Mar 31, 2018
Corporate information
Federal-Mogul Goetze (India) Limited (âFMGILâ or âthe Companyâ), is inter-alia engaged mainly in the manufacture, supply and distribution of âautomotive componentsâ used in two/three/four wheeler automobiles.
The principal facilities of the Company are located at Patiala (Punjab), Bengaluru (Karnataka) and Bhiwadi (Rajasthan), with its registered office in Delhi. The Company is listed at National Stock Exchange of India Limited and Bombay Stock Exchange.
Federal Mogul Holdings Limited, Mauritius, is the immediate parent company and ultimate parent company is Federal Mogul LLC, USA.
1. Statement of significant accounting policies
1.1 Statement of compliance with Ind AS
These financial statements (âfinancial statementsâ) of the Company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified by Ministry of Corporate Affairs (âMCAâ) under section 133 of the Companies Act 2013 read with the Companies (Indian Accounting Standards) Rules 2015, as amended and other relevant provisions of the Act. The Company has uniformly applied the accounting policies during the periods presented.
For all periods up to and including the year ended 31 March 2017, the Company had prepared its financial statements in accordance with accounting standards notified under section 133 of the Act, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP). These financial statements for the year ended 31 March 2018 are the first financial statements which the Company has prepared in accordance with Ind AS (see note 32 for explanation for transition to Ind AS). For the purpose of comparatives, financial statements for the year ended 31 March 2017 and opening balance sheet as at 1 April 2016 are also prepared as per Ind AS.
The financial statements for the year ended 31 March 2018 were authorized and approved for issue by the Board of Directors on 29th May 2018.
1.2 Recent accounting pronouncement
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.
The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.
Ind AS 115- Revenue from Contract with Customers: On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)
The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018. The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be insignificant.
1 A) Indian rupee loan amounting to Rs 2,000 lacs from Yes Bank in two tranches of Rs 1,000 lacs each taken on 31 May 2013 and 28 June 2013 respectively carried interest @ 11.70% p.a. Both tranches are repayable in 36 equal monthly installments of Rs. 27.77 lacs each along with interest after moratorium period of 12 months from the date of the disbursement of loan, viz., 31 May 2014 and 28 June 2014 respectively. The loan was secured by first parri passu charge on moveable assets of the Company including plant and machinery, spares, tools and accessories, furniture and fixtures and other moveable assets of the Company, excluding vehicles.
B) Indian rupee loan amounting to Rs 4,000 lacs from Yes Bank in two tranches of Rs 2,000 lacs each taken on 22 Dec 2015 and 31 Dec 2015 respectively carries interest @ 10.40% p.a. Both tranches are repayable in 36 equal monthly installments of Rs. 55.55 lacs each along with interest after a moratorium period of 12 months from the date of the disbursement of loan, viz., 22 Dec 2016 and 31 Dec 2016 respectively. The loan is secured by first parri passu charge on moveable assets of the Company including plant and machinery, spares, tools and accessories, furniture and fixtures and other moveable assets of the Company, excluding vehicles.
C) In May 2017, the company had repaid all of its term loans amounting to Rs 3,555 lacs and there is no such term loan exists as on 31st March 2018.
2. Current maturities of long term borrowings amounting to Rs. Nil as on 31 March 2018 (Rs. 1,388.89 lacs as on 31 March 2017 and Rs. 1,000 lacs as on 1 April 2016) are included under the head âOther financial liabilitiesâ. (refer Note no.19).
Note (a)
(i) Indian rupees working capital loans and cash credit facilities are secured against hypothecation of current assets of the company, both present and future with HDFC bank, Yes Bank, Kotak Mahindra Bank, State Bank of India and Deutsche Bank.
(ii) Cash credit facilities carries interest rate ranges from 9% to 11.80% p.a.
(iii) Details of working capital loans:
Note (b): Inter-corporate deposits are repayable on demand and carry rate of interest ranging from 8.50 % to 9.50% p.a. (31 March 2017, 9.50% p.a.) (1 April 2016, 9.50% p.a.)
Note (c): Balance as on 31 March 2018 includes unsecured cash credit facility from Bank of America which carries interest rate @ 7.75%. Balance as on 31 March 2017 includes Export Packing Credit Loan from Bank of America of Rs.1,979.74 lacs at interest rate of 5% p.a., repayable in May, 2017. Balance as on 1 April 2016 includes unsecured loan from HDFC of Rs. 2,000 lacs carriying interest rate of 9.8% p.a, repayable in April, 2016. Also, Company also took an Export Packing Credit Loan for Rs 2,009.92 lacs from Bank of America at interest rate of 6.25% p.a., repayable in May, 2016.
3. First Time Adoption of Ind AS Transition to Ind AS
These standalone financial statements, for the year ended March 31, 2018, are the first financial statements the Company has prepared in accordance with Ind AS. For the periods upto March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and Amendment thereof (âIndian GAAPâ or âprevious GAAPâ).
Accordingly, the Company has prepared standalone financial statements which comply with Ind AS applicable for the year ended March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Companyâs opening balance sheet was prepared as at April 1, 2016, the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2016 and the financial statements as at and for the year ended March 31, 2017.
A. Exemptions and exceptions applied
Ind AS 101 allows first-time adopters certain optional exemptions and mandatory exceptions from the retrospective application of certain requirements under Ind AS.
Ind AS optional exemptions A.1.1 Deemed cost- Previous GAAP carrying amount: (Property, plant and equipments and Intangible Assets)
The Company has elected to avail exemption under Ind AS 101 to use previous GAAP carrying value as deemed cost at the date of transition for all items of property, plant and equipment and intangible assets as per the balance sheet prepared in accordance with previous GAAP.
A.1.2 Investment in Subsidary
In separate financial statements, a first-time adopter that subsequently measures an investment in a subsidiary at cost, may measure such investment at cost (determined in accordance with Ind AS 27) or deemed cost (fair value or previous GAAP carrying amount) in its separate opening Ind AS balance sheet.
The Company has elected to apply previous GAAP carrying amount of its investment in subsidiary for investment in equity shares of one of its subsidiary as at April 1, 2016 as deemed cost on the date of transition to Ind AS Ind AS mandatory exceptions A.1.3 Estimates
The estimates as at April 1, 2016 and as at March 31, 2017 are consistent with those made for the same dates in accordance with Indian GAAP apart from the Impairment of financial assets based on Expected Credit Loss (ECL) model where application of Indian GAAP did not require estimation.
The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions as at April 1, 2016 the date of transition to Ind AS, and as of March 31, 2017
A.1.4 Classification and measurement of financial assets
The Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.
B. Reconciliations between previous GAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS:
Note-1. Environment health safety provision
Under IND-AS, non current provision for Environment, health and Saftey are recorded amortised cost. The amount of a provision is discounted to present value based on the interest cost determined by management equal to its interest cost of borrowing of the Company.
Note-2. Depreciation on leasehold land
Under Ind AS, amortisation of leasehold land has been recorded over the period of lease.
Note-3. Deferred tax impact on adjustments
Under Previous GAAP deferred taxes were recognised for the tax effect of timing differences between accounting profit and taxable profit for the year using the income statement approach. Under Ind AS, deferred taxes are recognised using the balance sheet for future tax consequences of temporary differences between the carrying value of assets and liabilities and their respective tax bases. The above difference, together with the consequential tax impact of the other Ind AS transitional adjustments lead to temporary differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or through profit and loss account or other comprehensive income.
Note-4. Other comprehensive income
Items of income and expense that are not recognised in profit and loss are shown in the statement of profit and loss as âother comprehensive incomeâ includes re-measurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP Note-5. Cash flow statement
The transition from previous GAAP to Ind AS has no material impact on the standalone cash flow of the Company.
4. Fair value disclosures
i) Fair values hierarchy
Financial assets and financial liabilities measured at fair value in the statement of financial position are classified into three Levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1: quoted prices (unadjusted) in active markets for financial instruments.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data rely as little as possible on entity specific estimates.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
(ii) Company has only one investment carried at fair value through profit and loss account. The fair value of investment in GI Power Corporation Limited is determined to be zero. There are no other financial assets or liabilities carried at fair value.
(iii) Fair value of instruments measured at amortised cost
The management assessed that cash and cash equivalents, trade receivables, other receivables, trade payables and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
The fair values of loans, security deposits, borrowings and other financial assets and liabilities are considered to be the same as their fair values, as there is an immaterial change in the lending rates.
ââInvestment in equity instrument of subsidiary has been accounted at cost in accordance with Ind AS 27, therefore not within scope of Ind AS 109, hence, not included here.
** The company has an investment in GI Power Corporation Limited which is carried at fair value which is equivalent to zero.
ii) Risk Management
The Companyâs activities expose it to market risk, liquidity risk and credit risk. The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.
A. Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation to the company. The Company is exposed to this risk for various financial instruments, for example by granting loans and receivables to customers, placing deposits, etc. The Companyâs maximum exposure to credit risk is limited to the carrying amount of following types of financial assets.
- cash and cash equivalents,
- trade receivables,
- loans & receivables carried at amortised cost, and
- deposits with banks
a) Credit risk management
The Company assesses and manages credit risk based on internal credit rating system, continuously monitoring defaults of customers and other counterparties, identified either individually or by the company, and incorporates this information into its credit risk controls. Internal credit rating is performed for each class of financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.
A: Low B: Medium C: High
Cash and cash equivalents and bank deposits
Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country.
Trade receivables
The Company closely monitors the credit-worthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become six months past due.
Other financial assets measured at amortised cost
Other financial assets measured at amortized cost includes loans and advances to employees, security deposits and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amounts are within defined limits.
b) Expected credit losses
The Company provides for expected credit losses based on the following:
The company recognizes lifetime expected credit losses on trade receivables using a simplified approach, wherein Company has defined percentage of provision by âanalysing historical trend of default based on the criteria defined above. And such provision percentage determined have been âconsidered to recognise life time expected credit losses on trade receivables.
B) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities.
Management monitors rolling forecasts of the Companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates. In addition, the Companyâs liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
Maturities of financial liabilities
The tables below analyses the Companyâs financial liabilities into relevant maturity companyings based on their contractual maturities for all non-derivative financial liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows. For balances due within 12 months amounts equal their carrying values as the impact of discounting is not significant.
C) Market Risk
a) Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, Euro and Japanese Yen. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the functional currency of any of the Company. Considering the low volume of foreign currency transactions, the Companyâs exposure to foreign currency risk is limited and the Company hence does not use any derivative instruments to manage its exposure. Also, the Company does not use forward contracts and swaps for speculative purposes.
(i) Foreign currency risk exposure:
The Companys exposure to foreign currency risk at the end of the reporting period expressed in Rs., are as follows:-
b) Interest rate risk
i) Liabilities
The Companyâs policy is to minimise interest rate cash flow risk exposures on long-term financing. As at 31 March 2018, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. The Companyâs investments in fixed deposits pay fixed interest rates.
Interest rate risk exposure
Below is the overall exposure of the Company to interest rate risk:
ii) Assets
The Companyâs fixed deposits are carried at amortised cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
c) Price risk
The Company does not have any significant investments in equity instruments which create an exposure to price risk.
35. Capital management
The Companyâ s capital management objectives are
- to ensure the Companyâs ability to continue as a going concern
- to provide an adequate return to shareholders
The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.
Management assesses the Companyâs capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Companyâs various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
5. Segment information
As the Companyâs business activities fall within a single primary business segment viz. auto components for automobile industry, the disclosure requirement of Indian Accounting Standard (Ind AS-108), Operating Segments is not applicable.
The analysis of geographical segment is based on the geographical location of the customers. The following table shows the distribution of the Companyâs consolidated sales by geographical market, regardless of where the goods were produced.
Revenue from one customer amounts to Rs. 13,437.40 Lacs (previous year Rs. Nil). No other single customer represents 10% or more to the Group revenue for financial year ended March 31, 2018 and March 31, 2017.
6. Related Party Transactions
(i) In accordance with the requirement of Indian Accounting Standard (Ind AS - 24) on related party disclosures where control exist and description of the relationship are as follows:
(a) Name of Parties where control exists
i) Holding Company
- Federal Mogul Holdings Limited (Mauritius)
ii) Subsidiary Company
- Federal-Mogul TPR (India) Limited
iii) Ultimate Holding Company
- Federal Mogul LLC, USA
(b) Key managerial personnel
- Mr. Vinod Kumar Hans, Whole Time Managing Director
- Mr. Manish Chadha, Chief Finance Officer & Finance Director
- Mr. Rajesh Sinha, Additional Director
- Mr. Khalid Iqbal Khan, Whole Time Director- Legal and Company Secretary
- Mr. Krishnamurthy Naga Subramaniam, Non-executive Director
- Mr. Mukul Gupta, Non-executive Director
- Mr. Sundareshan Kanakku Chembakaraman Pillai, Non-executive Director (appointed w.e.f 16th Dec 2016)
- Mr. Mahendra Kumar Goyal, Non-executive Director
(c)Fellow and step fellow subsidiaries
- Federal Mogul Burscheid GMBH, Germany
- Federal Mogul Nurnberg, GMBH (Germany)
- Federal Mogul Holding Deutschland (Germany)
- Federal Mogul Limited (U.K.)
- Federal Mogul Financial Services FRANCTNL (France)
- Federal Mogul Gorzyce, S.A. (Poland)
- Federal Mogul Friedberg, GMBH (Germany)
- Federal Mogul Sintered Products Limited. (U.K.)
- Federal Mogul Friction Products Limited (Thailand)
- Federal Mogul Thailand Manufacturina Ayutthaya, (Thailand)
- Federal Mogul France, S.A. (France)
- Federal Mogul Corporation, Garennes (France)
- Federal Mogul (Shanghai)
- Federal Mogul Friction Products Limited
- Federal Mogul Worldwide Aftermarket
- Federal Mogul Sistemas Brazil
- Federal Mogul Dongsuh Piston Co. Limited. (China)
- Federal Mogul Bradford Limited.
- Federal Mogul Powertrain Spara, MII
- Federal Mogul KK Yokohama
- Federal Mogul Powertrain Inc, Southbend
- Federal Mogul Chasseneuil
- Federal Mogul Kontich
- Federal Mogul Anand Bearings India Limited (India)
- Federal-Mogul Ignition Products India Limited (India)
- Federal-Mogul Motorparts Limited. (India)
- Federal-Mogul Powertrain Solutions India Private Limited (India)
- Federal Mogul Anand Sealing India Limited (India)
- Motocare India Private Limited (India)
7. Operating lease
a) Assets taken under operating lease
Office premises taken by the company are on operating leases. The company enter into certain cancellable and non cancellable operating leases arrangement towards office premises.
The details disclosure required by Ind AS-17, Leases is given below:
8. Employee benefit obligations Gratuity
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of services, gets a gratuity on departure at 15 days basic salary (last drawn) for each completed year of service on terms not less favourable than the provisions of the payment of Gratuity Act, 1972. The scheme is funded with an insurance company in the form of a qualifying insurance policy.
The following tables summaries 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 plan.
9. Details of dues to micro and small enterprises as defined under the MSMED Act, 2006
On the basis of confirmation obtained from suppliers who have registered themselves under the Micro, Small and Medium Enterprise Development Act, 2006 (MSMED Act, 2006) and based on the information available with the Company, the following are the details:
10. Expense capitalisation
The Company has capitalized various expenses incurred in the course of construction of self generated assets in accordance with Ind AS 16 - Property, plant and equipments, the details of expenses capitalized for the purpose of construction of self generated assets are as follows:
11. Provision for regulatory matters
The Company is continuosly evaluating processes for regulatory matters at its factories based on more accurate evidences available, a provision, towards costs to be incurred to remediate these matters, of Rs. 367.33 lacs is included under Note no. 15 for provisions which are net of amounts utilized of Rs. 247.38 lacs during the year towards remediation.
In addition to the above, the provision for regulatory matters includes a provision of Rs.1,959.19 lacs towards certain other regulatory matters.
The Company is actively seeking to resolve these actual and potential statutory, taxation, regulatory and contractual obligations. In accordance with requirements of Indian Accounting Standard (Ind AS) 37 on âProvisions, Contingent liability and Contingent assetsâ issued by the Institute of Chartered Accountants of India, although difficult to quantify based on the complexity of the issues, the Company has accrued amounts corresponding to its best estimate of the costs associated with such regulatory and contractual obligations on the basis of available information and best professional judgment of experts appointed for this exercise.
Based on consultations obtained from the experts in respect of the said matters, in managementâs view, no further costs are expected to be incurred for which a provision would be required at this stage and considers the provisions made to be adequate
12. Management support charges
During the financial year 2017-18, the Audit committee in its meeting held on December 6, 2017, had approved increase in management support charges under Cost Allocation Agreement with Federal Mogul Holding Deutschland Gmbh to Rs. 3,776.35 lacs (approx.) per annum, effective July 1, 2017 against the earlier charge of Rs. 580.06 lacs per annum for financial year 201617. The propotionate charge for the full financial year 2017-18 is Rs. 3,016.57 lacs (Previous year 2016-17 Rs.580.06 lacs).
These charges are availment of centralised services pertaining to all the products of the company and, inter-alia, include Technical Support, Operations Management, Applications Engineering, Global Executive Management Services, Purchasing, Key Accounts Sales Management. This charge is based on actual services received by the company on cost basis without any mark up and is at an armâs length basis.
13. Per transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961, the Company is required to use certain specific methods in computing armâs length prices of international transactions with associated enterprises and maintain adequate documentation in this respect. Since law requires existence of such information and documentation to be contemporaneous in nature, the Company has appointed independent consultants for conducting a Transfer Pricing Study (the âStudyâ) to determine whether the transactions with associate enterprises undertaken during the financial year are on an âarms length basisâ. Management is of the opinion that the Companyâs international transactions are at armâs length and that the results of the ongoing study will not have any impact on the financial statements and the independent consultants appointed have also preliminarily confirmed that they do not expect any transfer pricing adjustments.
14. Corporate social responsibility
a) Gross amount required to be spent by the Company during the year in compliance with section 135 of the Act is Rs. 155.11 lacs.
b) Amount spent during the year on :-
15. With the implementation of Goods and service tax Act, 2017 (GST), w.e.f 1st July 2017, Revenue from operations for the year ended 31 March 2018 is reported net of GST (from 01 July 2017 till 31 March 2018) and gross of excise duty (from 01 April 2017 till 30 June 2017). However, revenue from operations for the year ended 31 March 2017 is presented in the financial gross of excise duty. Had previously reported revenues were shown net of excise duty, the comparative revenue of the company would have been as follows:
Mar 31, 2017
1. (A) Indian rupee loan amounting to Rs 2,000 lacs from Yes Bank in two tranches of Rs 1,000 lacs each taken on May 31, 2013 and June 28, 2013 respectively carries interest @ 11.70% p.a. Both tranches are repayable in 36 equal monthly installments of Rs. 27.77 lacs each along with interest after moratorium period of 12 months from the date of the disbursement of loan, viz., May 31, 2014 and June 28, 2014 respectively. The loan is secured by first parri passu charge on moveable assets of the Company including plant and machinery, spares, tools and accessories, furniture and fixtures and other moveable assets of the Company, excluding vehicles.
(B) Indian rupee loan amounting to Rs 4,000 lacs from Yes Bank in two tranches of Rs 2,000 lacs each taken on Dec 22, 2015 and Dec 31, 2015 respectively carries interest @ 10.40% p.a. Both tranches are repayable in 36 equal monthly installments of Rs. 55.55 lacs each along with interest after a moratorium period of 12 months from the date of the disbursement of loan, viz., Dec 22, 2016 and Dec 31, 2016 respectively. The loan is secured by first parri passu charge on moveable assets of the Company including plant and machinery, spares, tools and accessories, furniture and fixtures and other moveable assets of the Company, excluding vehicles.
2. Current maturities of long term borrowings amounting to Rs. 1,388.89 lacs (Previous year: Rs. 1,000 lacs) are included under the head ''Other current liabilities''. (refer note 11)."
Note (a)
i. Indian rupees working capital loans and cash credit facilities are secured against hypothecation of current assets of the company, both present and future with HDFC bank, Yes Bank, Kotak Mahindra Bank, State Bank of India and Deutsche Bank.
ii. Cash credit facilities carries interest rate range of 9.50% to 11.80% p.a.
iii. Details of working capital loans.
Note (b): Inter-corporate deposits are repayable on demand and carry rate of interest 9.50 % p.a
Note (c): Balance as on 31 March 2017 includes Export Packing Credit Loan from Bank of America of of Rs 1,979.74 lakhs at interest rate of 5% p.a., repayable in May, 2017.
3. Segment Information
Based on the guiding principles given in AS-17 ''Segmental Reporting'' notified under Companies (Accounting Standard) Rules, 2006, the Company''s primary business segment is manufacturing and trading of auto components. Considering the nature of Company''s business and operations, there are no separate reportable business segment, as there is only one business segment and hence, there are no additional disclosures required to be provided other than those already been provided in the financial statements.
The analysis of geographical segment is based on the geographical location of the customers. The following table shows the distribution of the Company''s consolidated sales by geographical market, regardless of where the goods were produced.
The Company has common assets for producing goods for India and outside countries. Hence, separate figures for assets/ additions to fixed assets cannot be furnished.
32. Capital and other commitments
Total estimated amount of contracts, remaining to be executed on capital account (net of advances) and not provided for as at 31 March 2017 is Rs 1,206.51 lacs (31 March 2016 Rs. 1,392.81 lacs).
34(I). In accordance with the requirement of Accounting Standard (AS - 18) on related party disclosures where control exist and description of the relationship are as follows:
(a) Name of Parties where Control Exists
i) Holding Company
- Federal Mogul Holdings Limited (Mauritius)
ii) Subsidiary
- Federal-Mogul TPR (India) Limited
iii) Ultimate Holding Company
- Federal Mogul LLC, USA
(b) Key managerial personnel*
- Mr. Vinod Kumar Hans, Managing Director (w.e.f Jan 1, 2016)
- Mr. Andreas Wilhelm Kolf, Managing Director (resigned on Dec 31, 2015)
- Mr. Manish Chadha, CFO and Director (CFO : w.e.f June 1, 2015 and Director: w.e.f Feb 5, 2016)
- Mr. Rajesh Sinha, Additional Director (w.e.f Jan 1, 2016)
- Mr. Sachin Selot, CFO and Whole Time Director (resigned on May 26, 2015)
- Mr. Khalid Iqbal Khan, Whole Time Director
(c) Fellow and step fellow subsidiaries
- Federal Mogul Burscheid GMBH, Germany
- Federal Mogul Nurnberg, GMBH (Germany)
- Federal Mogul Holding Deutschland (Germany)
- Federal Mogul Limited (U.K.)
- Federal Mogul Financial Services FRANCTNL (France)
- Federal Mogul Gorzyce, S.A. (Poland)
- Federal Mogul Friedberg, GMBH (Germany)
- Federal Mogul Sintered Products Limited. (U.K.)
- Federal Mogul Friction Products Limited (Thailand)
- Federal Mogul Thailand Manufacturina Ayutthaya, (Thailand)
- Federal Mogul France, S.A. (France)
- Federal Mogul Corporation, Garennes (France)
- Federal Mogul (Shanghai)
- Federal Mogul Friction Products Limited.
- Federal Mogul Worldwide Aftermarket
- Federal Mogul Sistemas Brazil
- Federal Mogul Dongsuh Piston Co. Limited. (China)
- Federal Mogul Bradford Limited.
- Federal Mogul Powertrain Spara, MII
- Federal Mogul KK Yokohama
- Federal Mogul Powertrain Inc, Southbend
- Federal Mogul Chasseneuil
- Federal Mogul Kontich
- Federal Mogul Anand Bearings India Limited (India)
- Federal-Mogul Ignition Products India Limited (India)
- Federal-Mogul Motorparts Limited. (India)
- Federal-Mogul Powertrain Solutions India Private Limited (India)
(Formerly Federal-Mogul PTSB India Private Limited. (India))
- Federal Mogul Anand Sealing India Limited (India)
- Motocare India Private Limited (India).
Those transactions along with related balances as at 31 March 2017 and 31 March 2016 are presented in the following table:
4. Provision for regulatory matters
During the year ended 31 December 2010, the Company had commenced an evaluation process for various regulatory matters at its factories. Based on more accurate information discovered, a provision, towards costs to be incurred to remediate these matters, of Rs. 424.63 lacs is included under Note no. 8 of Standalone Financial Statements for provisions which are net of amounts utilized of Rs. 185.39 lacs during the year towards remediation.
In addition to the above, the provision for regulatory matters includes a provision of Rs.1,505.39 lacs towards certain other regulatory matters.
The Company is actively seeking to resolve these actual and potential statutory, taxation, regulatory and contractual obligations. In accordance with requirements of Accounting Standard 29 on ''Provisions, Contingent liability and Contingent assets'' issued by the Institute of Chartered Accountants of India, although difficult to quantify based on the complexity of the issues, the Company has accrued amounts corresponding to its best estimate of the costs associated with such regulatory and contractual obligations on the basis of available information and best professional judgment of experts appointed for this exercise.
Based on consultations obtained from the experts in respect of the said matters, in management''s view, no further costs are expected to be incurred for which a provision would be required at this stage and considers the provisions made to be adequate.
5. Management support charges
During the year 2016-17, the Company has paid management support charges to its group companies of Rs 580.06 lacs (31 March 2016 Rs 581.32 lacs) in respect of certain global support services related to various functions including engineering, IT, finance, legal and HR etc provided to the Company. The Company carries out its transfer pricing study annually and updates its documentation, choice of methods and benchmarks to ascertain adequacy and compliance with the "arms length" principles prescribed under Income Tax Act. For the year April 1, 2016 to March 31, 2017, the process of updation is ongoing and management is confident of completing the same. The provision for current tax has been made accordingly considering the said amounts of Rs. 580.06 lacs as "allowable expenditure".
6. Per transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961, the Company is required to use certain specific methods in computing arm''s length prices of international transactions with associated enterprises and maintain adequate documentation in this respect. Since law requires existence of such information and documentation to be contemporaneous in nature, the Company has appointed independent consultants for conducting a Transfer Pricing Study (the ''Study'') to determine whether the transactions with associate enterprises undertaken during the financial year are on an "arms length basis". Management is of the opinion that the Company''s international transactions are at arm''s length and that the results of the on-going study will not have any impact on the financial statements and the independent consultants appointed have also preliminarily confirmed that they do not expect any transfer pricing adjustments.
7. Previous year numbers have been regrouped/reclassified, wherever considered necessary.
Mar 31, 2016
1. Segment Information
Based on the guiding principles given in AS-17 ''Segmental Reporting'' notified under section 133 of the Companies Act 2013, read to together with Company (Accounts) Rules, 2014, the Company''s primary business segment is manufacturing of auto components. Considering the nature of Company''s business and operations, there are no separate reportable business segment, as there is only one business segment and hence, there are no additional disclosures required to be provided other than those already been provided in the financial statements.
The analysis of geographical segment is based on the geographical location of the customers. The following table shows the distribution of the Company''s consolidated sales by geographical market, regardless of where the goods were produced.
2. Related Party Transactions (I) In accordance with the requirement of Accounting Standard (AS - 18) on related party disclosures where control exist and description of the relationship are as follows:
(a) Name of Parties where control exists
i) Holding Company
- Federal Mogul Holdings Limited (Mauritius)
ii) Subsidiary
- Federal-Mogul TPR (India) Limited
iii) Ultimate Holding Company
- Federal Mogul Corporation, USA"
(b) Key managerial personnel
- Mr. Vinod Kumar Hans, Managing Director (w.e.f January 1, 2016)
- Mr. Andreas Wilhelm Kolf, Managing Director (resigned on December 31, 2015)
- Mr. Manish Chadha, CFO and Director (CFO : w.e.f June 1, 2015 and Director: w.e.f Feb 5, 2016)
- Mr. Rajesh Sinha, Additional Director (w.e.f January 1, 2016)
- Mr. Sachin Selot, CFO and Whole Time Director (resigned on May 22, 2015)
- Mr. Khalid Iqbal Khan, Whole Time Director (w.e.f May 22, 2015) and Company Secretary
(c) Fellow and step fellow subsidiaries
- Federal Mogul Burscheid GMBH, Germany
- Federal Mogul Nurnberg, GMBH (Germany)
- Federal Mogul Holding Deutschland (Germany)
- Federal Mogul Limited (U.K.)
- Federal Mogul Financial Services FRANCTNL (France)
- Federal Mogul Gorzyce, S.A. (Poland)
- Federal Mogul Friedberg, GMBH (Germany)
- Federal Mogul Sintered Products Ltd. (U.K.)
- Federal Mogul Friction Products Ltd (Thailand)
- Federal Mogul Thailand Manufacturina Ayutthaya, (Thailand)"
- Federal Mogul France, S.A. (France)
- Federal Mogul Corporation, Garennes (France)
- Federal Mogul (Shanghai)
- Federal Mogul Friction Products Ltd.
- Federal Mogul Worldwide Aftermarket
- Federal Mogul Sistemas Brazil
- Federal Mogul Dongsuh Piston Co. Ltd. (China)
- Federal Mogul Bradford Ltd.
- Federal Mogul Powertrain Spara, MII
- Federal Mogul KK Yokohama
- Federal Mogul Powertrain Inc, Southbend
- Federal Mogul Chasseneuil
- Federal Mogul Kontich
- Federal Mogul Anand Bearings India Ltd (India)
- Federal-Mogul Ignition Products India Ltd (India)
- Federal-Mogul Motorparts Ltd. (India)
- Federal-Mogul Powertrain Solutions India Private Limited (India)
(Formerly known as Federal-Mogul PTSB India Pvt. Ltd. (India))
- Federal Mogul Anand Sealing India Limited (India)
- Motocare India Private Limited (India).
Those transactions along with related balance as at 31 March 2016 and 31 March 2015 are presented in the following table.
3. Disclosures in accordance with AS-15 on "Employee Benefits"
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of services, gets a gratuity on departure at 15 days basic salary (last drawn) for each completed year of service on terms not less favorable than the provisions of the payment of Gratuity Act, 1972. The scheme is funded with an insurance company in the form of a qualifying insurance policy.
The following tables summaries 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 plan.
The Company''s expected contribution to the fund in the next year is not presently ascertainable and hence, the contribution expected to be paid during the annual period beginning after the balance sheet date as required by para 120(o) of the accounting standard 15(revised) on employee benefits has not been disclosed.
4. Details of dues to micro and small enterprises as defined under the MSMED Act, 2006
On the basis of confirmation obtained from suppliers who have registered themselves under the Micro, Small and Medium Enterprise Development Act, 2006 (MSMED Act, 2006) and based on the information available with the Company, the following are the details:
5. Provision for regulatory matters
During the year ended 31 December 2010, the Company had commenced an evaluation process for various regulatory matters at its factories. Based on more accurate information discovered, a provision, towards costs to be incurred to remediate these matters, of Rs. 439.46 lacs is included under Note no. 8 for provisions which are net of amounts utilized of Rs. 305.50 lacs during the year towards remediation.
In addition to the above, the provision for regulatory matters includes a provision of Rs.1,384.83 lacs towards certain other regulatory matters.
The Company is actively seeking to resolve these actual and potential statutory, taxation, regulatory and contractual obligations. In accordance with requirements of Accounting Standard 29 on ''Provisions, Contingent liability and Contingent assets'' issued by the Institute of Chartered Accountants of India, although difficult to quantify based on the complexity of the issues, the Company has accrued amounts corresponding to its best estimate of the costs associated with such regulatory and contractual obligations on the basis of available information and best professional judgment of experts appointed for this exercise.
Based on consultations obtained from the experts in respect of the said matters, in management''s view, no further costs are expected to be incurred for which a provision would be required at this stage and considers the provisions made to be adequate.
6. Management support charges
During the year 2015-16, the Company has paid management support charges to its group companies of Rs 581.32 lacs (31 March 2015 Rs 774.68 lacs) in respect of certain application engineering services provided to the Company. The Company carries out its transfer pricing study annually and updates its documentation, choice of methods and benchmarks to ascertain adequacy and compliance with the arms length principles prescribed under Income Tax Act. For the year April 1, 2015 to March 31, 2016, the process of updating is ongoing and management is confident of completing the same. The provision for current tax has been made accordingly considering the said amounts of Rs. 581.32 lacs as allowable expenditure.
7. Per transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961, the Company is required to use certain specific methods in computing arm''s length prices of international transactions with associated enterprises and maintain adequate documentation in this respect. Since law requires existence of such information and documentation to be contemporaneous in nature, the Company has appointed independent consultants for conducting a Transfer Pricing Study (the ''Study'') to determine whether the transactions with associate enterprises undertaken during the financial year are on an "arms length basis". Management is of the opinion that the Company''s international transactions are at arm''s length and that the results of the on-going study will not have any impact on the financial statements and the independent consultants appointed have also preliminarily confirmed that they do not expect any transfer pricing adjustments.
8. During the year 2014-15 the Company had entered into a power purchase agreement with Real Captive Power (RCP) and paid Rs. 850 lacs as refundable security deposit which was recoverable in 5 equal installments beginning from 7th to 11th year. Further, the Company had purchased 26% equity shares in RCP for Rs 26 lacs, in order to be eligible as a captive user for sourcing power at a cheaper rate from RCP As RCP was a newly incorporated company, recoverability of security deposit would solely be dependent on the financial position of RCP at the time of repayment, therefore, on a conservative basis, the management created a provision of Rs. 850 lacs and the same was duly provided for in the books of accounts of the Company in March 2015. Now, in view of delay in the start of power supply by RCP RCP has refunded the said security deposit of Rs. Rs. 850 lacs. The same amount which had already been provided for during the year ended March 2015 has been reversed now and shown as part of other income. Further, the Company has also disposed off the 26% equity holding in RCP at cost.
9. Previous year/period numbers have been regrouped/ reclassified, wherever considered necessary. Last year, the Company has changed the financial year from January - December to April - March . Pursuant to change in financial year the previous period financials has been prepared from January 1, 2014 to March 31, 2015 (i.e 15 months).
Mar 31, 2015
1. a) Corporate Information
Federal-Mogul Goetze (India) Limited (''FMGIL'' or ''the Company''), is
inter-alia engaged in the manufacture, supply and distribution of
''automotive components'' used in two/three/four wheeler automobiles.
The principal facilities of the Company are located at Patiala
(Punjab), Bangaluru (Karnataka) and Bhiwadi (Rajasthan), with its
registered office in Delhi. The Company is listed at National Stock
Exchange of India Ltd. and Bombay Stock Exchange.
Federal Mogul Holdings Limited, Mauritius, is the immediate parent
company and ultimate parent company is Federal Mogul Corporation, USA.
b) Basis of Preparation
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under section 133 of the Companies Act 2013, read together with
paragraph 7 of the Company (Accounts) Rules 2014. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
Pursunat to the requirement of Compaines Act 2013, the Company has
changed the financial year from Janurary to December every year to
April to March every year. Accordingly, the current financial year for
a period of fifteen months commencing from January 1,2014 and ending on
March 31,2015.
The accounting policies adopted in the preparation of financial
statment are consistent with those of previous year.
(a) There is no movement in equity share capital during the current and
comparative period.
(b) Right/restriction attached to equity shares.
The Company has only one class of equity shares having par value of
Rs.1 0 per share. Each holder of equity shares is 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 liabilities. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
(e) The Company has not issued any equity shares pursuant to any
contract without payment being received in cash, allotted as fully paid
up by way of bonus issues and bought back during the current reporting
period and immediately preceding four years.
"Note (a): Indian rupee loans amounting to Rs. 2,000 lacs from Yes Bank
in two tranches of Rs 1,000 lacs each taken on 31 May 2013 and 28 June
2013 respectively, carries interest @ 1 2.20% p.a. Both tranches are
repayable in 36 equal monthly instalments of Rs. 27.77 lacs each along
with interest, after a moratorium period of 1 2 months from the date of
disbursement of loan i.e. 31 May 2014 and 28 June 2014 respectively.
The loan is secured by first parri passu charge on moveable assets of
the Company including plant and machinery, spares, tools and
accessories, furniture and fixtures and other movable assets of the
Company, excluding vehicles."Current maturities of long term borrowings
amounting to Rs. 666.67 lacs (Previous year: Rs. 444.44 lacs) are
included under the head ''Other current liabilities (refer note 11).
Note (a) :
i. Indian rupees working capital loans and cash credit facilities are
secured against hypothecation of current assets of the Company, both
present and future with HDFC, Yes Bank, ING Vysya Bank, State Bank of
India and Deutsche Bank. Cash credit facilities carries interest rate
ranging from 10.00 % p.a to 12.50% p.a.
ii. Details of working capital loans
Note (b): Inter-corporate deposits are repayable on demand and carry
rate of interest ranging between 9.35 % p.a to 10.50 % p.a
Note (c): Indian rupees working capital loan and cash credit facilities
taken from Bank of America is at interest rate of 10.5% p.a., which was
repayable in 30 days from the date of loan.
Note (d) : Indian rupees loan amounting to Rs 61 lacs taken from Goetze
India employee welfare trust is at interest rate of 8% p.a. Entire loan
is repayable on 31 March 2014.
2. Segment Information
Based on the guiding principles given in AS-17 ''Segmental Reporting''
notified under Companies (Accounting Standard) Rules, 2006, the
Company''s primary business segment is manufacturing of auto components.
Considering the nature of Company''s business and operations, there are
no separate reportable business segment, as there is only one business
segment and hence, there are no additional disclosures required to be
provided other than those already been provided in the financial
statements.
The analysis of geographical segment is based on the geographical
location of the customers. The following table shows the distribution
of the Company''s consolidated sales by geographical market, regardless
of where the goods were produced.
The Company has common assets for producing goods for India and outside
countries. Hence, separate figures for assets/ additions to fixed
assets cannot be furnished.
3. Capital and other commitments (net of capital advances)
Total estimated amount of contracts, remaining to be executed on
capital account and not provided for as at 31 March 2015 is Rs:
1,853.51 lacs ( as at 31 December 2013 : 1,093.67 lacs)
4. Contingent liabilities
(a) Bank guarantees 596.25 554.54
(b) Claims/notices contested
by the Company
(i) Excise duty and service tax 4,051.40 687.20
(ii) Sales tax 2,250.91 1,781.70
(iii) Employee related cases 286.05 242.99
(iv) Electricity demand 52.24 52.24
(v) Income tax demands 800.28 609.55
1) In relation to b (i) above, Excise duty cases contested by the
Company comprise of :
i) Matters are pending at Joint Commissioner, Central Excise ,
Bangalore where four show cause notice were received for the period
2000 to 2004 for the excise duty demand of Rs.76.42 lacs on the
differential discount which was given to stockist. Matter is pending
with Joint Commissioner, Central Excise, Bangalaru. (Previous period
Rs.33.73 lacs).
ii) Matters are pending with CESTAT, Bangalaru wherein notice was
received for the period of 2006-07 for disallowing the cenvat credit
taken twice on the invoices for the excise demand of Rs.5.03 lacs The
case is pending for hearing. (Previous period Rs. 5.03 lacs).
iii) Matter is pending with CESTAT, Delhi on the six show cause notices
received for the period 2002 to 2006 for the excise duty demand of Rs.
189.48 raised on the Turnover Discount for the period of 2002-06. The
cases are pending with the CESTAT, Delhi for hearing (Previous peri od
Nil ) .
iv) Matters are pending for two show cause notices received on the
Patiala plant for the interest amount of Rs.14.02 lacs on the reversal
of Special additional duty taken wrongly. Cases are related to
2000-2001 and pending with the CESTAT, Delhi for hearing. (Previouse
Year 14.02 lacs).
v) Matter is pending on the show cause notice received for the excise
duty amounting Rs. 6.96 lacs on the classification issue related to the
period of 1 998-99. After filing of reply, there is no movement in the
case and pending before Joint Commissioner, Excise (Previous period Rs.
6.96 lacs).
vi) Matter is pending for a show cause notice received in 2002 for the
excise duty of Rs. 3.32 lacs on scrap sale for the period 2001 -02.
After filing of reply, there is no movement in the case and it is
pending with Joint Commissioner, Excise, Patiala (Previous period 3.32
lacs).
vii) Matter is pending for a show cause notice on disallowance of
excise credit of Rs.9.34 lacs on the ground that credit does not fall
in the category of input category. The case is related to the period
1987 to 1990 and pending with Honourable High Court.
viii) Matter is pending with Joint Commissioner, Central Excise on five
notices related to period of 1997-98,1998-99, 1995-96 and 2003-04 for
the disallowance of Modvat Credit on the input raw material for
amounting Rs.6.16 lacs (Previouse Year Nil).
ix) . Matter is pending before the Supreme Court in the valuation case
where two notices were issued to Patiala plant where department
alleged on the job work valuation and demanded excise duty of Rs.15.13
lacs.(Previous period 15.13 lacs).
x) . Matter is pending before the Commissioner, Excise, Jaipur for
taking excess credit of excise duty of Rs.3.19 lakhs for the period
2010-
5.(Previous period Nil).
xi) . Matter is pending before the Commissioner, Excise on issuance of
show cause notice on the cenvat credit taken on LPG on the invoice
addressed to Goetze India (technical errors) amounting to Rs. 0.97 lacs
(Previous period Nil).
1) In relation to b (i) above, Service tax cases contested by the
Company comprise of:
i) . Matter is pending with CESTAT, Bangaluru in respect of notice for
the period FY 2006-2007 amounting to Rs. 86.44 lacs wherein
disallowed the service tax credit taken on Input Service Distributor
invoices received from Gurgaon. (Previous period Rs 86.44 lacs).
ii) . Nine matters are pending for the year 2009 to 2014 where company
disallowed the service tax credit for Rs.2829 lacs for the common
inputs used in the job work which are exempted activities as per the
excise authorities.
iii) Matter is pending for a notice received for the period 2005-06
wherein service tax credit was disallowed for Rs.113.70 lacs on account
of non-availability of service invoices. The case is pending before the
CESTAT, Bangalaru for the decision. (Previous period Rs.113.70 lacs).
iv) Company received seven show cause notices at Patiala plants for the
period 2005 to 2011 for disallowance of service tax credit on various
services for the service tax amounting Rs.96.11 lacs. The case is
pending with Joint Commissioner, Service Tax (Previous period Rs 96.11
lacs).
v) Matter is pending with the Commissioner (Appeals ), Central Excise,
Chandigarh for two show cause notices received for the period 2009 to
2013 for demanding the service tax credit taken on the inward and
outward freight amounting Rs.31.93 lacs (Previous period Nil).
vi) Matter is pending in Bangalaru unit for the period 2008 to 2011 for
the service tax not paid on written off material for Rs.5.81 lacs The
case is pending before Commissioner, Service Tax. Company is confident
of favaourbale decision in this case. (Previous period Nil).
vii) Matters are pending for seven show cause notices for Patiala plant
for the period 2006 to 2007 for disallowance of service tax credit on
mediclaim services for the service tax amounting Rs.19.18 lacs. The
case is pending before CESTAT, Delhi. (Previous period Nil).
viii) Matter are pending for seven show cause notices received for the
period 2008 to 2012 for the disallowance of service tax credit
amounting Rs.79.02 lacs on few certain services for Bhiwadi Plant for
disallowance and demanding the service tax. Cases are pending with
Joint Commissioner and Additional Commissioner, Service Tax, Jaipur for
hearing. (Previous period Rs. 79.02 lacs).
ix) Matter is pending on the show cause notice received for corporate
office for the period 2008 to 2011 for the service tax demand of
Rs.134.18 lacs for disallowance of service tax credit on various
services.(Previous period Rs. 134.18 lacs).
x) Matter is pending for the service tax demand on the Royalty and
technical know how for Rs.16.79 lacs.(Previous period Nil).
xi) Service tax is pending for the service tax credit of Rs.1 0.71 lacs
for disallowance of service tax credit for 2011 to 213 (Previous period
Nil).
xii) Recently, service tax show casuse notice received on manpower
recuritement services for Rs.4.54 lacs where service tax not paid on PF
and ESI services in the year 2012-13 (Previous period Nil ).
xiii) Service tax show cause notice received for non-maintenaince of
service tax register for past period for the demand Rs.294 lacs for the
period 2009-13. Reply is to be filed for defending the case before
Commissioner. (Previous period Nil).
2) In relation of b (ii) above, sales tax cases contested by the
Company comprise of :
i) Sale tax matter is pending for assessment year 1 996-97 to 2001 -02
where sale tax demand was raised on the classification issue/rates
difference on product "Groove Insert Casting" for amounting Rs.97 lacs.
Company has deposited Rs.215.87 lacs. Recently, adverse verdict
received and tax demand is 97 lacs with interest which will be adjusted
from the deposited amount. Company has provided Rs.97 lacs in the
books. (Previous period the total demand amount was Rs. 442.92 lacs).
ii) Matter is pending with Honb''ble High Court of Karnataka on sale tax
demand notice for the period 2005-06 for the sale tax demand of Rs.
278.51 lacs for the sale tax rate difference charged on the Piston.
Case is pending before the Honb''ble High court for the final decision.
The Company so far has made an under protest payment of Rs.55 lacs in
this matter (Previous period 278.51 lacs).
iii) Matter is pending with Karnataka Sale Tax Tribunal for the penalty
of Rs.1.36 lacs for not paying CST on the central sale on the C form
liability. Company has deposited Rs.1.36 lcas in this case. The case is
related to 2007-08 pending before the Karnataka Sale tax Tribunal for
decision. (Previous period Nil).
iv) Matters is pending with next DCCT, Audit Bangalaru for Full 2014-15
on account C Forms pendency for Rs. 293 lacs. The company has filed an
appeal before the Joint Commissioner. (Previous period Nil).
v) Matter is pending with Joint Commissioner,Ghaziabad for the sale tax
demand of Rs.82.78 lacs for the financial year 2007 -08 on account of
several issues like rate differences, disallowance of central sales,
stock transfer and best judgement sales. Company has deposited Rs.47.54
lacs in this case and provided Rs.30 in one of the tax issue (Previous
period Rs. 82.78 lacs).
vi) Matter is pending with Sale Tax authorities, Patna for the sale tax
demand of Rs.25.66 lacs on account of non-availabilities of few
documents and pending for hearing. (Previous period Rs. 25.66 lacs).
vii) Four matters are pending at Kolkata sale tax authorities on
various reason for the financial year 2001 -02, 2004-05 and 2006 -07
for the sale tax demand of Rs.6.37 lacs on account of disallowance of
sale returns, warranty material and stock transfer forms. (Previous
period Rs. 6.37 lacs).
viii) Tax demand notice received from Maharashtra Sale Tax Demand of
Rs.30.1 9 lacs on non-submission of forms F and matter is pending with
next appellate authorities. (Previous period 30.19 lacs).
ix) Matter is pending with Additional Commissioner, Delhi for the total
sale tax demand of Rs. 613.92 lacs on the four notices issued on best
judgement basis for various reasons including disallowance of stock
transfer, Central sale and penalty on the above. One issue is related
to sale of fixed assets where sale tax demand is Rs.175 lacs out of
total tax demand. Company made a provision of Rs. 172 lacs for this.
The case is pending with hearing and related to financial year 2007-08.
Company is confident of favourable order on the remaining tax demand as
case was adjudged wrongly without giving opportunity.(Previous period
the total demand amount was Rs. 613.92 lacs).
x) Matter is pending with Joint Commissioner, Sale / Commercial Tax,
Ghaziabad for the sale tax demand on the disallowance of stock transfer
of Rs.32.68 lacs for the financial year 2012-13 (Previous period Rs.
32.11 lacs).
xi) Matter is pending with Additional Commissioner, Delhi for the
financial year 2008-09 for the sale tax demand of Rs. 73.44 lacs which
is demanded on the basis of best judgement (Previous period 73.44
lacs).
xii) Three matters are pending with next appellate authorities
(Bhiwadi) for Full2008-09, 2009-10 and 2012-13 on account C Forms
pendency. Amount involved Rs. 306.00 lacs.(Previous period Nil).
xiii) Entry tax not paid on imported machinery in the Bangalaru as
similar case is pending before the Supreme Court on the decision that
entry tax is unconstitutional and should not be levied. Afer 201 1,
Company started paying entry tax and capitalising the amount of entry
tax. Amount Involved is Rs 410 lacs.
3) In relation of b (iii) above, employee related cases comprise of:
Claims against the Company not acknowledged as debt, in respect of
demands raised by the workers. The Company has done an analysis and is
of the opinion that it has fair chance of a favourable decision. Amount
involved is Rs. 286.05 lacs. (Previous period Rs. 242.99 lacs).
4) In relation to b (iv) above, electricity demand comprise of In
respect of a demand raised by Punjab State Electricity Board (PSEB) for
various years in relation to availment of additional load. The Company
has done an analysis and is of the opinion that it has fair chance of a
favourable decision. Amount involved is Rs. 52.24 lacs (Previous period
Rs. 52.24 lacs).
5) In relation to b (v) above, income tax cases disputed by the Company
comprise of:
i) In respect of Assessment Year 1998-99, certain additions were made
on normal as well as on book profits. The matter is pending with
Honourable High court. The Company has done an analysis and is of the
opinion that it has fair chance of favourable decision. The amount
involved is Rs 86.69 lacs (Previous period Rs 86.69 lacs).
ii) In respect of Assessment Year 2002-03, certain additions were made
on normal income as well as on book profits. The matter is pending with
Assessing Officer for appeal effect. The Company has done an analysis
and is of the opinion that it has fair chance of a favorable decision.
The amount for contingent liability for the year is Rs. 68.45 lacs.
(Previous period Rs. 23.13 lacs).
iii) In respect of Assessment Year 2003-04, disallowance was made for
carry forward losses as well as certain disallowances. The matter is
subject to two different appeals. One is pending with the Assessing
Officer and other with the Commissioner of Income Tax(Appeals). The
Company has done an analysis and is of the opinion that it has fair
chance of a favorable decision. The amount involved is Rs.158.01 lacs.
(Previous period Rs. 158.01 lacs).
iv) In respect of Assessment Year 2006-07, certain additions were made
on normal as well as on book profit. The matter is pending with AO.
The Company has done an analysis and is of the opinion that it has fair
chance of a favorable decision. The amount for contingent liability for
the year is Rs. 39.52 lacs (Previous period Rs. 39.52 lacs).
v) In respect of Assessment Year 2006-07, under Wealth tax assessment,
debts relating to certain taxable assets were disallowed. The matter is
pending with Income Tax Appellate Tribunal. The Company has done an
analysis and is of the opinion that it has fair chance of favorable
decision. The amount involved is Rs 3.90 lacs (Previous period Rs 3.90
lacs).
vi) In respect of Assessment Year 2008-09, certain additions were made
on normal profits. The matter is pending with Income Tax Appellate
Tribunal. The Company has done an analysis and is of the opinion that
it has fair chance of favorable decision. The amount involved is Rs
72.68 lacs. (Previous period Rs 72.68 lacs).
vii) In respect of Assessment Year 2009-1 0, certain additions were
made on normal profits. The matter is pending with Commissioner Income
Tax (Appeals). The Company has done an analysis and is of the opinion
that it has fair chance of favorable decision. The amount involved is
Rs 163.61 lacs. (Previous period Rs 163.61 lacs).
viii) In respect of period starting 01.04.2007 to 31.03.2015, Company
has received TDS default notices on account of short deduction/ short
payment of tax deduction at Source. The Company believes that defaults
should have arisen due to some technical and clerical errors and could
be corrected by filing of revised return/correction statements. The
amount involved is Rs. 19.06 lacs. (Previous period Rs 27.71 lacs).
ix) In respect of Assessment Year 1999-2000, certain additions were
made on normal as well as on book profit. The matter is pending with
Honourable Supreme Court. The Company has done an analysis and is of
the opinion that it has fair chance of a favourable decision. The
amount for contingent liability for the year is Rs. 83.26 lacs
(Previous period Rs. Nil).
x) In respect of Assessment Year 2010-11, certain additions were made
on normal profits. The matter is pending with Commissioner Income Tax
(Appeals). The Company has done an analysis and is of the opinion that
it has fair chance of favorable decision. The amount involved is Rs
87.26 lacs. (Previous period Rs NIL).
xi) In respect of Assessment Year 2011-12, certain additions were made
on normal profits in the draft order. The matter is pending filling
objection before DRP The Company has done an analysis and is of the
opinion that it has fair chance of favorable decision. The amount
involved is Rs 17.85 lacs. (Previous period Rs NIL).
6. Related Party Disclosures
(i) In accordance with the requirement of Accounting Standard (AS - 18)
on related party disclosures where control exist and description of the
relationship are as follows:
(a) Name of Parties where Control Exists
i) Holding Company
Federal Mogul Holdings Limited (Mauritius)
ii) Subsidiary
Federal-Mogul TPR (India) Limited
iii) Ultimate Holding Company Federal Mogul Corporation, USA
(b) Key managerial personnel
- Mr. Andreas Wilhelm Kolf, Managing Director
- Mr. Sachin Selot, CFO & Whole Time Director
- Mr. Khalid Iqbal Khan, Company Secretary
- Mr. Sunit Kapur, Director
- Mr. Dan Brugger, Whole Time Director (till Feb. 2013)
- Mr. Vikrant Sinha, Whole Time Director (till March 2013)
(c) Fellow subsidiaries
- Federal Mogul Burscheid GMBH, Germany
- Federal Mogul Nurnberg, GMBH (Germany)
- Federal Mogul Holding Deutschland (Germany)
- Federal Mogul Limited (U.K.)
- Federal Mogul Financial Services FRANCTNL (France)
- Federal Mogul Gorzyce, S.A. (Poland)
- Federal Mogul Friedberg, GMBH (Germany)
- Federal Mogul Sintered Products Ltd. (U.K.)
- Federal Mogul Friction Products Ltd (Thailand)
- Federal Mogul Thailand Manufacturina Ayutthaya, (Thailand)
- Federal Mogul France, S.A. (France)
- Federal Mogul Corporation, Garennes (France)
- Federal Mogul (Shanghai)
- Federal Mogul Friction Products Ltd.
- Federal Mogul Worldwide Aftermarket
- Federal Mogul Sistemas Brazil
-Federal Mogul Dongsuh Piston Co. Ltd. (China)
- Federal Mogul Bradford Ltd.
- Federal Mogul Powertrain Sparta, MII
- Federal Mogul KK Yokohama
- Federal Mogul Powertrain Inc, Southbend
- Federal Mogul Chasseneuil
- Federal Mogul Kontich
- Federal Mogul Bearings India Ltd (India)
- Federal-Mogul Ignition Products India Ltd (India) (Formerly Federal
Mogul Automotive Product (India) Pvt Ltd.)
- Federal-Mogul Motorparts Ltd. (India) (Formerly known as Federal
Mogul VSP India Ltd.)
- Federal-Mogul PTSB India Pvt. Ltd. (India) (Formerly known as
Federal-Mogul Trading India Pvt. Ltd.)
(d) Associates
GI Power Ltd.
Those transactions along with related party balances for fifteen months
ended 31 March 201 5 and year ended 31 December 201 3 are presented in
the following table:
a) Assets taken under operating lease
The Company has taken office and residential facilities under
cancellable and non-cancellable operating leases, which are renewable
on a periodic basis and have escalations ranging from 5% to 15% per
annum
37. Disclosures in accordance with AS-15 on "Employee Benefits"
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of services, gets a gratuity on departure
at 15 days basic salary (last drawn) for each completed year of service
on terms not less favourable than the provisions of the payment of
Gratuity Act, 1972. The scheme is funded with an insurance company in
the form of a qualifying insurance policy.
The following tables summaries 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 plan.
Statement of Profit and Loss
Net employee benefit expense (recognized in Employee cost) [AS15
Revised (c) (i) to (x)]
The Company''s expected contribution to the fund in the next year is not
presently ascertainable and hence, the contribution expected to be paid
during the annual period beginning after the balance sheet date as
required by para 120(o) of the accounting standard 15(revised) on
employee benefits has not been disclosed.
The major categories of plan assets as a percentage of the fair value
of total plan assets are as follows:-
The estimates of seniority, future salary increases, considered in
actuarial valuation, take account of price inflation, promotions and
other relevant factors, such as supply and demand in the employment
market.
Note (a) : the overall expected rate of return on assets is determined
based on the market prices prevailing on that date, applicable to the
period over which the obligation is to be settled.
Amount for the current year and previous four years are as follows:
7. Details of dues to micro and small enterprises as defined under the
MSMED Act, 2006
The Micro, small and medium enterprises have been identified by the
Company from the available information, which has been relied upon by
the auditors. According to such identification, the disclosures in
respect to Micro and Small Enterprises as per MSMED Act, 2006 is as
follows:
8. Expenses capitalised
The Company has capitalized various expenses incurred in the course of
construction of self generated assets in accordance with AS 10
-Accounting for Fixed Assets, the details of expenses capitalized for
the purpose of construction of self generated assets are as follows:
9. Provision for regulatory matters
The Company had commenced an evaluation process for various regulatory
matters at its factories in December 2010. Based on more accurate
information discovered, a provision, towards costs to be incurred to
remediate these matters, of Rs. 355.05 lacs is included under Note no.
8 for provisions which are net of amounts utilized of Rs. 810.00 lacs
during the year towards remediation.
In addition to the above, the provision for regulatory matters includes
a provision of Rs.922.23 lacs towards certain other regulatory matters.
The Company is actively seeking to resolve these actual and potential
statutory, taxation, regulatory and contractual obligations. In
accordance with requirements of Accounting Standard 29 on ''Provisions,
Contingent liability and Contingent assets'' issued by the Institute of
Chartered Accountants of India, although difficult to quantify based on
the complexity of the issues, the Company has accrued amounts
corresponding to its best estimate of the costs associated with such
regulatory and contractual obligations on the basis of available
information and best professional judgment of experts appointed for
this exercise.
Based on consultations obtained from the experts in respect of the said
matters, in management''s view, no further costs are expected to be
incurred for which a provision would be required at this stage and
considers the provisions made to be adequate.
10. Management support charges
For the period 1 January 2014 till 31 March 2015, the Company has paid
management support charges to its group companies of Rs 774.68 lacs in
respect of certain application engineering services provided to the
Company. The Company carries out its transfer pricing study annually
for the tax period of April- March and updates its documentation,
choice of methods and benchmarks to ascertain adequacy and compliance
with the "arms length" principles prescribed under Income Tax Act. For
the year April 1, 2014 to March 31, 2015, the process of updation is
ongoing and management is confident of completing the same before
filing tax return for the same. The provision for current tax has been
made accordingly considering the said amounts of Rs. 774.68 lacs as
"allowable expenditure".
11 Per transfer pricing legislation under sections 92-92F of the Income
Tax Act, 1961, the Company is required to use certain specific methods
in computing arm''s length prices of international transactions with
associated enterprises and maintain adequate documentation in this
respect. Since law requires existence of such information and
documentation to be contemporaneous in nature, the Company has
appointed independent consultants for conducting a Transfer Pricing
Study (the ''Study'') to determine whether the transactions with
associate enterprises undertaken during the financial year are on an
"arms length basis". Management is of the opinion that the Company''s
domestic and international transactions are at arm''s length and that
the results of the on-going study will not have any impact on the
financial statements and the independent consultants appointed have
also preliminarily confirmed that they do not expect any transfer
pricing adjustments.
12. (a) Excess provision written back includes income on account of
reversal of provision for diminution in value of investment in GI Power
of Rs 876.44 Lacs.
The provision has been reversed during the period because the Company
has sold the investment.
(b). During the period the Company has entered into Power Purchase
Agreement with Real Captive Power Private Limited (RCP) and paid Rs 850
lacs as security deposit which is recoverable in 5 equal instalments
beginning from 7th to 11th year. RCP is a newly incorporated enterprise
and, as such, recoverability of the security deposit will solely be
dependent on the financial position of RCP at the time of repayment.
The management believes that purchase of power from RCP would result
into savings. On conservative basis, the Company has created a
provision for security deposit of Rs 850 Lacs.
13. Corporate social responsibility
a) Gross amount required to be spent by the company during the year in
compliance with section 135 of the Act is Rs. 57.35 lacs.
b) Amount spent during the year on-
1. Name of the Subsidiary Companies Federal-Mogul TPR (India) Limited
2. Financial Year of the Subsidiary 31st March, 2015
Companies ended on
3. Holding Company''s Interest Holders of 51,00,000
Equity Shares out of the
Subscribed and Paid up Capital
of the 1,00,00,000 Equity shares
of Rs.10/- each (51%)
4. Net Aggregate amount of Profit Less Losses of the subsidiary
Companies so far as it concerns the Members of Federal-Mogul Goetze
(India) Ltd
a] Not dealt with in the Accounts
of Federal-Mogul Goetze (India) Ltd.
i) for the subsidiary''s financial year
above referred Rs. 1171.07 Lacs
ii) for previous financial years of
subsidiary since it became
subsidiary of Federal-Mogul
Goetze (India) Ltd. Rs 2409.17 Lacs
b] Dealt with the Accounts of Federal
-Mogul Goetze (India) Ltd.
i) for the subsidiary''s financial year
above referred Nil
ii) for previous financial years of
subsidiary since it became
subsidiary of Federal-Mogul
Goetze (India) Ltd. Nil
Dec 31, 2013
1.Corporate Information
Federal-Mogul Goetze (India) Limited (''FMGIL'' or ''the Company''), is
inter-alia engaged in the manufacture, supply and distribution of
''automotive components'' used in two/three/four wheeler automobiles.
The principal facilities of the Company are located at Patiala
(Punjab), Bengaluru (Karnataka) and Bhiwadi (Rajasthan), with its
registered office in Delhi. The Company is listed at National Stock
Exchange and Bombay Stock Exchange of India.
Federal Mogul Holdings Limited, Mauritius, is the immediate parent
company and ultimate parent company is Federal Mogul Corporation, USA.
2. Basis of Preparation
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956 read with the
General Circular 15/ 2013 dated 13 September 2013 of the Ministry of
Corporate Affairs in respect of section 133 of the Companies Act,
2013.The financial statements have been prepared on an accrual basis
and under the historical cost convention.
3. Segment Information
Based on the guiding principles given in AS-17 ''Segmental Reporting''
notified under Companies (Accounting Standard) Rules, 2006, the
Company''s primary business segment is manufacturing of auto components.
Considering the nature of Company''s business and operations, there are
no separate reportable business segment, as there is only one business
segment and hence, there are no additional disclosures required to be
provided other than those already been provided in the financial
statements.
The analysis of geographical segment is based on the geographical
location of the customers. The following table shows the distribution
of the Company''s consolidated sales by geographical market, regardless
of where the goods were produced.
4. Capital and other commitments
Total estimated amount of contracts, remaining to be executed on
capital account and not provided for as at 31 December 2013 is Rs.
1,093.67 lacs (Previous year Rs. 982.57 lacs)
5. Contingent liabilities
(a) Bank guarantees 554.54 1,378.66
(b) Claims/notices contested by the Company
(i) Excise duty and service tax # 687.20 217.70
(ii) Sales tax # 1,781.70 579.88
(iii) Employee related cases 242.99 201.36
(iv) Electricity demand 52.24 52.24
(v) Income tax demands # 609.55 629.95
# The management is of the opinion that the appeals will be allowed in
favor of the Company and hence no provision is required for the above.
1) In relation to b (i) above, Excise duty cases contested by the
Company comprise of :
i) Matters pending with Joint Commissioner, Central Excise , Bangaluru
in respect of four show cause notice amounting to Rs.33.73 lacs. in
which excise duty was demanded on the differential discount which was
given to stockiest for the period from FY 2000 to 2004.
ii) Matter is pending with CESTAT, Bangaluru is respect of notice
issued towards disallowing the Cenvat Credit taken twice on the
invoices for the period FY 2006-2007 amounting to Rs. 5.03 lacs.
iii) Matter is pending with CESTAT, Bangaluru in respect of show cause
notice amounting to Rs. 8.57 lacs issued for non-payment of excise duty
on the removal of obsolete items ( piston ) without payment of duty and
permission for the period FY 2005-06.
iv) Matter is pending with CESTAT, Bangaluru in respect of show cause
notice issued for turn over discount amounting to Rs. 42.71 lacs.
v) Matter is pending with CESTAT, Delhi in respect two show cause
notices received at Patiala plant amounting to Rs. 14.02 lacs for the
interest amount on the reversal of SAD taken wrongly for the period FY
2000-2001.
vi) Matter is pending with Joint Commissioner, Excise in respect of
show cause notice received for the excise duty amounting to Rs. 6.96
lacs for the period FY 1998-99.
vii) Matter is pending with the High Court, in respect of a show cause
notice amounting to Rs. 9.34 lacs on disallowance of excise credit on
the ground that credit does not fall in the category of input category
for the period from FY 1987 to 1990.
viii) Matter is pending with he Supreme Court in the valuation case
where two notices were issued to Patiala plant where department alleged
on the job work valuation for an amount of Rs.15.13 lacs.
1) In relation to b (i) above, Service tax cases contested by the
Company comprise of:
i) Matter is pending with CESTAT, Bangaluru in respect of notice for
the period FY 2006-2007 amounting to Rs. 86.44 lacs wherein disallowed
the service tax credit taken on Input Service Distributor invoices
received from Gurgaon.
ii) Matter is pending with CESTAT, Bangaluru in respect of notice for
the period FY 2005-2006 amounting to Rs. 113.70 lacs wherein service
tax credit was disallowed for on account of non-availability of service
invoices.
iii) Matter is pending with Joint Commissioner, Service Tax, in respect
of seven show cause notices at Patiala plant for disallowance of
service tax credit on various services for the period from FY 2005 to
2011 amounting to Rs.96.11 Lacs.
iv) Matter is pending with the Commissioner (Appeal ), Central Excise,
Chandigarh for a show cause notice for demanding the service tax credit
taken on the inward and outward freight received for the period from FY
2005 to 2008 amounting to Rs.7.09 Lacs.
v) Matters are pending with Joint Commissioner & Additional
Commissioner, Service Tax, Jaipur for seven show cause notices received
for the disallowance of service tax credit amounting to Rs. 79.02 lacs
for the period from FY 2009 to 2012.
vi) Matter is pending on the show cause notice received from
Commissioner Gurgaon office for service tax demand for the period from
FY 2005 to 2011 amounting to Rs.134.18 Lacs
vii) Matter is pending Additional Commissioner, in respect of a show
cause notice for disallowing service tax credit of Rs.35.12 Lacs taken
on the service tax payment on the royalty remittances made to overseas
for the period 2008-2012.
2) In relation of b (ii) above, sales tax cases contested by the
Company comprise of :
i) Matter is pending with Hon''ble Karnataka High Court where sales tax
demand amounting to Rs. 442.92 lacs was raised on the classification
issue/ rates difference on product "Groove Insert Casting" for Sales
tax matter is pending for assessment year 1996-97 to 2001-02.
ii) Matter is pending with the Hon''ble High Court , Karnataka on sales
tax demand notice for the period FY 2005-06 for the sales tax rate
difference charged on the Piston amounting to Rs. 278.50 lacs. The
company so far has made an under protest payment of Rs.55 Lacs in this
matter.
iii) Matters are pending on the five sales tax demand order issued by
Rajasthan Sales tax Department for amounting Rs.486.35 Lacs on account
of non- submission of statutory form in the last five assessment of
2007-2012. Company has made a provision of Rs.17 Lacs for the forms and
other issue where tax liability may arise.
iv) Matter is pending with Joint Commissioner, Ghaziabad for the sales
tax demand of Rs.82.78 Lacs for the financial year 2007-08 on account
of several issues like rate differences, disallowance of central sales,
stock transfer and best judgment sales. Company has deposited Rs.47.54
Lacs in this case. Hearing awaited and company expect that tax demand
may get reduce further after submission of documents.
v) Matter is pending with Joint Commissioner, Sales / Commercial Tax,
Ghaziabad for the sales tax demand on the disallowance of stock
transfer of Rs. 32.11 Lacs for the FY 2012-13.
vi) Matter is pending with Additional Commissioner, Delhi for the sales
tax demand of Rs. 613.92 Lacs on the four notices issued on best
judgment basis for various reasons including disallowance of stock
transfer, Central sale and penalty on the above. One issue is related
to sale of fixed assets where sales tax demand would be Rs.171 lacs out
of total tax demand. Company made a provision of Rs. 171 lacs. The case
is pending with hearing and related to financial year 2007-08.
vii) Matter is pending with Additional Commissioner, Delhi for the FY
2008-09 which issue demand notice amounting Rs. 73.44 lacs on the basis
of best judgment.
viii) Matter is pending with Sales tax, Patna for the sales tax demand
of Rs.25.66 Lacs on account of non-availabilities of few documents.
ix) Matter is pending with Kolkata sales tax authorities on various
reason for period from FY 2001-02,2004-05 & 2006-07 for the sales tax
demand of Rs.6.37 Lacs on account of disallowance of sale returns,
warranty material and stock transfer forms.
x) Matter is pending with Maharashtra Sales tax in respect of Tax
demand notice received amounting to Rs.30.19 Lacs on non-submission of
forms F and matter is pending with next appellate authorities.
xi) Matters are pending before the Karnataka VAT on the entry tax
payment on the capital assets where tax authorities demanding entry tax
along with interest amount. Similar case is pending before the Supreme
Court for decision. In this case, company started paying entry tax and
only interest liability is remaining. Company made a provision in the
books for the interest liability of Rs.227 lacs.
6) In relation of b (iii) above, employee related cases comprise of:
Claims against the Company not acknowledged as debt, in respect of
demands raised by the workers. The Company has done an analysis and is
of the opinion that it has fair chance of a favorable decision. Amount
involved is Rs. 242.99 Lacs. (Previous year Rs. 201.36 Lacs)
7) In relation to b (iv) above, electricity demand comprise of in
respect of a demand raised by Punjab State Electricity Board (PSEB) for
various years in relation to availment of additional load. The Company
has done an analysis and is of the opinion that it has fair chance of a
favorable decision. Amount involved is Rs. 52.24 Lacs (Previous year
Rs. 52.24 Lacs).
8) In relation to b (v) above, income tax cases disputed by the Company
comprise of:
i) The matter is pending with High court in respect of Assessment Year
1998-99, certain additions were made on normal as well as on book
profits. The amount involved is Rs 86.69 Lacs (Previous year Rs 86.69
Lacs).
ii) The matter is pending with Commissioner Income Tax (Appeals) in
respect of Assessment Year 2002-03, certain additions were made on
normal income as well as on book profits. The amount for contingent
liability for the year is Rs. 23.13 Lacs. (Previous year Rs. 23.13
Lacs).
iii) The matter is pending with Income Tax Appellate Tribunal in
respect of Assessment Year 2003-04, disallowance was made for carry
forward losses as well as certain disallowances. The amount involved is
Rs.158.01 Lacs. (Previous year Rs. 158.01 Lacs).
iv) The matter is pending with Income Tax Appellate Tribunal in respect
of Assessment Year 2005-06, certain additions were made on normal as
well as on book profit. The amount for contingent liability for the
year is Rs. 2.00 Lacs (Previous year Rs. 38.42 Lacs).
v) The matter is pending with Income Tax Appellate Tribunal in respect
of Assessment Year 2006-07, certain additions were made on normal as
well as on book profit. The amount for contingent liability for the
year is Rs. 39.52 Lacs (Previous year Rs. 39.52 Lacs)
vi) The matter is pending with Commissioner Income Tax (Appeals) in
respect of Assessment Year 2007-08, certain additions were made on
normal profits. The amount involved is Rs 32.79 Lacs (Previous Year Rs
32.79 Lacs).
vii) The matter is pending with Income Tax Appellate Tribunal in
respect of Assessment Year 2007-08, under Wealth tax assessment, debts
relating to certain taxable assets were disallowed. The amount involved
is Rs 3.90 Lacs (Previous Year Rs NIL Lacs).
viii) The matter is pending with Income Tax Appellate Tribunal in
respect of Assessment Year 2008-09, certain additions were made on
normal profits. The amount involved is Rs 72.68 Lacs. (Previous Year
Rs. 227.l3 Lacs).
ix) The matter is pending with Commissioner Income Tax (Appeals) in
respect of Assessment Year 2009-10, certain additions were made on
normal profits. The amount involved is Rs 163.61 Lacs. (Previous Year Rs
NIL).
x) In respect of Assessment Year 2007-08, company has received TDS
default notices on account of short deduction/ short payment of tax
deduction at Source. The company believes that defaults should have
arisen due to some technical and clerical errors and could be corrected
by filing of revised return. The amount involved is Rs. 7.51 Lacs.
xi) In respect of Assessment Year 2013-14, company has received TDS
default notices on account of short deduction/ short payment of tax
deduction at Source. The company believes that defaults should have
arisen due to some technical and clerical errors and could be corrected
by filing of revised return. The amount involved is Rs. 19.71 Lacs.
xii) In respect of Assessment Year 2000-01, certain additions were made
on normal as well as on book profits. The matter is pending with
Honorable High Court is Rs. Nil (Previous year Rs. 21.21 Lacs).
xiii) In respect of Assessment Year 2001-02, certain additions were
made on normal as well as on book profit. The matter is pending with
Honorable High Court is Rs. Nil (Previous year Rs. 3.05 Lacs).
9. Related Party Disclosures
(i) In accordance with the requirement of Accounting Standard (AS - 18)
on related party disclosures where control exist and description of the
relationship are as follows:
(a) Name of Parties where Control Exists
i) Holding Company Federal Mogul Holdings Limited (Mauritius)
ii) Subsidiary Federal-Mogul TPR (India) Limited
iii) Ultimate Holding Company Federal Mogul Corporation, USA
(b) Key managerial personnel
- Mr. Sunit Kapur, Managing Director & President (Till 5 November 2013)
- Mr. Dan Brugger, Whole Time Director & CFO (Till 28 February 2013)
- Mr. Vikrant Sinha, Whole time Director & CFO (w.e.f. 28 February 2013
till 31 March 2013)
- Mr. Andreas Kolf, Managing Director (w.e.f. 6 November 2013)
- Mr. Sachin Selot, Whole time Director & CFO (w.e.f. 6 November 2013)
(c) Fellow subsidiaries
- Federal Mogul Burscheid GMBH, Germany
- Federal Mogul Nurnberg, GMBH (Germany)
- Federal Mogul Holding Deutschland (Germany)
- Federal Mogul Financial Services FRANCTNL (France)
- Federal Mogul Gorzyce, S.A. (Poland)
- Federal Mogul Sintered Products Ltd. (U.K.)
- Federal Mogul Friction Products Ltd (Thailand)
- Federal Mogul Bearings India Ltd (India)
- Federal-Mogul Automotive Products India Ltd (India)
- Federal-Mogul VSP India Ltd. (India)
- Federal-Mogul PTSB India Pvt. Ltd. (India)
(d) Associates
GTZ Securities Limited
10. Disclosures in accordance with AS-15 on "Employee Benefits"
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of services, gets a gratuity on departure
at 15 days basic salary (last drawn) for each completed year of service
on terms not less favorable than the provisions of the payment of
Gratuity Act, 1972. The scheme is funded with an insurance company in
the form of a qualifying insurance policy. The following tables
summaries 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 plan.
11. Non fulfillment of export obligation under Export promotion Capital
Goods (EPCG) Licenses
The Company had obtained certain licenses under Export Promotion
Capital Goods scheme against which the Company has fulfilled the entire
export obligation (levied in lieu of permission to import fixed assets
at a concessional rate of import duty). Accordingly, provision created
in the books for shortfall in export obligation if any,(included as
''Provision for non fulfillment of export obligation'' in provisions under
note 8) has been reversed in August 2013.
12. Provision for regulatory matters
The Company had commenced an evaluation process for various regulatory
matters at its factories in December 2010. Based on more accurate
information discovered, a provision, towards costs to be incurred to
remediate these matters, of Rs. 370.80 lacs is included under note no.
8 for provisions which are net of amounts utilized of Rs. 539.15 lacs
during the year towards remediation.
In addition to the above, the provision for regulatory matters includes
a provision of Rs.842.51 lacs towards certain other regulatory matters.
The Company is actively seeking to resolve these actual and potential
statutory, taxation, regulatory and contractual obligations. In
accordance with requirements of Accounting Standard 29 on ''Provisions,
Contingent liability and Contingent assets'' issued by the Institute of
Chartered Accountants of India, although difficult to quantify based on
the complexity of the issues, the Company has accrued amounts
corresponding to its best estimate of the costs associated with such
regulatory and contractual obligations on the basis of available
information and best professional judgment of experts appointed for
this exercise.
Based on consultations obtained from the experts in respect of the said
matters, in management''s view, no further costs are expected to be
incurred for which a provision would be required at this stage and
considers the provisions made to be adequate.
13. Management support charges and other transactions with associated
entities
In December 2013, the Company has paid management support charges to
its group companies of Rs 631.51 lacs in respect of certain application
engineering services provided to the Company. The Company has also
purchased/supplied goods/services to other group entiites. The Company
carries out its transfer pricing study annually for the tax period of
April-March and updates its documentation, choice of methods and
benchmarks to ascertain adequacy and compliance with the "arms length"
principles prescribed under Income Tax Act. For the year 1 April 2013
to 31 March 2014, the process of updating is ongoing and management is
confident of completing the same and is of the view that no additional
tax provision is required to be recorded in this regard.
14. Investments in G.I. Power Corporation Limited
The Company is holding an investment of Rs. 1,070.92 lacs (equity
shares: Rs. 194.48 lacs and preference shares: Rs. 876.44 lacs) in GI
Power Corporation Limited (GIPCL). Since the Company is not confident
that it would be able to recover the entire carrying value of these
investments a provision of Rs. 1070.92 lacs (representing the full cost
of these investments) had been created during the previous year. The
Company has been assessing various options for liquidating these
investments as these are not related to the core business of the
Company.
15. Per transfer pricing legislation under sections 92-92F of the
Income Tax Act, 1961, the Company is required to use certain specific
methods in computing arm''s length prices of international transactions
with associated enterprises and maintain adequate documentation in this
respect. Since law requires existence of such information and
documentation to be contemporaneous in nature, the Company has
appointed independent consultants for conducting a Transfer Pricing
Study (the ''Study'') to determine whether the transactions with
associate enterprises undertaken during the financial year are on an
"arms length basis". Management is of the opinion that the Company''s
international transactions are at arm''s length and that the results of
the on-going study will not have any impact on the financial statements
and the independent consultants appointed have also preliminarily
confirmed that they do not expect any transfer pricing adjustments.
16. Previous year number has been regrouped/reclassified wherever
considered necessary.
Dec 31, 2012
1. a) Corporate Information
Federal-Mogul Goetze (India) Limited (''FMGIL'' or ''the
Company''), is inter-alia engaged in the manufacture, supply and
distribution of ''automotive components'' used in two/three/four
wheeler automobiles.
The principal facilities of the Company are located at Patiala
(Punjab), Bengaluru (Karnataka) and Bhiwadi (Rajasthan), with its
registered office in Delhi. The Company is listed at National Stock
Exchange of India Limited and Bombay Stock Exchange.
Federal Mogul Holdings Limited, Mauritius, is the immediate parent
company and ultimate parent company is Federal Mogul Corporation, USA.
b) Basis of Preparation
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
During the year ended 31 December 2012, the revised Schedule VI
notified under the Companies Act 1956, has become applicable to the
company, for preparation and presentation of its financial statements.
The adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year
(a) There is no movement in equity share capital during the current
year and previous year.
(b) Right/preferences/restriction attached to equity shares.
The Company has only one class of equity shares having par value of
Rs.10 per share. Each holder of equity shares is 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.
(c) List of shareholders holding more than 5% of the equity share
capital of the Company at the beginning and at the end of the reporting
year.
(e) The Company has not issued any equity shares pursuant to any
contract without payment being received in cash, allotted as fully paid
up by way of bonus issues and bought back during the last five years
1. Indian rupee loan from banks carries interest @ 15.70% p.a. The
loan is repayable in monthly instalments of Rs. 33.33 lacs each along
with interest, from the date of the loan, viz., December 15, 2009. The
loan is secured by first parri passu charge on entire fixed assets of
the Company including land and building and whole of moveable assets of
the Company including plant & machinery, spares, tools and accessories,
furniture & fixtures and other moveable assets of the Company.
2. Current maturities of long term borrowings amounting to Rs. 400
lacs (Previous year: Rs. 400 lacs) are included under the head (''Other
current liabilities'').
3. Segment Information
Based on the guiding principles given in AS-17 ''Segmental Reporting''
notified under Companies (Accounting Standard) Rules, 2006, the
Company''s primary business segment is manufacturing of auto components.
Considering the nature of Company''s business and operations, there are
no separate reportable business segment, as there is only one business
segment and hence, there are no additional disclosures required to be
provided other than those already been provided in the financial
statements.
The analysis of geographical segment is based on the geographical
location of the customers. The following table shows the distribution
of the Company''s consolidated sales by geographical market, regardless
of where the goods were produced.
Geographical segment
Net sales revenue (including trading sales but excluding excise duty)
by geographical market
The Company has common assets for producing goods for India and outside
countries. Hence, separate figures for assets/ additions to fixed
assets cannot be furnished.
4. Capital and other commitments
Total estimated amount of contracts, remaining to be executed on
capital account and not provided for as at 31 December 2012 is Rs:
982.57 lacs (Previous year Rs: 4,359.65 lacs)
5. Contingent liabilities
(a) Bank guarantees 1,378.66 949.88
(b) Claims/notices contested by the Company
(i) Excise duty 217.70 155.27
(ii) Sales tax 579.88 405.91
(iii) Employee related cases 201.36 136.18
(iv) Electricity demand 52.24 52.24
(v) Income tax demands 629.95 648.13
1) In relation to b (i) above, Excise duty cases contested by the
Company comprise of:
i) The deputy commissioner of Central Excise, Banguluru, confirming the
demand in respect of excess availment of Cenvat credit during the FY
2005-06.The Company has not filed an appeal against this decision and
paid the demand. Since, the amount of demand is already paid,
contingency existing as on date is NIL (Previous year Rs. 0.93 lacs)
ii) Matter was pending with Central Excise & Service Tax Appellate
Tribunal, Chandigarh in respect of service tax on transport services
for the period 2007-08 and which was favourably decided in Company''s
favour. Contingency existing as on date is NIL (Previous year Rs.2.92
lacs).
iii) Matters pending with Central Excise & Service Tax Appellate
Tribunal in respect of interest on reversal of special additional duty
(SAD) for 2000-01. The Company has done an analysis and is of the
opinion that it has fair chance of a favourable decision. Amount
involved is Rs. 14.02 lacs. (Previous year Rs. 14.02 lacs).
iv) Miscellaneous service tax cases with respect to disallowance of
Cenvat credit claimed on various input services are pending with Cestat
Banguluru/ Joint Commissioner Jaipur/ Joint Commissioner Patiala for
the period 2005-06 to 2010-11. The Company has done an analysis and is
of the opinion that it has fair chance of a favourable decision. Amount
involved is Rs. 203.68 lacs (Previous year Rs. 137.40 lacs).
2) In relation of b (ii) above, sales tax cases contested by the
Company comprise of:
i) In respect of Assessment Year 1996-97 to 2001-02, the department
raised a demand on account of differences in sales tax rates. The
matter is pending with Karnataka Honourable Hight Court. The Company
has taken legal opinion in this regard and is confident of success.
Amount involved is Rs. 301.38 lacs. (Previous year Rs. 315.21 lacs).
The Company has so far made an ''under protest payment'' of Rs. 215.87
lacs in this matter.
ii) In respect of Assessment Year 2005-06, the department raised a
demand on account of differences in sales tax rates. The Honourable
Hight Court has favourably decided this matter in Company''s favour, but
later the department filed writ appeal against said order and this
matter is pending with Karnataka Honourable Hight Court. The Company
has taken legal opinion in this regard and is confident of favourable
outcome. Amount involved is Rs.278.50 lacs. (Previous year Rs. 90.70
lacs). The Company so far has made an ''under protest payment'' of Rs.55
lacs in this matter.
3) In relation of b (iii) above, employee related cases comprise of:
Claims against the Company not acknowledged as debt, in respect of
demands raised by the workers. The Company has done an analysis and is
of the opinion that it has fair chance of a favourable decision. Amount
involved is Rs.201.36 lacs. (Previous year Rs. 136.18 lacs)
4) In relation to b (iv) above, electricity demand comprise of:"In
respect of a demand raised by Punjab Electricity Board (PSEB) for
various years in relation to availment of additional load. The Company
has done an analysis and is of the opinion that it has fair chance of a
favourable decision. Amount involved is Rs. 52.24 lacs (Previous year
Rs. 52.24 lacs).
5) In relation to b (v) above, income tax cases disputed by the Company
comprise of:
i) In respect of Assessment Year 1998-99, certain additions were made
on normal as well as on book profits. The matter is pending with
Honourable Hight Court. The Company has done an analysis and is of the
opinion that it has fair chance of favourable decision. The amount
involved is Rs 86.69 Lacs (Previous year Rs 86.69 Lacs).
ii) In respect of Assessment Year 2000-01, certain additions were made
on normal as well as on book profits. The matter is pending with
Honourable Hight Court. The Company has done an analysis and is of the
opinion that it has fair chance of favourable decision. The amount
involved is Rs 21.21 Lacs (Previous year Rs 21.21 Lacs).
iii) In respect of Assessment Year 2001-02, certain additions were made
on normal as well as on book profit. The matter is pending with
Honourable Hight Court. The Company has done an analysis and is of the
opinion that it has fair chance of a favourable decision. The amount
for contingent liability for the year is Rs. 3.05 lacs (Previous year
Rs. 8.14 lacs).
iv) In respect of Assessment Year 2002-03, certain additions were made
on normal income as well as on book profits. The matter is pending with
Commissioner Income Tax (Appeals). The Company has done an analysis and
is of the opinion that it has fair chance of a favourable decision. The
amount for contingent liability for the year is Rs. 23.13 lacs.
(Previous year Rs. 23.13 lacs).
v) In respect of Assessment Year 2003-04, disallowance was made for
carry forward losses as well as certain disallowances. The matter is
pending with Income Tax Appellate Tribunal. The Company has done an
analysis and is of the opinion that it has fair chance of a favourable
decision. The amount involved is Rs.158.01 lacs. (Previous year Rs.
158.01 lacs).
vi) In respect of Assessment Year 2004-05, certain additions were made
on normal income. The Income Tax Appellate Tribunal has decided the
matter in Company''s favour. The amount of contingency for the year is
Rs. NIL. (Previous year Rs. 13.05 lacs)
vii) In respect of Assessment Year 2005-06, certain additions were made
on normal as well as on book profit. The matter is pending with
Commissioner Income Tax (Appeals). The Company has done an analysis and
is of the opinion that it has fair chance of a favourable decision. The
amount for contingent liability for the year is Rs. 38.42 lacs
(Previous year Rs. 38.42 lacs).
viii) In respect of Assessment Year 2006-07, certain additions were
made on normal as well as on book profit. The matter is pending with
Income Tax Appellate Tribunal. The Company has done an analysis and is
of the opinion that it has fair chance of a favourable decision. The
amount for contingent liability for the year is Rs. 39.52 lacs
(Previous year Rs. 39.52 lacs).
ix) In respect of Assessment Year 2007-08, certain additions were made
on normal profits. The matter is pending with Commissioner Income Tax
(Appeals). The Company has done an analysis and is of the opinion that
it has fair chance of favourable decision. The amount involved is Rs
32.79 Lacs (Previous Year Rs 32.79 Lacs).
x) In respect of Assessment Year 2008-09, certain additions were made
on normal profits. The matter is pending with Commissioner Income Tax
(Appeals). The Company has done an analysis and is of the opinion that
it has fair chance of favourable decision. The amount involved is Rs
227.13 Lacs. (Previous Year Rs 227.13 lacs).
6. In accordance with the requirement of Accounting Standard (AS -
18) on related party disclosures where control exist and description of
the relationship are as follows:
(a) Name of Parties where Control Exists
i) Holding Company
Federal Mogul Holdings Limited (Mauritius)
ii) Subsidiary
Federal-Mogul TPR (India) Limited
iii) Ultimate Holding Company
Federal Mogul Corporation, USA
(b) Key managerial personnel*
Mr. Sunit Kapur, Managing Director
Mr. Dan Brugger, Whole Time Director & CFO
(c) Fellow subsidiaries
Federal Mogul Burscheid GMBH, Germany
Federal Mogul Maysville (USA)
Federal Mogul Operation S.R.L (Italy)
Federal Mogul Bimet S.A. (Poland)
Federal Mogul Nurnberg, GMBH (Germany)
Federal Mogul Wiesbaden GMBH, (Germany)
Federal Mogul Power Train System (South Africa)
Federal Mogul Holding Deutschland (Germany)
Federal Mogul Valves (PTY) Ltd (South Africa)
Federal Mogul Limited (U.K.)
Federal Mogul KK (Japan)
SSCFRAN FM Financial Services SAS Veurey Voroize (France)
Federal Mogul Financial Services FRANCTNL (France)
Federal Mogul Gorzyce, S.A. (Poland)
Federal Mogul Friedberg, GMBH (Germany)
Federal Mogul Sintered Products Ltd. (U.K.)
Federal Mogul Sealing Systems, GMBH (Germany)
Federal Mogul Brasil do Limited (Brazil)
Federal Mogul Friction Products Ltd (Thailand)
Federal Mogul Corporation Power Train Systems (USA)
Federal Mogul Power Train Systems Schofield (USA)
Federal Mogul S.A.R.L. (Switzerland)
Federal Mogul France, S.A. (France)
Federal Mogul Corporation, Lake City (USA)
Federal Mogul Corporation, Garennes (France)
Federal Mogul Dongsuh Piston Co. Ltd. (China)
Federal Mogul Corp, Mgmoogus (USA)
KFM Bearing Company (South Korea)
Federal Mogul Bradford Ltd.
T&N Limited Manchester (England)
Federal Mogul Powertrain Spara, MII
Federal Mogul KK Yokohama
Federal Mogul Sintertech SVC Functionnels
Federal Mogul Powertrain Inc, Southbend
Federal Mogul Kontich
Federal Mogul Schofield
Federal Mogul Bearings India Ltd (India)
Federal-Mogul Automotive Products India Ltd (India) (Formerly Federal
Mogul Automotive Product (India) Pvt Ltd.)
Federal-Mogul VSP India Ltd. (India) (Formerly known as Ferodo India
Pvt. Ltd.)
Federal-Mogul PTSB India Pvt. Ltd. (India) (Formerly known as
Federal-Mogul Trading India Pvt. Ltd.)
(d) Associates
GTZ Securities Limited
*Mr. Dan Brugger. Whole Time Director and CFO has resigned w.e.f 28
February 2013 and Mr. Vikrant Sinha has been appointed as Whole Time
Director and CFO of the Company w.e.f 28 February 2013.
Those transactions along with related balances as at 31 December 2012
and 31 December 2011 and for the years then ended are presented in the
following table:
7. Disclosures in accordance with AS-15 on "Employee Benefits"
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of services, gets a gratuity on departure
at 15 days basic salary (last drawn) for each completed year of service
on terms not less favourable than the provisions of the payment of
Gratuity Act, 1972. The scheme is funded with an insurance company in
the form of a qualifying insurance policy."The following tables
summaries 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 plan."
8. Non fulfilment of export obligation under Export promotion Capital
Goods (EPCG) Licenses
The Company has identified some licenses obtained under Export
Promotion Capital Goods scheme, which have expired and against which
the Company has partially fulfilled the export obligation (levied in
lieu of permission to import fixed assets at a concessional rate of
import duty). In view of partial shortfall in fulfilling export
obligation, the management has decided, on prudent basis, to make a
provision aggregating to Rs. 186.22 lacs (Previous Year Rs. 214.89
lacs) in these financial statements which in view of the management, is
adequate to cover any liability on this account at all its facilities''
and is included as ''Provision for non fulfilment of export obligation''
in Provisions under Note 8.
9. Provision for regulatory matters
During the year ended 31 December 2010, the Company had commenced an
evaluation process for various regulatory matters at its factories.
Based on more accurate information discovered, a provision, towards
costs to be incurred to remediate these matters, of Rs. 383.60 lacs is
included under Note no. 8 for provisions which are net of amounts
utilized of Rs. 610.53 lacs during the year towards remediation.
During the year, the Company became aware of certain discrepancies
regarding sales tax matters at one of its factories. It thereafter
undertook a review and based on the information available at this stage
of the ongoing evaluation, has paid / provided an amount of Rs. 625.81
lacs [included under Note no. 8 under the head provision for regulatory
matters net of payments made of Rs. 398.03 lacs. Provision created
during the year relating to this has been disclosed as an exceptional
item in the Statement of Profit and Loss.
In addition to the above, the provision for regulatory matters include
a provision of Rs.487.68 lacs (Previous Year Rs. 654.96 lacs ) towards
certain other regulatory matters.
The Company is actively seeking to resolve these actual and potential
statutory, taxation, regulatory and contractual obligations. In
accordance with requirements of Accounting Standard 29 on ''Provisions,
Contingent liability and Contingent assets'' issued by the Institute of
Chartered Accountants of India, although difficult to quantify based on
the complexity of the issues, the Company has accrued amounts
corresponding to its best estimate of the costs associated with such
regulatory and contractual obligations on the basis of available
information and best professional judgment of experts appointed for
this exercise.
Based on consultations obtained from the experts in respect of the said
matters, in management''s view, no further costs are expected to be
incurred for which a provision would be required at this stage and
considers the provisions made to be adequate.
10. Management support charges
In December 2012, the Company has paid management support charges to
its group companies of Rs 556.81 lacs in respect of certain application
engineering services provided to the Company. The Company carries out
its transfer pricing study annually for the tax period of April-March
and updates its documentation, choice of methods and benchmarks to
ascertain adequacy and compliance with the "arms length" principles
prescribed under Income Tax Act. For the year April 1, 2012 to March
31, 2013, the process of updation is ongoing and management is
confident of completing the same. The provision for current tax has
been made accordingly considering the said amounts of Rs. 556.8 lacs as
"allowable expenditure".
11. Change in accounting policy
Till the year ended 31 December 2011, the Company, in accordance with
the pre-revised schedule VI requirement, was recognizing dividend
declared by subsidiary company after the reporting date in the current
year''s Statement of Profit and Loss if such dividend pertained to the
period ending on or before the reporting date. The revised schedule VI,
applicable for financial years commencing on or after 1 April 2011,
does not contain this requirement. Hence, to comply with AS 9 Revenue
Recognition, the company has changed its accounting policy for
recognition of dividend income from subsidiary companies. In
accordance with the revised policy, the company recognized dividend as
income only when the right to receive the same is established by the
reporting date. Pursuant to this change, loss for the year ended 31
December, 2012 is higher by Rs. 357 lacs
12. Investments in G.I. Power Corporation Limited
The Company is holding an investment of Rs. 1,070.92 lacs (Equity
Shares: Rs. 194.48 lacs and Preference Shares: Rs. 876.44 lacs) in GI
Power Corporation Limited (GIPCL). During the year ended 31 December
2011, the Company''s shareholding in GIPCL has reduced from 26.00% to
6.60% due to conversion of the preference shares held by other
investors into equity shares. Accordingly GIPCL has discontinued to be
an ''Associate'' of the Company in the previous year.
In addition to the above, the Company had changed the classification of
the investment in GIPCL from long term investment to current investment
in the previous year, as the Company had started assessing various
options for liquidating these investments as these are not related to
the core business of the Company. The recoverability of these
Investments is being consistently evaluated and based on current
assessment, the Company is not confident that it would be able to
recover the entire carrying value of these investments and accordingly
a provision of Rs. 1072.25 lacs (representing the full cost of these
investments) has been created during the year.
Dec 31, 2011
1. Background
Federal-Mogul Goetze (India) Limited ('FMGIL' or 'the Company'), is
inter-alia engaged in the manufacture, supply and distribution of
'automotive components' used in two/three/four wheeler automobiles.
The principal facilities of the company are located at Patiala (Punjab,
Bangaluru (Karnataka) and Bhiwadi (Rajasthan), with its registered
office in delhi. The Company is listed at National Stock Exchange of
India Limited and Mumbai Stock Exchange.
Federal Mogul Holdings Limited, Mauritius, is the immediate parent
company and ultimate parent company is Federal Mogul Corporation, USA.
2. Segment Information
Based on the guiding principles given in AS-17 'Segmental Reporting'
notified under Companies (Accounting Standard) Rules, 2006, the
Company's primary business segment is manufacturing of auto components.
Considering the nature of Company's business and operations, there are
no separate reportable business segment, as there is only one business
segment and hence, there are no additional disclosures required to be
provided other than those already provided in the financial statements.
The analysis of geographical segment is based on the geographical
location of the customers. The following table shows the distribution
of the Company's consolidated sales by geographical market, regardless
of where the goods were produced.
3. Related party transactions
During the year under review, the Company has entered into transactions
with related parties. Name of Parties where Control Exists
i) Holding Company
- Federal Mogul Holdings Limited (Mauritius)
ii) Subsidiary
- Federal-Mogul TPR (India) Limited
iii) Ultimate Holding Company
- Federal Mogul Corporation, USA.
Name of related Parties where transactions have taken place
i) Key managerial personnel
- Mr. Jean De Montleur, Managing Director & President
- Mr. Dan Brugger, Whole Time Director & CFO
4. Contingent liabilities not provided for:
Particulars Year ended Year ended
December 31, 2011 December 31, 2010
(Rs in lacs) (Rs in lacs)
(a) Bank Guarantees 949.88 457.47
(b) Claims/notices contested
by the company
i) Excise duty 155.27 17.87
ii) Sales Tax 405.91 405.91
iii) Employee Related Cases 136.18 102.44
iv) Electricity Demand 52.24 52.24
v) Income Tax Demands 648.13 420.96
vi) Consumer Cases (settled
during the current year) - 30.91
c) In relation to b (i) above, Excise Duty cases contested by the
Company comprise of:
a) Matter pending with Deputy Commissioner of Central Excise,
Bangalore, in respect of excess availment of Cenvat credit. The Company
has done an analysis and is of the opinion that it has fair chance of a
favorable decision. The amount involved is Rs 0.93 lacs (Previous year
Rs. 0.93 lacs)
b) Matters pending with Central Excise & Service Tax Appellate
Tribunal, Chandigarh in respect of Service Tax on Transport Services
for the period 2007-08. The Company has done an analysis and is of the
opinion that it has fair chance of a favorable decision. Amount
involved is Rs. 2.92 lacs (Previous year Rs.2.92 lacs).
c) Matters pending with Central Excise & Service Tax Appellate Tribunal
in respect of interest on reversal of Special Additional Duty (SAD) for
2000-01. The Company has done an analysis and is of the opinion that it
has fair chance of a favorable decision. Amount involved is Rs. 14.02
lacs. (Previous year Rs. 14.02 lacs).
d) Miscellaneous Service tax cases in respect disallowance of Cenvat
Credit claimed on various input Services are pending with Cestat
Bangalore/ Joint Commissioner Jaipur/ Joint Commissioner Patiala for
the period 2005-06 to 2010-11. The Company has done an analysis and is
of the opinion that it has fair chance of a favorable decision. Amount
involved is Rs. 137.40 lacs (Previous year Rs. Nil).
d) In relation of b (ii) above, Sales Tax cases contested by the
Company comprise of:
i) In respect of Assessment Year 1996-97 to 2001-02, on account of
differences in sales tax rates, (the matter is pending with Karnataka
High court. The Company has taken legal opinion in this regard and is
confident of success). Amount involved is Rs. 315.21 lacs. (Previous
year Rs. 315.21 lacs).
ii) In respect of Assessment Year 2005-06, on account of differences in
sales tax rates, (the matter is pending with superintendent audit
Banga- lore. The Company has taken legal opinion in this regard and is
confident of success). Amount involved is Rs. 90.70 lacs. (Previous
year Rs. 90.70 lacs).
e) In relation of b (iii) above, Employee related cases comprise of:
Claims against the Company not acknowledged as debt, in respect of
demands raised by the workers. The Company has done an analysis and is
of the opinion that it has fair chance of a favorable decision. Amount
involved is Rs.136.18 lacs. (Previous year Rs. 102.44 lacs)
f) In relation to b (iv) above, Electricity demand comprise of:
In respect of a demand raised by Punjab Electricity Board (PSEB) for
various years in relation to availment of additional load. The Company
has done an analysis and is of the opinion that it has fair chance of a
favorable decision. Amount involved is Rs. 52.24 lacs (Previous year
Rs. 52.24 lacs).
g) In relation to b (v) above, Income Tax cases disputed by the Company
comprise of:
i) In respect of Assessment Year 1998-99, certain additions were made
on normal as well as on book profits. The matter is pending with High
court. The Company has done an analysis and is of the opinion that it
has fair chance of favourable decision. The amount involved is Rs 86.69
Lacs (Previous year Rs 86.69 Lacs).
ii) In respect of Assessment Year 2000-01, certain additions were made
on normal as well as on book profits. The matter is pending with High
court. The Company has done an analysis and is of the opinion that it
has fair chance of favourable decision. The amount involved is Rs 21.21
Lacs (Previous year Rs 21.21 Lacs).
iii) In respect of Assessment Year 2001-02, certain additions were made
on normal as well as on book profit. The matter is pending with High
Court. The Company has done an analysis and is of the opinion that it
has fair chance of a favorable decision. The amount for contingent
liability for the year is Rs. 8.14 lacs (Previous year Rs. 8.14 lacs).
iv) In respect of Assessment Year 2002-03, certain additions were made
on normal income as well as on book profits. The matter is pending with
Commissioner Income Tax (Appeals). The Company has done an analysis and
is of the opinion that it has fair chance of a favorable decision. The
amount for contingent liability for the year is Rs. 23.13 lacs.
(Previous year Rs. 23.13 lacs).
v) In respect of Assessment year 2003-04, disallowance was made for
carry forward losses as well as certain disallowances. The matter is
pending with Income Tax Appellate Tribunal. The Company has done an
analysis and is of the opinion that it has fair chance of a favorable
decision. The amount involved is Rs.158.01 lacs. (Previous year Rs.
158.01 lacs).
vi) In respect of Assessment Year 2004-05, certain additions were made
on normal income. The matter is pending with Income Tax Appellate
Tribunal (the matter has been heard and the order is awaited). The
amount of contingency for the year is Rs. 13.05 lacs. (Previous year
Rs. 13.05 lacs)
vii) In respect of Assessment Year 2005-06, certain additions were made
on normal as well as on book profit. The matter is pending with
Commissioner Income Tax (Appeals). The Company has done an analysis and
is of the opinion that it has fair chance of a favorable decision. The
amount for contingent liability for the year is Rs. 38.42 lacs
(Previous year Rs. 38.42 lacs).
viii) In respect of Assessment Year 2006-07, certain additions were
made on normal as well as on book profit. The matter is pending with
Income Tax Appellate Tribunal. During the year, management has done an
analysis and is of the opinion that chances of liability getting
materialised are high. Hence the Company has created provision for the
same. The amount for contingent liability for the year is Rs. 39.52
lacs (Previous year Rs. 39.52 lacs)
ix) In respect of Assessment Year 2007-08, certain additions were made
on normal profits. The matter is pending with Commissioner Income Tax
(Appeals). The Company has done an analysis and is of the opinion that
it has fair chance of favorable decision. The amount involved is Rs
32.79 Lacs (Previous Year Rs 32.79 Lacs).
x) In respect of Assessment Year 2008-09, certain additions were made
on normal profits. The matter is pending with Commissioner Income Tax
(Appeals). The Company has done an analysis and is of the opinion that
it has fair chance of favorable decision. The amount involved is Rs
227.17 Lacs. (Previous Year Rs Nil).
*As the liabilities for compensated absences are provided on an
actuarial basis for the Company as a whole, the amounts pertaining to
the directors are not included above.
b) Personal expenses under schedule 18 include Rs. 197.99 lacs
(including Rs. 29.33 lacs pertaining to previous year) towards whole
time Finance Direct or and CFO's remuneration for which the company has
filed an application in January, 2011 with Central Government for
appointment and payment of remuneration for the period November 12,
2010 to November 11, 2015, which was pending for the approval of the
Central Govern- ment.
c) During an earlier year, the company has filed an application for
approval of excess managerial remuneration to its erstwhile managing
director of Rs. 84.14 lacs for the period January 1, 2007 to September
24, 2007 with the Central Government under section 309(3) of the
Companies Act, 1956 which was in excess of permissible remuneration
under schedule XIII of the Companies Act, 1956. The Company received an
approval from Central Government for partial amount of Rs. 45.67 lacs
on September 14, 2010, while the approval for balance amount of Rs.
38.47 lacs paid to the erstwhile managing director is awaited.
Pending such approvals, the management believes that no material
adjustments are deemed necessary in financial statements in this
regard.
5. In accordance with Explanation below Para 10 of Accounting standard
9 notified by Companies (Accounting Standards) Rules, 2006, excise duty
on sales amounting to Rs. 9,398.49 lacs (Previous year Rs. 7,218.17
lacs) has been reduced from sales in profit & loss account and excise
duty on (decrease)/increase in stock amounting to Rs. 170.40 lacs
(Previous year Rs. 140.97) lacs has been considered as expense in the
financial statements.
6. Gratuity and other post-employment benefit plans:
a) The Guidance Note on implementing AS-15, Employee Benefits (revised
2005) issued by the Accounting Standard Board (ASB) of the Institute of
Chartered Accountants of India states that provident funds set up by
employers, which requires interest shortfall to be met by the employer,
needs to be treated as defined benefit plan. Pending the issuance of
the Guidance Note from the Actuarial Society of India, the Company's
actuary has expressed his inability to reliably measure the provident
fund liability. However, the Company, on a conservative basis has made
a provision for the deficit in the fund. The deficit accounted for the
in the books as on December 31, 2011 is Rs. 50.57 lacs.
b) The Company has a defined benefit gratuity plan. Every employee who
has completed five years or more of service gets a gratuity on
departure at 15 days salary (last drawn salary) for each completed year
of service.
The following table summarizes the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the respective plans.
7. Non fulfillment of export obligation under Export promotion
Capital Goods (EPCG) Licenses
The Company has identified some licenses obtained under Export
Promotion Capital Goods scheme, which have expired and against which
the Company has partially fulfilled the export obligation (levied in
lieu of permission to import fixed assets at a concessional rate of
import duty). In view of partial shortfall in fulfilling export
obligation, the management has decided, on prudent basis, to make a
provision aggregating to Rs. 214.89 lacs (Previous Year Rs. 932.32
lacs) in these financial statements which in view of the management, is
adequate to cover any liability on this account at alrits facilities'
and is included as 'Provision for non fulfillment of export obligation'
in Provisions under schedule 14.
As at December 31, 2011, the Company has export benefits receivable of
Rs. 695.94 lacs, of which Rs 315.26 lacs is outstanding in respect of
export invoices over one year, due to delay in fulfillment of export
obligations as explained above. The management believes that such
recognition is in accordance with relevant accounting guidance and
basis an expert opinion, there is reasonable certainty of its ultimate
realization and no adjustments are deemed necessary in financial
statements in this regard.
8. Provision for regulatory matters
During the year ended December 31, 2010, the Company had commenced an
evaluation process for various regulatory matters at its factories.
Based on more accurate information discovered, a provision, towards
costs to be incurred to remediate these matters, of Rs. 288.30 lacs is
included under Schedule no. 14 for provisions which are net of amounts
utilized of Rs. 269.75 lacs during the year towards remediation.
Further, the Company has also recognized a provision of Rs 654.96 lacs
(including interest of Rs. 357.37 lacs) against certain other
regulatory matters. The Company is actively seeking to resolve these
actual and potential statutory, taxation regulatory, and contractual
obligations. In accordance with requirements of Accounting Standard 29
on 'Provisions, Contingent liability and Contingent assets' issued by
the Institute of Chartered Accountants of India, although difficult to
quantify based on the complexity of the issues, the Company has accrued
amounts corresponding to its best estimate of the costs associated with
such regulatory and contractual obligations on the basis of available
information and best professional judgment of experts appointed for
this exercise.
Based on consultations obtained from the experts in respect of the said
matters, in management's view, no further costs are expected to be
incurred to remediate for which a provision would be required at this
stage and considers the provisions made to be adequate
9. Management support charges
In December 2011, the Company has received management support charges
from its group companies of Rs 498.52 lacs in respect of certain
application engineering rendered by the Company. Further, the charges
amounting to Rs. 354.40 lacs (on net basis) in respect of certain other
set of services received from the parent company, which were accounted
for by the Company for the period January 1, 2011 to September 30,
2011, have been reversed as these charges have been discontinued by the
parent company. The Company carries out its transfer pricing study
annually for the tax period of April-March and updates its
documentation, choice of methods and benchmarks to ascertain adequacy
and compliance with the "arms length" principles prescribed under
Income Tax Act. For the year April 1, 2011 to March 31, 2012, the
process of updation is ongoing and management is confident of
completing the same. The provision for current tax has been made
accordingly considering the said amounts of Rs. 498.52 lacs as
"allowable expenditure".
10. Investments in G.I. Power Corporation Limited
The Company is holding an investment of Rs. 1,070.92 lacs (Equity
Shares: Rs. 194.48 lacs and Preference Shares: Rs. 876.44 lacs) in GI
Power Corporation Limited (GIPCL). During the year, the Company's
shareholding in GIPCL has reduced from 26.00% to 6.60% due to
conversion of the preference shares held by other investors into equity
shares. Accordingly GIPCL has discontinued to be an 'Associate' of the
Company.
In addition to the above, the Company has now changed the
classification the investment in GIPCL from long term investment to
current investment, as the Company is assessing various options for
liquidating these investments as these are not related to the core
business of the Company. Based on current assessment, the Company is
confident that it would be able to recover the entire carrying value of
these investments and these investments have been carried at cost in
the balance sheet in accordance with the requirements of AS-13
"Accounting for Investments".
11. Previous year figures have been regrouped and rearranged wherever
necessary to make these comparable.
Dec 31, 2010
1. Background
Federal-Mogul Goetze (India) Limited (FMGIL or the Company1), is
inter-alia engaged in the manufacture, supply and distribution of
automotive components used in two/three/four wheeler automobiles.
The principal facilities of the Company are located at Patiala
(Punjab), Bengaluru (Karnataka) and Bhiwadi (Rajasthan), with its
registered office in Delhi. The Company is listed at National Stock
Exchange of India Limited and Bombay Stock Exchange Limited.
Federal Mogul Holdings Limited, Mauritius, is the immediate parent
company and ultimate parent company is Federal Mogul Corporation, USA.
2. Segment Information
Based on the guiding principles given in AS-17 Segmental Reporting
notified under Companies (Accounting Standard) Rules, 2006, the
Companys primary business segment is manufacturing of auto components.
The Company operates in one geographical segment that is "India" and no
further disclosures as per AS17 need to be made.
3. Related party transactions
During the year under review, the Company has entered into transactions
with related parties. i) Key managerial personnel and their relatives
Mr. Jean De Montlaur, Managing Director & President Mr. Rustin Murdock,
Whole Time Director (upto June 30, 2010) Mr. Dan Brugger, Whole Time
Finance Director (from November 12, 2010) ii) Holding Company
Federal Mogul Holdings Limited (Mauritius)
ii) Fellow subsidiaries
Federal Mogul Burscheid GMBH, Germany.
Federal Mogul Maysville (USA).
Federal Mogul Operation S.R.L (Italy)
Federal Mogul Bimet S.A. (Poland).
Federal Mogul Numberg, GMBH (Germany).
Federal Mogul Wiesbaden GMBH, (Germany)
Federal Mogul Power Train System (South Africa).
Federal Mogul Holding Deutschland (Germany).
Federal Mogul Valves (PTY) Ltd (South Africa).
Federal Mogul Limited (U.K)
Federal Mogul KK (Japan)
SSCFRAN FM Financial Services SAS Veurey Voroize (France).
Federal Mogul Financial Services FRANCTNL (France).
Federal Mogul Gorzyce, S.A (Poland).
Federal Mogul Friedberg, GMBH (Germany).
Federal Mogul Sintered Products Ltd. (U.K.).
Federal Mogul Sealing Systems, GMBH (Germany).
Federal Mogul Brasil do Limited (Brazil)
Federal Mogul Friction Products Ltd (India).
Federal Mogul Corporation Power Train Systems (USA).
- Federal Mogul Plant Van Wert (USA.)
Federal Mogul Power Train Systems Schofield (USA).
Federal Mogul S.A.R.L. (Switzerland)
Federal Mogul France, S.A. (France)
Federal Mogul Corporation, Lake City (USA)
Federal Mogul Corporation, Garennes (France)
Federal Mogul Dongsuh Piston Co. Ltd. (China)
Federal Mogul Corp, Mgmoogus (USA)
KFM Bearing Company (South Korea)
Federal Mogul Bradford Ltd.
Federal Mogul Bearing India Ltd (India)
Federal Mogul Automotive Product (India) Pvt Ltd. (India).
Ferodo India Private Ltd. (India)
Federal Mogul Trading India Pvt. Ltd. (India)
iv) Associates
Gl Power Corporation Limited
GTZ Securities Limited
v) Subsidiaries
Federal-Mogul TPR (India) Limited
Satara Rubbers and Chemicals Limited (upto March 31, 2010)
vi) Ultimate Holding Company
Federal Mogul Corporation, USA.
4. Contingent liabilities not provided for:
Particulars Year ended Year ended
December 31, 2010 December 31, 2009
(Rs in lacs) (Rs in lacs)
(a) Bank Guarantees 457.47 355.82
(b) Claims/notices contested by
the company
i) Excise duty 34.96 47.80
ii) Sales Tax 59.23 59.23
iii) ESI Cases - 14.51
iv) Employee Related Cases 102.44 63.33
v) Electricity Demand 52.24 52.24
vi) Income tax Demands 464.83 651.98
vii) Consumer Cases 30.91 60.91
c) In relation to b (i) above Excise Duty cases contested by the
Company comprise of:
i) Matter pending with Central Excise & Service Tax Appellate Tribunal
(CESTAT) in respect of valuation rates employed for certain products
sold by the Company for the period 2004-2005 & 2005-2006. The Company
has done an analysis and is of the opinion that it has fair chance of a
favorable decision. The amount involved is Rs 0.93 lacs (Previous year
Rs. 0.93 lacs)
ii) Miscellaneous Excise Cases in respect of MODVAT credits are pending
with Deputy Commissioner Central Excise Patiala (DCCE PTA)/ Addi-
tional Commissioner/Punjab and Haryana High Court/Assistant
Commissioner Central Excise for the period 1987-1988 to 2006-2007. The
Company has done an analysis and is of the opinion that it has fair
chance of a favorable decision. Amount involved is Rs. 16.46 lacs
{Previous year Rs. 16.82 lacs).
iii) Matters pending with Additional Commissioner, Chandigarh in
respect of Service Tax on Transport Services for the period 2005-06,
2006-07 & 2007-08. The Company has done an analysis and is of the
opinion that it has fair chance of a favorable decision. Amount
involved is Rs. 2.92 lacs (Previous year Rs. 15.40 lacs).
iv) Matters pending with Commissioner Appeals/ Joint Commissioner in
respect of interest on reversal of Special Additional Duty (SAD) for
200001. The Company has done an analysis and is of the opinion that it
has fair chance of a favorable decision. Amount involved is Rs. 9.37
lacs. (Previous year Rs. 9.37 lacs).
v) Matter pending with Central Excise & Service Tax Appellate Tribunal
(CESTAT) in respect of valuation rates employed for certain products
sold by the Company for the period 2001-2002 to 2004-2005. The Company
has done an analysis and is of the opinion that it has fair chance of a
favorable decision. Amount involved is Rs:5.28 lacs. (Previous year Rs.
5.28 lacs).
d) In relation of b (ii) Sales Tax cases contested by the Company
comprise of:
i) In respect of Assessment Year 1996-97 to 2001-02, on account of
differences in sales tax rates, (the matter is pending with Karnataka
High court. The Company has taken legal opinion in this regard and is
confident of success). Amount involved is Rs. 59.23 lacs. (Previous
year Rs. 59.23 lacs)
e) In relation b (iii) above Employee State Insurance claims comprise
on
i) In respect of demand from Employee State Insurance, relating to non
deposit of Employee State Insurance on certain employee related
expenses pending with the Assessing Officer. The Company has done an
analysis and is of the opinion that it has fair chance of a favorable
decision. Amount involved is Rs. Nil (Previous year Rs. 14.51 lacs)
f) In relation of b (iv) above Employee related cases comprise of:
i) Claims against the Company not acknowledged as debt, in respect of
demands raised by the workers. The Company has done an analysis and is
of the opinion that it has fair chance of a favorable decision. Amount
involved is Rs.102.44 lacs. (Previous year Rs. 63.33 lacs)
g) In relation to b (v) above Electricity demand relates to:
In respect of a demand raised by Punjab State Electricity Board (PSEB)
for various years in relation to availment of additional load. The
Company has done an analysis and is of the opinion that it has fair
chance of a favorable decision. Amount involved is Rs. 52.24 lacs
(Previous year Rs. 52.24 lacs). h) In relation to b (vi) above Income
Tax cases disputed by the Company:
i) In respect of Assessment Year 2001-02, certain additions were made
on normal as well as on book profit. The matter is pending with ITAT.
The Company has done an analysis and is of the opinion that it has fair
chance of a favorable decision. The amount for contingent liability for
the year is Rs. 28.90 lacs (Previous year Rs. 28.90 lacs).
ii) In respect of Assessment Year 2002-03, certain additions were made
on normal income as well as on book profits. The matter is pending with
Commissioner Income Tax (Appeals). The Company has done an analysis and
is of the opinion that it has fair chance of a favorable decision. The
amount for contingent liability for the year is Rs. 116.23 lacs.
(Previous year Rs. 214.28 lacs)
iii) In respect of Assessment Year 2003-04, disallowance was made for
carry forward losses as well as certain disallowances. The matter is
pending with Commissioner Income Tax (Appeals). The Company has done an
analysis and is of the opinion that it has fair chance of a favorable
decision.
The amount involved is Rs. 145.81 lacs. (Previous year Rs. 220.66 lacs)
iv) In respect of Assessment Year 2004-05, certain additions were made
on normal income. The matter is pending with ITAT. During the year,
Company has got the order in its favour, hence the amount involved is
Rs. 16.02 lacs. (Previous year Rs. 24.07 lacs)
v) In respect of Assessment Year 2005-06, certain additions were made
on normal as well as on book profit. The matter is pending with
Commissioner Income Tax (Appeals). The Company has done an analysis and
is of the opinion that it has fair chance of a favorable decision. The
amount for contingent liability for the year is Rs. 12.30 lacs
(Previous year Rs. 47.19 lacs)
vi) In respect of Assessment Year 2006-07, certain additions were made
on normal as well as on book profit. The matter is pending with
Commissioner Income Tax (Appeals). During the year, management has done
an analysis and is of the opinion that chances of liability getting
materialised are high. Hence the Company has created provision for the
same. The amount for contingent liability for the year is Rs. 78.21
lacs (Previous year Rs. 39.52 lacs)
vii) In respect of Assessment Year 1997-98, demand was raised due to
disallowance of previous year expense made in regular assessment and
also certain penalty proceedings on the above issue. The amount
involved is Rs. 23.24 lacs. (Previous year Rs. 33.24 lacs)
viii) In respect of Assessment Year 2000-01, certain additions were
made on normal as well as on book profits. The matter is pending with
High court. The company has done an analysis and is of the opinion that
it has fair chance of favourable decision. The amount involved is Rs 1
1.01 Lacs (Previous year Rs 11.01 Lacs).
ix) In respect of Assessment Year 2007-08, certain additions were made
on normal profits. The matter is pending with Commissioner Income Tax
(Appeals). The company has done an analysis and is of the opinion that
it has fair chance of favourable decision. The amount involved is Rs
33.11 Lacs (Previous Year Rs 33.11 Lacs).
i) In relation to b (vii) above Consumer cases filed against the
company:
i) Matter pending with Delhi High Court relating to cases filed by a
customer of the Company relating to defective goods for the period
1995-1996.
The Company nas done an analysis and is of the opinion that it has fair
chance of a favorable decision Amount involved is Rs. 30.91 lacs
(Previous year Rs. 60.91 lacs).
(b) Personnel expenses under Schedule 18 include Rs. 333.28 lacs
(including Rs.. 195.67 lacs in respect of earlier financial year)
towards director remuneration which is in excess of permissible
remuneration determined under Schedule XIII of the Companies Act, 1956.
Management has filed an application with the Central government on June
23, 2009 for approval of payment of salary to the managing director for
Rs. 54.96 lacs per month for 5 years. Pending approval from the
government, management has taken a confirmation from the managing
director that he shall refund the amounts in the event of such
approvals being refused.
(c) Remuneration of Rs. 1 19.85 Lacs for the period April 1, 2006 to
December 31, 2006, paid to the erstwhile managing director of the
Company was in excess of permissible remuneration under Schedule XIII
of the Companies Act, 1956. The Company had applied to the Central
Government for the approval of such excess remuneration which was
rejected by the Central Government vide letter dated May 26, 2009. The
Company has filed an application on April 29, 2010 under Section
309(5B) of tne Companies Act, 1956 to waive the recovery of the
aforesaid amount from the erstwhile managing director. Further during
the year company has received an approval from Central Government for
partial amount of Rs 45.67 lacs (total amount of Rs 84.14 iacs) on
September 14, 2010 for the period January 01, 2007 to September 24,
2007. Company has again applied to Central Government on November 18,
2010 for waiver of recovery of balance amount of Rs 38.47 Lacs paid to
the erstwhile managing director.
5. In accordance with Explanation below Para 10 of Accounting standard
9 notified by Companies (Accounting Standards^ Rules, 2006, excise duty
on sales amounting to Rs. 7,218.17 lacs (Previous year Rs. 5,175.75
lacs) has been reduced from sales in profit & loss account and excise
duty on (decrease) / increase in stock amounting to Rs. 140.97 lacs
(Previous year Rs. (218.58) lacs has been considered as (income) /
expense in the financial statements.
6. The Company has sold its entire investment amounting to Rs. 1,902
lacs in the shares of its wholly owned subsidiary company, Satara
Rubbers and Chemicals Limited on March 31, 2010 for a consideration of
Rs. 1,130 lacs (Rs. 200 lacs was received in the previous year ended
December 31, 2009 as advance payment and the balance amount was
received on March 31, 2010). The Company has accordingly considered an
additional loss of Rs. 570.59 lacs on sale of this investment which has
been recorded in Operating and other expenses.
7. Non fulfillment of export obligation under (Export promotion
Capital Goods) EPCG Licenses
The Company has identified some licenses obtained under Export
Promotion Capital Goods scheme, which have expired and against which
the Company has partially fulfilled the export obligation [levied in
lieu of permission to import fixed assets at a concessional rate of
import duty), in view of partial shortfall in fulfilling export
obligation, the management has decided, on prudent basis, to make a
provision aggregating to Rs. 932.32 lacs (Previous Year Rs. 822.76
lacs) in these financial statements which in view of the management is
adequate to cover any liability on this account at ail its facilities
and is included as Provision for non fulfillment of export obligation
in Provisions under schedule 14.
8. During the year ended December 31, 2010, the Company commenced an
evaluation process for various regulatory matters at its factories.
Based on more accurate information discovered, a provision, towards
costs to be incurred to remediate these matters, of Rs. 424.91 lacs is
included under Schedule no. 14 for provisions which are net of amounts
utilized of Rs. 513.23 lacs towards remediation. The Company is
actively seeking to resolve these actual and potential statutory,
regulatory, and contractual obligations.
accordance with
requirements of Accounting Standard 29 on Provisions, Contingent
liability and Contingent assets issued by the Institute of Chartered
Accountants of India, although difficult to quantify based on the
complexity of the issues, the Company has accrued amounts corresponding
to its best estimate of the costs associated with such regulatory and
contractual obligations on the basis of available information and best
professional judgment of experts appointed for this exercise. Based on
consultations obtained from these experts, in managements view/ no
further costs are expected to be incurred to remediate for which a
provision would be required at this stage and considers the provisions
made to be adequate.
9, The Company carries out its transfer pricing study annualfy for the
tax period of April-March and updates its documentation, choice of
methods and benchmarks to ascertain adequacy and compliance with the
"arms length" principles prescribed under Income Tax Act. For the year
April 1, 2010 to March 31, 201 1, the process of updation is ongoing
and management expects to complete this before March 31, 2011.
Accordingly, the provision for current tax includes adequate amount to
cover any additional liability till the completion of study.
10. Previous year figures have been regrouped and rearranged wherever
necessary to make these comparable.
Dec 31, 2009
1. Background
Federal-Mogul Goetze (India) Limited (FMGIL or the Company), is
inter-alia engaged in the manufacture, supply and distribution of
automotive components used in two/three/four wheeler automobiles.
The principal facilities of the Company are located at Patiala
(Punjab), Bengaluru (Karnataka) and Bhiwadi (Rajasthan), with its
registered office in New Delhi. The Company is listed at National Stock
Exchange of India Limited and Bombay Stock Exchange Limited.
Federal Mogul Holdings Limited, Mauritius, is the immediate parent
company and ultimate parent company is Federal Mogul Corporation, USA.
2. Segment Information
Based on the guiding principles given in AS-17 Segmental Reporting
notified under Companies (Accounting Standard) Rules, 2006, the
Companys primary business segment is manufacturing of auto components.
The Company operates in one geographical segment that is "India" and no
further disclosures as per AS-17 need to be made.
3. Related party transactions
During the year under review, the Company has entered into transactions
with related parties. i) Key managerial personnel and their relatives
Mr. Jean De Montlaur, Managing Director & President (w.e.f March 03,
2008)
Mr. Rustin Murdock, Whole Time Director & CFO
ii) Holding Company
Federal Mogul Holdings Limited (Mauritius)
iii) Fellow subsidiaries
Federal Mogul Burscheid GMBH, Germany.
Federal Mogul Vemogensuverwaltungs GMBH (Germany)
Federal Mogul Maysville (USA).
Federal Mogul Operation S.R.L (Italy)
Federal Mogul Bimet S.A. (Poland).
Federal Mogul Nurnberg, GMBH (Germany).
Federal Mogul Wiesbaden GMBH, (Germany)
Federal Mogul Power Train System (South Africa).
Federal Mogul Holding Deutschiand (Germany).
Federal Mogul Valves (PTY) Ltd (South Africa).
Federal Mogul Limited (formerly T & N Limited) (U.K)
Federal Mogul KK (Japan)
SSCFRAN FM Financial Services SAS Veurey Voroize (France).
Federal Mogul Financial Services FRANCTNL (France).
Federal Mogul Gorzyee, S.A (Poland).
Federal Mogul Friedberg, GMBH (Germany).
Federal Mogul Sintered Products Ltd. (U.K.).
Federal Mogul Sealing Systems, GMBH (Germany).
Federal Mogul Friction Products Ltd (India).
Federal Mogul Corporation Power Train Systems (USA).
Federal Mogul Plant Van Wert (USA.)
Federal Mogul Power Train Systems Schofield (USA).
Federal Mogul S.A.R.L. (Switzerland)
Federal Mogul France, S.A. (France)
Federal Mogul Corporation, Lake City (USA)
Federal-Mogul Chivasso. (Italy)
Federal Mogul Corporation, Garennes (France)
Federal Mogul Dongsuh Piston Co. Ltd. (China)
Federal Mogul Corp, Mgmoogus (USA).
KFM Bearing Company (South Korea).
Federal Mogul Bearings India Ltd (India).
Federal Mogul Automotive Products (India) Pvt Ltd. (India).
Ferodo India Private Ltd. (India).
Federal Mogul Trading India Pvt Ltd.(India)
iv) Associates
Gl Power Corporation Limited
GTZ Securities Limited
v) Subsidiaries
Federal-Mogul TPR (India) Limited
Satara Rubbers and Chemicals Limited
vi) Ultimate Holding Company
Federal Mogul Corporation, USA.
4. Contingent liabilities not provided for:
Particulars Year ended Year ended
December 31, 2009 December 31, 2008
(Rs in lacs) (Rs in lacs)
(a) Bank Guarantees 355.82 518.06
(b) Claims/notices contested
by the company
i) Excise duty 47.80 146.45
ii) Sales Tax 59.23 59.23
iii) ESI Cases 14.51 40.53
iv) Employee Related Cases 63.33 72.67
v) Electricity Demand 52.24 52.24
vi) Income Tax Demands 683.20 154.88
vii) Consumer Cases 60.91 60.91
c) In relation to b (i) above Excise Duty cases contested by the
Company comprise of:
i) Matter pending with Central Excise & Service Tax Appellate Tribunal
(CESTAT) in respect of valuation rates employed for certain products
sold by the Company for the period 2004-2005 & 2005-2006. The Company
has done an analysis and is of the opinion that it has fair chance of a
favorable decision. The amount involved is Rs 0.93 lacs (Previous year
Rs. 0.93 lacs) ii) Matter pending with Additional Commissioner of
Central Excise (ADCCE) in respect of excise duty on scrap produced by
the Company for the period 2000-2001 to 2002-2003. During the year, the
order was passed in favour of the company. The amount involved is Rs.
Nil (Previous year Rs. 34.11 lacs)
iii) Miscellaneous Excise Cases in respect of MODVAT credits are
pending with Deputy Commissioner Central Excise Patiala (DCCE PTA)/
Additional Commissioner/Punjab and Haryana High Court/Assistant
Commissioner Central Excise for the period 1987-1988 to 2006-2007. The
Company has done an analysis and is of the opinion that it has fair
chance of a favorable decision. Amount involved is Rs. 16.82 lacs
(Previous year Rs. 16.82 lacs).
iv) Matters pending with Additional Commissioner, Chandigarh in respect
of Service Tax on Transport Services for the period 2005-06, 2006-07 &
2007-08. The Company has done an analysis and is of the opinion that it
has fair chance of a favorable decision. Amount involved is Rs. 15.40
lacs (Previous year Rs. 14.56 lacs).
v) Matters pending with CESTAT in respect of excise cases in relation
cenvat credit availed on imported goods for the period 2006-07.During
the year, the order was passed in the favour of the company. Amount
involved is Rs. Nil (Previous year Rs. 55.72 lacs).
vi) Matters pending with Commissioner Chandigarh/ Deputy Commissioner
Central Excise (DCCE) Patiala in respect of clearance of reprocessed
goods without payment of duty for the period 2004-2005 to 2006-2007.
During the year, the order was passed in the favour of the Company.
Amount involved is Rs. Nil. (Previous year Rs. 8.82 lacs).
vii) Matters pending with Commissioner Appeals/ Joint Commissioner in
respect of interest on reversal of Special Additional Duty (SAD) for
2000-01. The Company has done an analysis and is of the opinion that
it has fair chance of a favorable decision. Amount involved is Rs. 9.37
lacs. (Previous year Rs. 9.3/ lacs).
viii) Matter pending with Central Excise & Service Tax Appellate
Tribunal (CESTAT) in respect of valuation rates employed for certain
products sold by the Company for the period 2001 -2002 to 2004-2005.
The Company has done an analysis and is of the opinion that it has fair
chance of a favorable decision. Amount involved is Rs.5.28 lacs.
(Previous year Rs. 6.12 lacs).
d) In relation of b (ii) Sales Tax cases contested by the Company
comprise of:
i) In respect of Assessment Year 1996-97 to 2001-02, on account of
differences in sales tax rates, (the matter is pending with Karnataka
High court. The Company has taken legal opinion in this regard and is
confident of success). Amount involved is Rs. 59.23 lacs. (Previous
year Rs. 59.23 lacs)
e) In relation b (iii) above Employee State Insurance claims comprise
of:
i) In respect of demand from Employee State Insurance, relating to non
deposit of Employee State Insurance on certain employee related
expenses pending with the Assessing Officer. The Company has done an
analysis and is of the opinion that it has fair chance of a favorable
decision. Amount involved is Rs. 14.51 lacs. (Previous year Rs. 40.53
lacs)
f) In relation of b (iv) above Employee related cases comprise of:
i) Claims against the Company not acknowledged as debt, in respect of
demands raised by the workers. The Company has done an analysis and is
of the opinion that it has fair chance of a favorable decision. Amount
involved is Rs.63.33 lacs. (Previous year Rs. 72.67 lacs)
g) In relation to b (v) above Electricity demand relates to:
In respect of a demand raised by Punjab Electricity Board (PSEB) for
various years in relation to availment of additional load. The Company
has done an analysis and is of the opinion that it has fair chance of a
favorable decision. Amount involved is Rs. 52.24 lacs (Previous year
Rs. 52.24 lacs). h) In relation to b (vi) above Income Tax cases
disputed by the Company:
i) In respect of Assessment Year 2001-02, certain additions were made
on normal as well as on book profit. The matter is pending with ITAT
The Company has done an analysis and is of the opinion that it has fair
chance of a favorable decision. The amount for contingent liability for
the year is Rs. 104.24 lacs (Previous year Rs. Nil)
ii) In respect of Assessment Year 2002-03, certain additions were made
on normal income as well as on book profits. The matter is pending with
Commissioner Income Tax (Appeals). The Company has done an analysis and
is of the opinion that it has fair chance of a favorable decision. The
amount for contingent liability for the year is Rs. 214,28 lacs.
(Previous year Rs. 15.10 lacs)
iii) In respect of Assessment Year 2003-04, disallowance was made for
carry forward losses as well as certain disallowances. The matter is
pending with Commissioner Income Tax (Appeals). The Company has done an
analysis and is of the opinion that it has fair chance of a favorable
decision. The amount involved is Rs.220.66 lacs. (Previous year Rs.
55.62 lacs)
iv) In respect of Assessment Year 2004-05, certain additions were made
on normal income. The matter is pending with ITAT, during the year
Company has got the order in its favour, hence the amount involved is
Rs. 24.07 lacs. (Previous year Rs. 11.71 lacs)
v) In respect of Assessment Year 2005-06, certain additions were made
on normal as well as on book profit. The matter is pending with
Commissioner Income Tax (Appeals). The Company has done an analysis and
is of the opinion that it has fair chance of a favorable decision. The
amount for contingent liability for the year is Rs. 47.19 lacs
(Previous year Rs. 39.21 lacs)
vi) In respect of Assessment Year 2006-07, certain additions were made
on normal as well as on book profit. The matter is pending with
Commissioner Income Tax (Appeals). During the year, management has done
an analysis and is of the opinion that chances of liability getting
materialised are high. Hence the Company has created provision for the
same. The amount for contingent liability for the year is Rs. 39.52
lacs (Previous year Rs. Nil)
vii) In respect of Assessment Year 1997-98, demand was raised due to
disallowance of previous year expense made in regular assessment and
also certain penalty proceedings on the above issue. The amount
involved is Rs. 33.24 lacs. (Previous year Rs. 33.24 lacs)
i) In relation to b (vii) above Consumer cases filed against the
company:
i) Matter pending with Delhi High Court relating to cases filed by
Space 2000 a customer of the Company relating to defective goods for
the period 1995-1996. The Company has done an analysis and is of the
opinion that it has fair chance of a favorable decision Amount involved
is Rs. 60.91 lacs (Previous year Rs. 60.91 lacs).
5. (a) (i) Payment made to Directors:
(b) Personnel expenses under Schedule 18 include Rs. 540.12 lacs
(including Rs. 305.54 lacs in respect of earlier financial year)
towards director remunera- tion which is in excess of permissible
remuneration determined under Schedule XIII of the Companies Act, 1956.
Management has filed an application with the Central government on June
23, 2009 for approval of payment of salary to the managing, director
for Rs. 54.96 lacs per month for 5 years. Pending approval from the
government, management has taken a confirmation from the managing
director that he shall refund the amounts in the event of such
approvals being refused.
(c) Remuneration of Rs. 119.85 lakhs for the period April 1, 2006 to
December 31, 2006, paid to the erstwhile managing director of the
Company was in excess of permissible remuneration under Schedule XIII
of the Companies Act, 1956. the Company had applied to the Central
Government for the approval of such excess remuneration which was
rejected by the Central Government vide letter dated May 2o, 2009. The
Company is in the process of filing an application under Section 309
(5B) of the Companies Act, 1956 to waive the recovery or the aforesaid
amount from the erstwhile managing director. Further, there is another
application for excess remuneration of Rs. 84.15 lakhs for the period
January 1, 2007 to September 24, 2007 applied to the Central Government
for its approval under Section 309 (3) of the Companies Act, 1956. The
management has confirmed from the erstwhile managing director that he
will refund this amount, to the extent of this being not approved by
the Central Government. Pending above mentioned approvals by Central
Govt, no adjustments have been made to these financial statements in
this regard.
6. (a) In accordance with Explanation below Para 10 of Accounting
standard 9 notified by Companies (Accounting Standards) Rules, 2006,
excise duty on sales amounting to Rs. 5,175.75 lacs (Previous year Rs.
8,194.26 lacs) has been reduced from sales in profit & loss account and
excise duty on (decrease) / increase in stock amounting to Rs. (218.58)
lacs (Previous year Rs. (380.69) lacs has been considered as (income) /
expense in the financial statements.
7. On December 31, 2009, the Company has entered into an
agreement/memorandum of understanding with a third party to sell the
investment made in one of the subsidiary for Rs 1,200 lacs. As per the
terms of the agreement the Company will convert the loan recoverable of
Rs 1,700 lacs into equity share capital with a face value of Rs 10 per
share of subsidiary. Accordingly a provision of Rs 514.71 lacs has been
made.
8. Non fulfillment of export obligation under (Export promotion
Capital Goods) EPCG Licenses
During the year, the Company has identified some of the licenses,
obtained under Export Promotion Capital Goods scheme under which
Company had imported certain fixed assets without payment of relevant
custom duties, on which the Company has fulfilled the export obligation
partially. The Company, based on opinions by legal experts, is of the
view that they will be able to apply for the extension of the time
period and will be exploring various possibilities for completing the
export obligations.
However, considering that these licenses have already expired, the
management has decided, on prudent basis, to make a provision for the
potential interest payable to the Government aggregating to Rs. 532.20
lacs in these financial statements and has also capitalized the duty
portion to be paid for Rs. 380.06 lacs with the relevant fixed assets
and has depreciated the same as if these were capitalized on the date
of respective assets being put to use. This has resulted in Company
charging the additional depreciation ana additional interest of Rs.
822.76 lacs during the year (including Rs. 351.25 lacs for earlier
periods).
9. Previous year figures have been regrouped and rearranged wherever
necessary to make these comparable.
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