (MoU) dated August 7, 2006
read along with a Supplementary MoU dated January 11, 2011, executed
between the Government of Tamil Nadu (GoTN) and the Company, GoTN
sanctioned a Structured Package of Assistance to the Company in terms
of the New Industrial Policy, 2007. As per this Structured Package of
Assistance, the Company is entitled, interalia, for refund of an amount
equal to Net Output VAT CST paid by the Company to GoTN in the form
of Investment Promotion Subsidy for a period of 14 years (which can be
extended by another 4 years), from the date of commencement of
commercial production or till the cumulative availment of the said
subsidy reaches 50% of the investment made in eligible fi xed assets
during the approved investment period as defi nd by the MoU, whichever
is earlier. This eligiblity is subject to fulfilllment of certain
obligations by the Company.
As the Company has fulfillled the relevant obligations during the year,
the Company has recognized subsidy income of Rs. 939.14 Million as other
operating income (refer note B11), being the eligible amount of refund
of Net Output VAT CST paid by the Company to GoTN from the date of
commencement of commercial production till March 31, 2014. Based on
the legal opinion obtained by the Company, the said subsidy is
considered non-taxable.
6. EXCEPTIONAL ITEMS
Exceptional item during the year represents expenses incurred in
connection with the proposed acquisition of Cooper Tier & Rubber
Company (Cooper) which was terminated by Cooper on December 30, 2013.
7. ISSUE OF SHARE WARRANTS
The company had alloted 5,000,000 warrants, convertible into 5,000,000
equity shares of Rs. 1 each to a promoter Group Company on 21st December
2012, on a preferential allotment basis, pursuant to Section 81 (1A) of
the Compa- nies Act, 1956, at a conversion price of Rs. 86.20 per share
determined in accordance with the SEBI (Issue of Capital and Disclusure
Requirements) Regulations, 2009. An amount equivalent to 25% of the
price aggregating to Rs. 107.75 Million was received on allotment of the
warrants. The warrants may be converted to equivalent number of shares
on payment of the balance amount at any time within a period of 18
Months from their date of allotment. In the event the warrants are not
converted to shares within the said period, the company is eligible to
forfeit the amounts received towards the warrants.
8. Excise duty relating to sales has been disclosed as a reduction
from turnover. Excise duty related to difference between the closing
stock and opening stock has been disclosed in Note B 14 "Changes in
Inventories of Finished Goods, Work in Process & Bought Out Materials /
Stock-in-Trade".
9. Borrowing costs capitalized / transferred to capital work in
progress during the year is Nil (Rs. 74.57 Million). This includes Nil
(Nil) towards loan processing fees.
10. Employee benefit Plans Defined Contribution Plans:
a. Superannuation Plan: The Company contributes a sum equivalent to
15% of the eligible employees salary to a superannuation fund
administered and maintained by Life Insurance Corporation of India
(LIC). The Company has no liability for future superannuation fund
benefits other than its annual contribution and recognizes such
contributions as an expense in the year incurred. The amount of
contribution paid by the company to Superannuation Fund is Rs. 57.15
Million (Rs. 49.21 Million).
b. Provident Fund: Contributions are made to the Company''s Employees
Provident Fund Trust / Regional Provident Fund in accordance with the
fund rules. The interest rate payable to the beneficiaries every year
is being notifi ed by the Government.
In the case of contribution to the Trust, the Company has an obligation
to make good the shortfall, if any, between the return from the
investments of the Trust and the notifi ed interest rate and recognizes
such obligation as an expense.
The amount of contribution made by the Company to Employees Provident
Fund Trust / Regional Provident Fund is Rs. 192.37 Million (Rs. 175.85
Million).
Defined Benefit Plans:
Gratuity
The Company has a defi ned benefit gratuity plan. Every employee who
has completed fi ve years or more of service receives gratuity on
leaving the Company at 15 days salary (last drawn salary) for each
completed year of service. The scheme is funded with Life Insurance
Corporation of India.
The following table summarizes the components of net benefit expense
recognized in the statement of profit and loss and the funded status
and amounts recognized in the balance sheet for the respective plan:
11. Employees Phantom Stock Plan 2010
a) During the year 2010-11, the company had announced Cash-settled
Employee Share-based Payment Plan (Phantom Stock Plan) for the eligible
employees of the company. Under the scheme, 1,200,000 phantom stock
units have been granted on 1st April 2010, 900,000 Phantom stock units
have been granted on 1st April 2011 and another 75,000 Units have been
granted on 1st April 2012 by the board appointed committee. All three
options have been vested as per the following schedule:
Pursuant to the above scheme, the eligible employees are entitled to
get cash compensation upon exercise of the phantom stock unit within
seven years of the vesting date
12. The Company''s operations comprise of only one business segment
ÂAutomobile Tyres, Automobile Tubes & Automobile Flaps in the context
of reporting business/geographical segment as required under mandatory
accounting standards AS -17 "Segment Reporting "
The geographical segments considered for disclosure are - India and
Rest of the world. All the manufacturing facilities are located in
India:
13. Previous year''s figures have been regrouped / reclassified
wherever necessary to correspond with the current year''s classifi
-cation / disclosure.
Mar 31, 2013
1. CORPORATE INFORMATION
The Company''s principal business is manufacture of automobile tyres,
tubes and tyre re-treading compound. The Company has four tyre
manufacturing plants - two in Kerala, one in Vadodra and one in
Chennai. The Company has started its operations since 1977 with its
first plant at Perambra in Kerala.
The Company has two main overseas subsidiary companies - Apollo Tyres
South Africa (Pty) Ltd. located in South Africa and Apollo Vredestein
B.V. located in Netherlands. The first Company, previously known as
Dunlop Tyres International (Pty) Ltd, was acquired on April 21, 2006.
It has two tyre manufacturing plants in South Africa and its products
are sold in Africa and Europe under the brand name of Dunlop. The
second Company, previously known as Vredestein Banden B.V. was acquired
on May 15, 2009. It has one manufacturing plant in Netherlands and
sales and marketing offices all over Europe. Its products are sold
primarily in Europe under the brand name of Vredestein.
2. CONTINGENT LIABILITIES
2012-13 2011-12
PARTICULARS Rs. Million Rs. Million
Sales Tax 204.94 153.37
Claims against the Company not
acknowledged as debts - Employee Related 53.95 26.97
- Others 27.54 19.83
Provision of Security (Bank Deposits pledged
with a Bank against which working capital
loan has been availed by Apollo Finance Ltd,
an Associate Company) 68.14 63.50
Excise Duty* 1,381.35 253.12
* Excludes demand of Rs. 532.12 Million (Rs. 532.12 Million) raised on
one of the Company''s units relating to issues which have been decided by
the Appellate Authority in Company''s favour in appeals pertaining to
another unit of the Company. Show-cause notices received from various
Government Agencies pending formal demand notices have not been
considered as contingent liabilities.
In the opinion of the management, no provision is considered necessary
for the disputes mentioned above on the grounds that there are fair
chances of successful outcome of appeals.
3. MAT CREDIT ENTITLEMENT
In the current year the Company has made provision for tax as per
normal provisions of the Income tax Act, 1961 unlike previous year when
the provision for tax was made under MAT. In view of the consistent
profits over the years including the current year and also considering
the future profit projections, the management believes that there is
convincing evidence with regard to the earning of future taxable income
and payment of tax under normal tax within the specified period.
Accordingly, MAT Credit Entitlement of Rs. 508.65 Million (Rs. 617.22
Million) has been carried forward during the current year.
4. The Company has international transactions with related parties.
For the current year, the management confirms that it maintains
documents as prescribed by the Income tax Act, 1961 to prove that these
international transactions are at arm''s length and the aforesaid
legislation will not have any impact on the financial statements,
particularly on the amount of tax expense and that of provision for
taxation.
5. ISSUE OF SHARE WARRANTS:
During the year, the Company alloted 5,000,000 warrants, convertible
into 5,000,000 equity shares of Rs. 1 each to a promoter Group Company,
on a preferential allotment basis, pursuant to Section 81 (1A) of the
Companies Act, 1956, at a conversion price of Rs. 86.20 per share
determined in accordance with the SEBI (Issue of Capital and Disclosure
Requirements) Regulations, 2009. An amout equivalent to 25% of the
price aggregating to Rs. 107.75 Million was received on allotment of the
warrants. The warrants may be converted in to equivalent number of
shares on payment of the balance amount at any time within a period of
18 Months from their date of allotment. In the event the warrants are
not converted into shares within the said period, the Company is
eligible to forfeit the amounts received towards the warrants.
6. Excise duty relating to sales has been disclosed as a reduction
from turnover. Excise duty related to difference between the closing
stock and opening stock has been disclosed in Note B 13 "Changes in
Inventories of Work in Process, Finished Goods & Stock in Trade".
7. Borrowing costs capitalized / transferred to capital work in
progress during the year is Rs. 74.57 Million (Rs. 370.77 Million). This
includes Nil (Rs. 48.36 Million) towards loan processing fees.
8. During the year, the Company noticed that certain employees had
misappropriated cash in earlier years by booking fictitious expenses.
The Company has recovered a substantial part of the amount from the
concerned employees. The Net amount involved after recoveries made is
Rs. 76.44 Million. Amounts recovered from these persons have been
included in Other Income in the Statement of Profit & Loss.
9. Employee Benefit Plans Defined Contribution Plans:
a. Superannuation Plan: The Company contributes a sum equivalent to
15% of the eligible employees salary to a superannuation fund
administered and maintained by Life Insurance Corporation of India
(LIC). The Company has no liability for future superannuation fund
benefits other than its annual contribution and recognizes such
contributions as an expense in the year incurred.
b. Provident Fund: Contributions are made to the Company''s Employees
Provident Fund Trust / Regional Provident Fund in accordance with the
fund rules. The interest rate payable to the beneficiaries every year
is being notified by the Government.
In the case of contribution to the Trust, the Company has an obligation
to make good the shortfall, if any, between the return from the
investments of the Trust and the notified interest rate and recognizes
such obligation as an expense.
Defined Benefit Plans:
Gratuity
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service receives gratuity on leaving
the Company at 15 days salary (last drawn salary) for each completed
year of service. The scheme is funded with Life Insurance Corporation
of India.
The following table summarizes the components of net benefit expense
recognized in the statement of profit and loss and the funded status
and amounts recognized in the balance sheet for the respective plan:
10. Employees Phantom Stock Plan 2010
a) During the year 2010-11, the Company had announced Cash-settled
Employee Share-based Payment Plan (Phantom Stock Plan) for the eligible
employees of the Company. Under the scheme, 1,200,000 phantom stock
units have been granted on 1st April 2010, 900,000 Phantom stock units
have been granted on 1st April 2011 and another 75,000 Units have been
granted on 1st April 2012 by the board appointed committee. All three
options will be vested as per the following schedule:
Pursuant to the above scheme, the eligible employees are entitled to
get cash compensation upon exercise of the phantom stock unit within
seven years of the vesting date
b) Details of the expense recognized during the year and outstanding
phantom stock units of the Company under the Phantom Stock Plan 2010
are as under:
11. a) Following are the forward exchange contracts [being derivative
instruments], which are not intended for trading or speculative
purposes but for hedge purposes to establish the amount of reporting
currency required or available at the settlement date of certain
payables and receivables. The following forward exchange contracts
entered into by the Company are outstanding as on March 31, 2013:
The mark to market losses of Nil (Rs. 0.03 Million) relating to
undesignated / ineffective forward contracts / derivatives has been
recognized in the Statement of Profit and Loss.
b) No. of Currency swaps (other than forward exchange contracts stated
above) to hedge against fluctuations in changes in exchange rate are 20
(23).
12. The Company''s operations comprise of only one business segment
-Automobile Tyres, Automobile Tubes & Automobile Flaps in the context
of reporting business/geographical segment as required under mandatory
accounting standards AS -17 "Segment Reporting "
The geographical segments considered for disclosure are - India and
Rest of the world. All the manufacturing facilities are located in
India:
13. Operating Lease
The Company has acquired assets under the operating lease agreements
that are renewable on a periodic basis at the option of both the lessor
and lessee. Rental expenses under those leases were Rs. 400 Million (Rs.
400 Million)
14. Finance Lease - Deferred Payment Credit
The Company has entered into finance lease arrangements for certain
Assets. The schedule of future minimum lease payments in respect of
non-cancelable Finance leases is set out below:
15. Previous year''s figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s classification /
disclosure.
Mar 31, 2012
1 CORPORATE INFORMATION
The company's principal business is manufacture of automobile tyres,
tubes and tyre re-treading compound. The company has four tyre
manufacturing plants - two in Cochin, one in Vadodara and one in
Chennai. The company has started its operations since 1977 with its
first plant at Perambra in Cochin. The company has two main overseas
subsidiary companies - Apollo Tyres South Africa (Pty) Ltd. located in
South Africa and Apollo Vredestein B.V. located in Netherlands. The
first company, previously known as Dunlop Tyres International (Pty)
Ltd, was acquired on April 21, 2006. It has two tyre manufacturing
plants in South Africa and its products are sold in Africa and Europe
under the brand name of Dunlop. The second company, previously known as
Vredestein Banden B.V. was acquired on May 15,2009. It has one
manufacturing plant in Netherlands and sales and marketing offices all
over Europe. Its products are sold primarily in Europe under the brand
name of Vredestein.
DETAILS OF SECURITY OFFERED:
Note A1 A pari passu first charge along with other lenders created by
way of mortgage on the Company's Land & Premises at Village Kodakara in
Kerala, at Village Limda in Gujarat, at SIPCOT Industrial Growth Centre
at Oragadam near Chennai, and at Head Office in Gurgaon, Haryana together
with the factory buildings, Plant & machinery & Equipments, both present
& future.
Note A2 A pari passu first charge along with other lenders created by
way of mortgage on the Company's Land & Premises at Village Kodakara in
Kerala and at Village Limda in Gujarat together with the factory
buildings, Plant & machinery & Equipments, both present & future.
Note A3 A pari passu first charge along with other lenders created by
way of mortgage on the Company's Land & Premises at SIPCOT Industrial
Growth Centre at Oragadam near Chennai together with the factory
buildings, Plant & machinery & Equipments, both present & future
(under process)
NoteA4 A pari passu first charge along with other lenders created by
way of mortgage on the Company's Land &
Premises at Village Kodakara in Kerala, atSIPCOT Industrial Growth
Centre at Oragadam near Chennai, and at Head Office in Gurgaon, Haryana
together with the factory buildings, Plant & machinery & Equipments,
both present & future (under process)
Note B1 A pari passu first charge along with other lenders by way of
hypothecation over the movable assets of the company, both present and
future (except stocks & book debts).
Note B2 A pari passu first charge along with other lenders by way of
hypothecation over the movable assets of the
company at Village Kodakara in Kerala and at Village Limda in Gujarat
and pari passu second charge on the current assets of the company.
Note B3 A pari passu first charge on the movable assets and pari passu
second charge on the current assets of the company.
Note B4 A pari passu first charge along with other lenders by way of
hypothecation over the movable assets of the
company at SIPCOT Industrial Growth Centre at Oragadam near Chennai,
both present and future (except stocks & book debts) - under process
NoteC A charge to be created by way of hypothecation on the assets at
Village Limda in Gujarat acquired out of the proceeds of loan taken from
BEML.
Note D Sales Tax Loan is secured by a pari passu charge on the entire
fixed assets of the company, both present & future situated at Village
Limda in Gujarat.
*Cash Credits and Secured Buyers Credit for Raw Materials are secured
by a first charge on Raw materials, Work-in-Process, Stocks, Stores and
Book Debts and by a second charge on the Company's land at Village
Kodakara in Kerala, at Oragadam and Mathur Village in Tamil Nadu and at
Head Office in Gurgaon, Haryana together with the Factory Buildings,
Plant & Machinery and Equipments, both present and future.
** Employee Related Payables include commission on net profits payable
to whole-time directors Rs.74 Million (Rs 75 Million) *** For Nature of
Security on Current Maturities of Long Term Debts, Refer Note B 3(a).
* Interest Income of Rs. 58.51 Million (Rs. 26.38 Million) comprises of
the following:
(a) Interest Earned on Deposits Rs.13.36 Million (Rs. 18.30 Million)
(b) Interest Earned on Trade Balances Rs. 2.32 Million (Rs. 2.77
Million)
(c) Interest on Income Tax Refund Rs. 39.64 Million (Rs.2.16 Million)
(d) Interest Earned - Others Rs. 3.19 Million (Rs. 3.15 Million)
2. CONTINGENT LIABILITIES
As at As at
PARTICULARS March31,2012 March31,2011
Rs. Million Rs. Million
Sales Tax 153.37 110.26
Claims against the company
not acknowledged as debts
- Employee Related 26.97 23.90
- Property Disputes - 2.60
- Others 19.83 8.83
Provision of Security
(Bank Deposits pledged with
a Bank against which
working capital loan has
been availed by Apollo
Finance Ltd,
an Associate Company) 63.50 73.30
Guarantee given by Company
For the loan taken by Sub-
Subsidiary Companies - 2,570.40
Custom Duty - 23.50
Excise Duty* 253.12 199.83
*Excludes demand of Rs. 532.12 Million (Rs. 532.12 Million) raised on
one of the Company's units relating to issues which have been decided
by the Appellate Authority in Company's favour in appeals pertaining
to another unit of the Company. Show-cause notices received from
various Government Agencies pending formal demand notices have not been
considered as contingent liabilities.
In the opinion of the management, no provision is considered necessary
for the disputes mentioned above on the grounds that there are fair
chances of successful outcome of appeals.
3. MAT CREDIT ENTITLEMENT
a. In view of the consistent profits over the years & also considering
the future profit projections, the management believes that there is
convincing evidence with regard to the earning of future taxable income
and payment of tax under normal tax within the specified period.
Accordingly, MAT Credit Entitlement of Rs. 301.29 Million (Rs. 315.93
Million) has been recognized during the year.
b. The Company has international transactions with related parties.
For the current year, the management confirms that it maintains
documents as prescribed by the Income tax Act, 1961 to prove that these
international transactions are at arm's length and the aforesaid
legislation will not have any impact on the financial statements,
particularly on the amount of tax expense and that of provision for
taxation.
4. Excise duty relating to sales has been disclosed as a reduction
from turnover. Excise duty related to difference between the closing
stock and opening stock has been disclosed in Note B13 "Changes in
Inventories of Work in Process, Finished Goods & Stock in Trade".
5. Borrowing costs capitalized/transferred to capital work in progress
during the year is Rs. 370.77 Million (Rs.251.28 Million). This
includes Rs. 48.36 Million (Rs. 69.90 Million) towards loan processing
fees and Nil (Rs. 14.71 Million) towards Bank Charges.
6. Employee Benefit Plans Defined Contribution Plans:
a. Superannuation Plan: The Company contributes a sum equivalent to
15% of the eligible employees salary to a superannuation fund
administered and maintained by Life Insurance Corporation of India
(LIC). The Company has no liability for future superannuation fund
benefits other than its annual contribution and recognizes such
contributions as an expense in the year incurred.
b. Provident Fund: Contributions are made to the Company's Employees
Provident Fund Trust/ Regional Provident Fund in accordance with the
fund rules. The interest rate payable to the beneficiaries every year
is being notified by the Government.
In the case of contribution to the Trust, the Company has an obligation
to make good the shortfall, if any, between the return from the
investments of the Trust and the notified interest rate and recognizes
such obligation as an expense.
Defined Benefit Plans:
Gratuity
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service receives gratuity on leaving
the Company at 15 days salary (last drawn salary) for each completed
year of service. The scheme is funded with Life Insurance Corporation
of India.
The following table summarizes the components of net benefit expense
recognized in the statement of profit and loss and the funded status
and amounts recognized in the balance sheet for the respective plan:
b) Cross Currency swaps (other than forward exchange contracts stated
above) to hedge against fluctuations in changes in exchange rate. No.
of contracts: 23 (As at March 31,2011:9)
7. The Company's operations comprise of only one business segment
-Automobile Tyres, Automobile Tubes & Automobile Flaps in the context
of reporting business/geographical segment as required under mandatory
accounting standards AS -17 "Segment Reporting "
Note: Related Parties and their Relationships are as identified by the
management and relied upon by the Auditors.
Notes:
(a) The management had initiated the deregistration of Pollock and
Aitken (Pty.) Ltd. during the last financial year. The deregistration
process was completed during the year with effect from April 17,2011
after 2 months from the publication of notice of deregistration
received on February 17,2011.
(b) The management had initiated the voluntary winding-up process for
Apollo Tyres (Nigeria) Ltd. during the last financial year. Corporate
Affairs Commission of Nigeria has registered the winding-up on March
26,2012 and the company shall be deemed to be dissolved after 3 months
from this date.
(c) During the year, the company has incorporated a new subsidiary
company named Apollo Tyres B.V, Netherlands.
(d) During the year, the company has incorporated a new subsidiary
company named Apollo Tyres U.K (Pvt) Ltd., United Kingdom.
(e) During the year, the company has incorporated a new subsidiary
company named Apollo Tyres (Brasil) LTDA., Brazil for trading of the
tyres sourced from various group companies.
8. Operating Lease
The Company has acquired assets under the operating lease agreements
that are renewable on a periodic basis at the option of both the lessor
and lessee. Rental expenses under those leases were Rs. 400 Million (Rs.
400 Million)
9.The Revised Schedule VI has become effective from 1 April, 2011 for
the preparation of financial statements. This has significantly changed
the disclosure and presentation made in the financial statements.
Previous year's figures have been regrouped / reclassified wherever
necessary to correspond with the current year's classification /
disclosure.
Mar 31, 2011
1. Contingent Liabilities
PARTICULARS 2010-11 2009-10
Rs Million Rs Million
Sales Tax 94.61 108.24
Income Tax-Disputed Demands under Appeal - -
Claims not acknowledged as debts
- Employee Related 23.90 21.54
- Property Disputes 2.60 2.60
- Others 8.83 5.83
Provision of Security (Bank Deposits
pledged with a Bank against
which working capital loan has been
availed by Apollo Finance Ltd, 73.30 99.52
an Associate Company)
Guarantee given by Company for the
loan taken by Sub-Subsidiary
Companies 2,570.40 673.50
Guarantees given by bankers on behalf
of the Company 528.00 497.66
Custom Duty 23.50 23.50
Excise Duty* 177.30 56.34
Irrevocable Letters of Credit 2,916.73 3,865.72
* Excludes demand of Rs 532.12 Million (Rs 532.12 Million) raised on
one of the Companys units relating to issues which have been decided
by the Appellate Authority in Companys favour in appeals pertaining to
another unit of the Company. Show-cause notices received from various
Government Agencies pending formal demand notices have not been
considered as contingent liabilities.
In the opinion of the management, no provision is considered necessary
for the disputes mentioned above on the grounds that there are fair
chances of successful outcome of appeals.
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for as on 31st March, 2011 is Rs 4,076.59
Million (Rs 8,323.09 Million).
3. Lock Out at Perambra Plant
A Lock out was declared at Companys manufacturing facility at Perambra
in the state of Kerala on 11th June 2010. The same was lifted on 21st
August 2010 after signing of the Long Term Settlement Agreement with
the workers.
4. Status of Chennai Project
The first phase of passenger car vehicle segment of the Chennai project
had commenced operations from 11th March 2010 and the Truck/Bus radial
segment had commenced operations from 11th May 2010. The construction
of the second and third phase of the project to enhance the production
capacities of the passenger car and Truck/Bus radial tyres has started
in the current financial year.
5. MAT Credit Entitlement
In view of the consistent profits over the years and also considering
the future profit projections, the management believes that there is
convincing evidence with regard to the earning of future taxable income
and payment of tax under normal tax within the specified period.
Accordingly, MAT Credit Entitlement of Rs 315.93 Million has been
recognized during the year.
6. Based on and to the extent of information received from the
Suppliers by the Company, regarding their status under the Micro, Small
and Medium Enterprises Development Act, 2006 (MSMED Act) and relied
upon by the auditors, the relevant particulars as at March 31, 2011 are
furnished below:
7. Excise duty relating to sales has been disclosed as a reduction
from turnover. Excise duty related to difference between the closing
stock and opening stock has been disclosed in Schedule 10 "Increase in
Work in Process and Finished Goods".
8. Borrowing costs capitalized/transferred to capital work in progress
during the year is Rs 251.28 Million (Rs 257.42 Million). This includes
Rs 69.90 Million (Rs 31.57 Million) towards loan processing fees and Rs
14.71 Million (Rs 15.44 Million) towards Bank Charges.
9A Employee Benefits
Gratuity
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service receives gratuity on leaving
the Company at 15 days salary (last drawn salary) for each completed
year of service. The scheme is funded with Life Insurance Corporation
of India.
The following table summarizes the components of net benefit expense
recognized in the profit and loss account and the funded status and
amounts recognized in the balance sheet for the respective plan:
10B Employees Phantom Stock Plan 2010
a) During the year the company had announced Cash-settled Employee
Share-based Payment Plan (Phantom Stock Plan) for eligible employees of
the company. Under the scheme, 12 Lacs phantom stock units have been
granted on April 1, 2010 by the board appointed committee and the same
will vest as per the following schedule:
Pursuant to the above scheme, the eligible employees are entitled to
get cash compensation upon exercise of the phantom stock unit within
seven years of the vesting date
b) Details of the expense recognized during the year and outstanding
phantom stock units of the company under the Phantom Stock Plan 2010
are as under:
Phantom Stock Scheme - Proforma P&L and EPS
Had compensation cost for the Phantom Stock units granted under the
Scheme been determined based on fair value approach, the Companys net
profit and earnings per share would have been as per the proforma
amounts indicated below:
11. The Companys operations comprise of only one business segment Ã
Automobile Tyres, Automobile Tubes & Automobile Flaps in the context of
reporting business/geographical segment as required under mandatory
accounting standards AS -17 "Segment Reporting "
The geographical segments considered for disclosure are - India and
Rest of the world. All the manufacturing facilities are located in
India:
Note: Related Parties and their Relationships are as identified by the
management and relied upon by the Auditors.
Notes:
(a) During the year, the management decided to deregister Pollock and
Atiken (Pty.) Ltd. Notice of deregistration has been received from
local authorities on February 17, 2011 and the company would be
deregistered on the expiry of two months from the date of publication
of the notice.
(b) The management had initiated the voluntary dissolution of Apollo
Tyres, Zrt during the last financial year. The dissolution process was
completed during the year with effect from October 1, 2010.
(c) The management had initiated the winding up of Apollo Tyres Pte
Ltd. during the last financial year. The winding-up process was
completed during the year and the name of Apollo Tyres Pte Ltd. was
struck off the register of companies with effect from June 4, 2010.
(d) During the year the company has incorporated a new subsidiary
company named Apollo Tyres Middle East FZE for trading activity in the
Middle Eastern countries of the tyres sourced from various group
companies.
(e) The company acquired 95% shareholding of KP Construction & Forestry
Development Co. Ltd. (name being changed to Apollo Tyres (LAO) Co.
Ltd.) through newly incorporated company in Singapore, Apollo Tyres
Holdings (Singapore) Pte. Ltd. (ATHS).
(f) During the year, the management decided to liquidate Apollo Tyres
(Nigeria) Ltd. Liquidation process is underway and is expected to be
completed during the next financial year.
(g) The associate companies Apollo Radial Tyres Ltd. & Apollo
Automotive Tyres Ltd. applied for voluntary dissolution during the
year. Notice pursuant to Section 560(3) of the Companies Act, 1956 has
been issued by Registrar of Companies on March 10, 2011 & March 7, 2011
respectively. Consequently, the companies have been dissolved and their
names struck-off from the register upon expiry of 30 days from the date
of said notices.
12. Operating Lease
The Company has acquired assets under the operating lease agreements
that are renewable on a periodic basis at the option of both the lessor
and lessee. Rental expenses under those leases were Rs 400 Million (Rs
250 Million)
13. Previous Years figures have been regrouped or rearranged wherever
considered necessary to conform to the classifications for the current
year. Figures in brackets relate to previous year.
Mar 31, 2010
1. CONTINGENT LIABILITIES
PARTICULARS 2009-10 2008-09
Rs/Million Rs/Million
Sales Tax 108,24 65.64
Income Tax-Disputed Demands under Appeal - 247.10
Claims not acknowledged as debts -
Employee Related 21.54 28.22
- Property Disputes 2.60 2.60
-Others 5.83 16.53
Provision of Security (Bank Deposits
pledged with a Bank against
which working capital loan has been
availed by Apollo Finance Ltd.) 99.52 168.13
Guarantee given by Company for the
loan taken by a group Company
(Apollo Tyres South Africa Pty. Ltd) 673.50 760.80
Guarantees given by bankers on behalf
of the Company 497.66 588.18
Custom Duty 23.50 23.50
Excise Duty* 56.34 125.68
Irrevocable Letters of Credit 3,865.72 1,562.98
- Excludes demand of Rs 532.12 Million (Rs 533.31 Million) raised on
one of the Companys units relating to issues which have been decided
by the Appellate Authority in Companys favour in appeals pertaining to
another unit of the Company. Show-cause notices received from various
Government Agencies pending formal demand notices have not been
considered as contingent liabilities.
In the opinion of the management, no provision is considered necessary
for the disputes mentioned above on the grounds that there are fair
chances of successful outcome of appeals.
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for as on March 31,2010 is Rs 8,323.09 Million
(Rs 6,314.31 Million).
3. Buy Back of Shares :
The Board of Directors of the Company, at its meeting held on March 19,
2009 had approved the Buy Back of equity shares of the Company from
open market through stock exchange route up to an amount not exceeding
Rs 1,220 Million at a price not exceeding Rs 25 per share. This amount
was within 10% of the Companys paid-up equity share capital and free
reserves as per last audited accounts. The Company could not buy back
any shares because of the run-up in the market price of Companys
shares after the commencement of Buy Back. The Company, therefore,
closed its Buy Back offer during the year on the due date of closure,
i.e., March 18,2010.
4. Acquisition of Vredestein Banden B.V. :
The Company acquired 100% Shareholding of Vredestein Banden B.V.
(VBBV), a Dutch Tyre manufacturing Company with a production capacity
of 5.5 Million Tyres per annum on May 15, 2009 through a special
purpose vehicle formed for this purpose. The acquisition was funded
through internal accruals and external debt.
5. Status of Chennai Project:
The construction of first phase of the new green field radial tyre
plant at Oragadam near Chennai has been completed as per project
schedule. The first phase of passenger car vehicle segment of the
project has commenced operations from March 11, 2010 and the Truck/Bus
radial segment has commenced operations from May 11, 2010. The
construction of the second phase of the project has also commenced from
January 20.10 and is going on as per project schedule.
6. Excise duty relating to sales has been disclosed as a reduction
from turnover. Excise duty related to difference between the closing
stock and opening stock has been disclosed in Schedule 10
"(Increase)/Decrease in Work in Process and Finished Goods".
7. Borrowing costs capitalised/transferred to capital work in progress
during the year is Rs 257.42 Million (Rs 215.48 Million). This includes
Rs 31.57 Million towards Loan processing fees and Rs 15.44 Million
towards Bank Charges.
8. Disclosure of Related Party Transactions in accordance with the
mandatory Accounting Standard AS -18 "Related Party Disclosures"
Name of the Related Parties:
PARTICULARS
Subsidiaries 2009-10 2008-09
Apollo (Mauritius) Holdings Apollo (Mauritius)
Holdings Pvt. Ltd. (AMHPL)
Pvt. Ltd. (AMHPL)
Apollo (South Africa) Apollo (South Africa)
Holdings Pty Ltd. (ASHPL)
(Subsidiary through AMHPL)
Holdings Pty Ltd. (ASHPL)
(Subsidiary through AMHPL)
Apollo Tyres South Africa Apollo Tyres South Africa
(Pty) Ltd.(ATSA)
(Previously Dunlop Tyres
International (Pty) Ltd.
(DTIPL)) (Subsidiary
through ASHPL)
(Pty) Ltd.(ATSA)
(Previously Dunlop Tyres
International (Pty) Ltd.
(DTIPL)) (Subsidiary through Dunlop Africa Marketing
(UK) Ltd. (DAMUK)
(Subsidiary through ATSA)
ASHPL)
Dunlop Africa Marketing (UK) Dunlop Zimbabwe (Pvt)
Ltd. (DZL)
(Subsidiary through
DAMUK)
Ltd.(DAMUK)
(Subsidiary through ATSA)
Dunlop Zimbabwe (Pvt) Ltd.
(DZL)
(Subsidiary through DAMUK)
Radun Investments (Pvt.) Radun Investments (Pvt.)
Ltd.
(Subsidiary through
DAMUK)
Ltd.
(Subsidiary through DAMUK)
AFS Mining (Pvt.) Ltd. AFS Mining (Pvt.) Ltd.
(Subsidiary through DZL)
(Subsidiary through DZL)
Apollo Tyres (Cyprus) Pvt.
Ltd ( ATCPL)
(Subsidiary through AMHPL)
Subsidiaries Apollo Tyres AG (AT AG),
Switzerland Apollo Tyres AG, (AT
AG) Switzerland
(Subsidiary through ATCPL)
Apollo Tyres GmbH, (AT
GmbH), Germany Apollo Tyres GmbH, (AT
GmbH), Germany
(Subsidiary through AT AG) (Subsidiary through AT AG)
Apollo Tyres Zrt.(AT ZRT),
Hungary Apollo Tyres Zrt.(AT ZRT),
Hungary
(Subsidiary through AT
AG) (Subsidiary through AT AG)
Apollo Tyres Pte Ltd
( AT PL), Singapore Apollo Tyres Pte Ltd ( AT
PL) Singapore
(Subsidiary through
AMHPL) (Subsidiary through AMHPL)
Apollo Tyres (Nigeria)
Limited Apollo Tyres (Nigeria)
Limited
(Subsidiary through AMHPL) (Subsidiary through
AMHPL)
Apollo Tyres Co-Operatief
UA (Apollo Coop),
The Netherlands (Subsidiary
through AMHPL)
Pollock & Aitken (Pty)
Limited
(Subsidiary through ATSA)
Apollo Vredestein BV-AVBV
(Previously
Vredestein Banden BV), The
Netherlands
(Subsidiary through Apollo
Coop)
Subsidiaries of Apollo
Vredestein BV:
Vredestein GmbH
Vredestein Norge A S
Vredestein UK Ltd
NV Vredestein SA
Vredestein GesmbH
Vredestein Schweiz AG
Vredestein Deck AB
Vredestein Italia Sri
Vredestein Iberica SA
Vredestein Tyres North
America Inc
Vredestein Kft
Vredestein Polska Sp Z o.o
Vredestein Bekleding
Vredestein Consulting BV
Finlo BV
Vredestein Marketing BV
Vredestein Marketing
Agentur BV & Co KG
Notes:
a) Apollo Tyres Co-operatief UA (Apollo Coop) and Apollo Tyres (Cyprus)
Pvt. Ltd. (ATCPL) are incorporated during the year.
b) As a part of group restructuring exercise, entire share capital of
AT AG has been transferred by Apollo Tyres Ltd (Parent Company) to
Apollo Tyres (Cyprus) Pvt. Ltd., a subsidiary through AMHPL, on March
9, 2010.
c) During the year, the management decided to merge the German
subsidiary AT, GmbH with another group entity Vredestein, GmbH which is
a subsidiary of Apollo Vredestein BV (AVBV), Netherlands. The upstream
merger has been registered by the Court of Registration, Germany on
April 8, 2010 with an effective date of October 1, 2009
d) The Company acquired 100% Shareholding of Vredestein Banden BV
(VBBV), a Dutch Tyre manufacturing company with a production capacity
of 5.5 Million Tyres per annum along with various subsidiaries on May
15, 2009 through a special purpose vehicle, Apollo Cooperatief UA. The
acquisition was funded through internal accruals and external debt.
e) Pollock & Aitken (Pty) Limited (Subsidiary through ATSA) has been
Acquired by Apollo Tyres South Africa as a part of pension surplus.
Name of the Related Parties:
PARTICULARS 2009-10 2008-09
Associates Apollo International Ltd (AIL) Apollo International
Ltd (AIL)
Encorp E Services Ltd Encorp - Services Ltd
UFO Moviez India Ltd UFO Moviez India Ltd
Landmark Farms & Housing
(P) Ltd Landmark Farms &
Housing (P) Ltd
Sunlife Tradelinks (P) Ltd Sunlife Tradelinks
(P) Ltd
Travel Tracks Ltd Travel Tracks (P) Ltd
Classic Auto Tubes Ltd. (CATL) Classic Auto Tubes
Ltd (CATL)
PTL Enterprises Ltd (PTL) PTL Enterprises Ltd
(PTL)
National Tyre Services,
Zimbabwe National Tyre Services,
Zimbabwe
Pressurite (Pty) Ltd, South
Africa Pressurite (Pty) Ltd,
South Africa
Apollo Finance Ltd Apollo Finance Ltd
Artemis Medicare Services Ltd Artemis Medicare
Services Pvt Ltd
Artemis Health Sciences Ltd Artemis Health Sciences
Pvt Ltd
Apollo Automotive Tyres Ltd Apollo Automotive Tyres
Ltd
Apollo Radial Tyres Ltd Apollo Radial Tyres Ltd
Key
Management Mr 0 S Kanwar Mr 0 S Kanwar
Personnel Mr Neeraj Kanwar Mr Neeraj Kanwar
Mr U S Oberoi Mr U S Oberoi
Mr Sunam Sarkar Mr Sunam Sarkar
Relatives
of Key Mr Raaja Kanwar Mr Raaja Kanwar
Managerial
Personnel
9. The mark to market losses of Rs 3.89 Million (Nil) relating to
undesignated / ineffective forward contracts / derivatives has been
recognised in the Profit and Loss Account.
10, Previous Years figures have been regrouped or rearranged wherever
considered necessary to conform to the classifications for the current
year. Figures in brackets relate to previous year.
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