Mar 31, 2022
Write-downs of inventories, except for stores and spare parts and work in progress, to net realisable value amounted to March 31, 2022 - Rs.82, March 31, 2021 - Rs. 18. These were recognised as an expense during the year and included in ''changes in inventories of work-in-progress,stock-in-trade and finished goods in the statement of profit and loss.
The Company has an accounting policy to do the work-in-progress (WIP) inventory valuation on standard costing at the time of production and at each month end this cost has been actualized based on the best estimate. Company does actualization of WIP inventory at regular interval by way of physical verification. During the current year, the Company has performed the physical verification in December 2021 and March 2022 and recorded the gain of Rs. 433 and Rs.109 respectively.
(v) Nature and purpose of other reserves
(i) Securities premium
Securities premium is used to record the premium on issue of shares and is utilised in accordance with the provisions of the Companies Act, 2013.
General reserve is kept aside out of Company''s profits and are used to meet future obligations.
(iii) Other equity - revaluation
As the Company has opted for exemption under paragraph D7AA of Ind AS 101 and also elected the cost model under Ind AS 16 for subsequent measurement of Property, Plant and Equipment, the revaluation reserve recognised under previous GAAP has been transferred to ''Other equity- revaluation'' on the date of transition to Ind AS. This balance does not constitute free reserves available for distribution as dividend in accordance with the provisions of the Companies Act, 2013.
(a) Information about individual provisions and significant estimates
Provision for customs, excise and sales tax litigation: These represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes. It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.
Provision for replacement loss: Replacement loss reserves are based on past claims experience, sales history and other considerations. Replacement loss is provided on the sale of our products and an accrual for estimated future claims is recorded at the time revenue is recognized. Tyres replacement offered by the Company is on a prorated basis.
(c) Employee Benefit Obligations
(A) Leave obligations
The amount of the provision of Rs. 741 (March 31, 2021 - Rs. 650) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is expected to be taken or paid within the next 12 months.
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below : Salary Increases:
Actual salary increases will increase the Plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
Investment Risk:
If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
Reduction in discount rate in subsequent valuations can increase the plan''s liability.
Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan''s liability.
The Company through its Trusts ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans.
The Company through its Trusts actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.
A large portion of assets in 2021-22 consists of government and corporate bonds, although the Company through its Trusts also invests in equities and mutual funds. The plan asset mix is in compliance with the requirements of the respective local regulations.
(c) The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. For this purpose, the Company has appointed independent consultants for conducting Transfer Pricing Study. Management is of the opinion that its international transactions with associated enterprises have been undertaken at arms'' length basis at duly negotiated prices on usual commercial terms. The Company has submitted the Accountants'' Report in form 3CEB upto the financial year ended on March 31, 2021 as required under section 92E of the Income Tax Act, 1961.
The carrying amounts of security deposits, trade receivables, trade payables, creditors for capital items, cash and cash equivalents, other bank balances, lease liabilities and other financial assets/ liabilities are considered to be the same as their fair values, due to their short-term nature.
The Company does not have any financial instruments where significant estimation was involved in determination of its fair value.
The Company ''s activities expose it to the market risk, liquidity risk and the credit risk. The Company''s risk management is carried out by the treasury department for cash and cash equivalent, deposits with banks, foreign currency risk exposure and liquidity risk under various approved policies. The risk management for trade receivables is carried out by controlling department of the Company.
Credit risk arises from cash and cash equivalents, other bank balance, trade receivables and other financial assets.
(i) Credit risk management
(a) Cash and cash equivalents and other bank balance:
The Company is in control of its exposure to these financial instruments by diversifying the deposit, by investing cash and cash equivalents and other bank balance based on counterparty credit strength as measured by long-term credit ratings of the three major rating agencies (Standard & Poors, Moody''s and Fitch) and by monitoring the financial strength of these banks on regular basis.
(b) Trade Receivables:
The Company has Credit Policy and the independent credit control department to review the credit worthiness of the customers and assess the recoverability of the asset. Finance Director is the authority to approve any exception to the Policy.
Customer credit risk is managed basis established policies of the Company, procedures and controls relating to customer credit risk management which helps in assessing the risk at the initial recognition of the asset. Outstanding customer receivables are regularly and closely monitored. The Company has a monthly process of following past due analysis leading to very few cases of bad debts and delayed payments. The same is evident from the earlier years receivable write-off. The Company provides for any outstanding beyond 180 days. The trade receivables on the respective reporting dates are net off the allowance which is sufficient to cover the entire lifetime loss of sales recognised including those that are currently less than 180 days outstanding.
A default on a financial asset is when the counterparty fails to make contractual payment within 180 days of when they fall due. This definition of default is determined by considering the business environment in which entity operates.
The Company believe that there are efficient processes established to monitor and control the risk of loss associated with receivables.
(c) Other financial assets:
Other financial assets of the Company mainly comprises of security deposit with Dakshin Haryana Bijli Vitran Limited, security deposits for the rental premises and others, accrued interest on fixed deposits with banks, deposits held as lien with Banks and other receivables from related parties.
Credit risk exposure with respect to other financial assets are negligible as they are either supported by legal agreement or are with Nationalised banks and Government organisations:
- Security deposit with Dakshin Haryana Bijli Vitran Limited, a public sector organisation, represents low credit risk.
- Security deposits for the rental premises and others are with counter parties with strong capacity to meet the obligation, hence the risk of default is considered to be negligible.
- Deposits held as lien with Banks are with Nationalised Bank, hence the risk of default is considered to be negligible.
- Accrued interest on fixed deposits are with banks having strong financial strength as explained above, hence the risk of default is considered to be negligible.
- Other receivables from related parties are as per approved policy and the established procedure to monitor the dues from related parties which also ensures timely payments and no default, hence credit risk is negligible.
(ii) Provision for expected credit losses
Customer credit risk is managed basis established policies of the Company, procedures and controls relating to customer credit risk management. Outstanding customer receivables are regularly monitored. The Company has a diverse customer base, as its customers are located and operate in largely independent markets and does not see any significant concentration of risk related to reliance on any single customer. The credit quality of the customers is evaluated based on the approved policies and established processes.
Impairment of Trade Receivables:
The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
The Company''s primary sources of liquidity are cash generated from operation. The cash flows from operating activities are driven primarily by operating results and changes in the working capital requirements.
The Company intend to operate the business in a way that allows the Company to address its needs with existing cash and available financing arrangement if they cannot be funded by cash generated from operations.
The Company believe that its liquidity position is adequate to fund the operating and investing needs and to provide with flexibility to respond to further changes in the business environment.
(ia) Foreign Currency Risk: The Company operates internationally and is exposed to foreign exchange risk in relation to operating activities (when revenue or expense is denominated in a foreign currency) arising from foreign currency transactions, primarily with respect to the USD and EUR. The Company has approved policies to enter into foreign currency contracts in order to manage the impact of changes in foreign exchange rates on the results of operations and future foreign currency-denominated cash flows.
Foreign currency exposure of the Company is minimal.
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not have any borrowings therefore it is not impacted by interest rate risk.
(iii) Price Risk: Price risk arises from exposure to equity securities prices from investments held by the Company. The Company does not have any investments in equity shares.
29 Capital Management (a) Risk Management
The Company''s objectives when managing capital is to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders.
As of March 31, 2022, the Company has only one class of equity shares and no debt. Therefore, there are no externally imposed capital requirements.
The Company is engaged in the business of sales of automotive tyres, tubes and flaps. The Company sells tyres of its own brand "Goodyearâ. The Company is domiciled in India.
The Company has monthly review and forecasting procedure in place. The review involves the operating results of the Company as a whole except for sales and sales volume information which is available on disaggregated basis.
The Chief Operating Decision Maker (CODM), Managing Director, performs a detailed review of the operating results including cashflow, working capital, headcount of the Company as a whole and sales and sales volume on disaggregated basis and thereby makes decisions about the allocation of resources among the various functions. Since the operating results of each of the functions are not considered individually by the CODM, the functions do not meet the requirements of Ind AS 108 for classification as an operating segment, hence there is only one operating segment namely, "Automotive tyres,tubes & flapsâ.
In 2008, the State of Haryana (the State) introduced the Haryana Tax on Entry of Goods into Local Areas Act, 2008 ("Actâ) which High Court of Punjab and Haryana declared as ''Unconstitutional''. As on date, the State did not frame and notify enabling "Rulesâ under the Act, and no demand has been received by the Company. Accordingly, the amount of liability involved, if any, under the Act also cannot be measured.
Further, on November 11, 2016 the nine Judges Bench of Hon''ble Supreme Court held that the State Governments do have right to levy an ''Entry Tax'', however (i) whether States have enacted correct legislations in alignment with Indian Constitutional provisions, (ii) whether such taxes demanded by State Governments were actually used for intended development of local area and (iii) the interpretation of the word "Local Areaâ were among questions not addressed by the November 11, 2016 ruling, but instead are to be heard by Hon''ble Divisional Bench of the Supreme Court individually for each state, on merits. The above mentioned matters were heard by the Hon''ble
Divisional Bench of the Supreme Court and remanded back to High Court of Punjab and Haryana and directed that fresh petitions should be filed by the parties, based on the principles given by the nine Judges Bench of Hon''ble Supreme Court.The Company filed its fresh petition in May 2017.
Having regard to the status of matter above and in the absence of any rules notified under which tax can be levied or measured and matter is also time barred since no demand has been raised till date since enactment of the Act, the management supported by the legal opinion has assessed obligation towards entry tax, if any, as a contingent liability.
G. In Feburary 2019, the Hon''ble Supreme Court has passed a judgement in relation to the non-exclusion of certain allowances from the definition of ''basic wages'' of the relevant employees for the purpose of determining contribution to provident fund under Employees Provident Fund & Miscellaneous Provisions Act, 1952. According to the management and legal opinion obtained by the management, there are the various interpretational issues related to this matter, therefore, as of now, the impact on the financials statements, if any can not be ascertained.
* The Company has given financial guarantee to Sarva Haryana Gramin Bank (Bank) in respect of loans taken by its employees. In case any employee on who''s behalf a guarantee has been provided by the Company, opts to leave his/ her employment, then the Company is required to pay the outstanding balance in his loan account to the Bank from the proceeds of the terminal benefits payable to him after adjusting the Company''s dues. The Company is not exposed to any loss, futher the fair value of financial guarantee is not material.
** These represent the best estimates arrived at on the basis of available information. The uncertainties and possible reimbursements
are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes. It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings. Amount of contingent liabilities are inclusive of Interest as per order.
34 Events occurring after the reporting period
Refer to note 29 for the final dividend recommended by the directors which is subject to the approval of shareholders in the ensuing annual general meeting.
The Goodyear Tire & Rubber Company, Akron, Ohio, USA (Ultimate holding company) issues stock-based awards to the Company''s employees under their approved Performance Plan. The issue of grants of restricted stock units and stock appreciation rights to the employees of the Company are covered under the same Performance Plan as declared by the ultimate holding company.
Stock appreciation rights (SAR)
Grants of Stock Appreciation Right generally have a graded vesting period of four years whereby one-fourth of the awards vest on each of the first four anniversaries of the grant date, an exercise price equal to the fair market value of one share of the ultimate holding company on the date of grant (calculated as the average of the high and low price or the closing market price on that date depending on the terms of the related Plan) and a contractual term of ten years. Stock Appreciation Rights are cancelled on, or 90 days following, termination of employment unless termination is due to retirement, death or disability under certain circumstances, in which case, all outstanding options vest fully and remain outstanding for a term set forth in the related grant agreement. As the obligation to settle the share based transaction rests with the Company in cash, hence these are accounted for as cash-settled options. The Company has not granted any SAR after December 2014.
Restricted stock units have vesting period of three years beginning on the date of grant. Restricted stock units will be settled through the issuance of an equivalent number of shares of The Goodyear Tire & Rubber Company, Akron, Ohio, USA common stock. The Company is required to reimburse the ultimate holding company the cost of the share issuance as on the date of vesting. As the obligation to settle the share based transaction rests with the Company in cash, hence these are accounted for as cash-settled options.
iii. Measurement of fair values
The fair value of SAR''s have been measured using the Black Scholes formula. Service and non-performance conditions attached to the arrangements were not taken into account in measuring fair value.
The fair value of grant of restricted stock unit is based on the closing market price of a share of The Goodyear Tire and Rubber Company, Akron''s common stock on the date of grant, thereafter re-measuring the value on each reporting date at the closing market price of a share.
39 Standards issued but not yet effective
Recent pronouncements Ministry of Corporate Affairs ("MCAâ) notifies new standard or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian
Accounting Standards) Amendment Rules, 2022, applicable from April 1, 2022, as below:
a Ind AS 103 - Reference to Conceptual Framework The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date. These changes do not significantly change the requirements of Ind AS 103. The Company does not expect the amendment to have any significant impact in its financial statements.
b Ind AS 16 - Proceeds before intended use The amendments mainly prohibit an entity from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, an entity will recognise such sales proceeds and related cost in profit or loss. The Company does not expect the amendments to have any impact in its recognition of its property, plant and equipment in its financial statements.
c Ind AS 37 - Onerous Contracts - Costs of fulfilling a contract The amendments specify that that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts. The amendment is essentially a clarification and the Company does not expect the amendment to have any significant impact in its financial statements.
d Ind AS 109 - Annual improvements to Ind AS (2021) The amendment clarifies which fees an entity includes when it applies the ''10 percent'' test of Ind AS 109 in assessing whether to derecognise a financial liability. The Company does not expect the amendment to have any significant impact in its financial statements.
40 No funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
41 No funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
42 Estimation of uncertainties relating to the pandemic from COVID-19:
The Company has considered the ongoing possible effects that may result from the pandemic relating to COVID 19 on the carrying amount of all assets and liabilities as at March 31, 2022. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Company, as at the date of approval of these financials statements has used internal and external sources on the expected future performance of the Company. The Company has made assessment of its liquidity position for the current period and expects that the carrying amount of these assets / liabilities will be recovered / settled and subsequent liquidity is available to fund the business operations for at least another 12 months. The impact of COVID-19 on the Company''s financial statements may differ from that estimated as at the date of approval of these financial statements and would be recognized prospectively.
Mar 31, 2018
1. Segment Information
The Company is engaged in the business of sales of automotive tyres, tubes and flaps. The Company sells tyres of its own brand âGoodyearâ. The Company is domiciled in India.
The Company has monthly review and forecasting procedure in place. The review involves the operating results of the Company as a whole except for sales and sales volume information which is available on disaggregated basis.
The Chief Operating Decision Maker (CODM), Managing Director, performs a detailed review of the operating results including cash flow, working capital, headcount of the Company as a whole and sales and sales volume on disaggregated basis and thereby makes decisions about the allocation of resources among the various functions. Since the operating results of each of the functions are not considered individually by the CODM, the functions do not meet the requirements of Ind AS 108 for classification as an operating segment, hence there is only one operating segment namely, "Automotive tyres, tubes & flaps".
All the non-current assets of the Company are located in India.
C) Revenue of Rs. 47,533 ( Mar 31, 2017 - Rs. 35,278) are derived from a single external customer. No other single customer contributed 10% or more to the revenue.
The above mentioned matter heard by the Honâble Divisional Bench of the Supreme Court and were remanded back to the Punjab and Haryana High Court and directed that fresh petitions should be filed by the parties, based on the above principles given by the nine Judges Bench of Supreme Court. The Company has filed its fresh petition and based on legal opinion, is of the view that the Company has a strong case and has considered this as contingent liability at this stage.
* The Company has given financial guarantee to Sarva Haryana Gramin Bank (Bank) in respect of loans taken by its employees. In case any employee on who''s behalf a guarantee has been provided by the Company, opts to leave his/ her employment, then the Company is required to pay the outstanding balance in his loan account to the Bank from the proceeds of the terminal benefits payable to him after adjusting the Companyâs dues. The Company is covered and is not exposed to any loss. Therefore the fair value of financial guarantee is not material.
** These represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes. It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings. Amount of contingent liabilities are inclusive of Interest as per order.
(b) The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.
(c) Non-cancellable operating leases
Cancellable: The Company''s cancellable operating lease arrangement mainly consists of residential premises, warehouses and offices taken on lease for periods between 1-10 years. Terms of lease include terms for renewal, increase in rents in future periods and terms of cancellation.
2. Events occurring after the reporting period
Refer to note 25 for the final dividend recommended by the directors which is subject to the approval of shareholders in the ensuing annual general meeting.
3. Share-based payments
The Goodyear Tire & Rubber Company, Akron, Ohio, USA (Ultimate holding company) issues stock-based awards to employees under their approved Performance Plan. The issue of grants of restricted stock units and stock appreciation rights to the employees of the Company are covered under the same Performance Plan as declared by the ultimate holding company.
Stock appreciation rights (SAR)
Grants of Stock Appreciation Right generally have a graded vesting period of four years whereby one-fourth of the awards vest on each of the first four anniversaries of the grant date, an exercise price equal to the fair market value of one share of the ultimate holding company on the date of grant (calculated as the average of the high and low price or the closing market price on that date depending on the terms of the related Plan) and a contractual term of ten years. Stock Appreciation Rights are cancelled on, or 90 days following, termination of employment unless termination is due to retirement, death or disability under certain circumstances, in which case, all outstanding options vest fully and remain outstanding for a term set forth in the related grant agreement. As the obligation to settle the share based transaction rests with the Company, hence these are accounted for as cash-settled options. The Company has not granted any SAR after December 2014.
Restricted stock units (RSU)
Restricted stock units have vesting period of three years beginning on the date of grant. Restricted stock units will be settled through the issuance of an equivalent number of shares of The Goodyear Tire & Rubber Company, Akron, Ohio, USA common stock. The Company is required to reimburse the ultimate holding company the cost of the share issuance as on the date of vesting. As the obligation to settle the share based transaction rests with the Company, hence these are accounted for as cash-settled options.
4 Standards issued but not yet effective
In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115, âRevenue from Contracts with Customersâ (a new revenue standard) and Appendix B to Ind AS 21, âForeign Currency Transactions and Advance Considerationâ. These amendments are applicable to the company from April 1, 2018.
Ind AS 115, Revenue from Contracts with Customers
This standard requires an entity to recognise revenue on the basis of 5 step model given in the standard. The Standard focuses on identification of various performance obligations on the basis of promised goods and services to the customers as per contract, allocation of contract price on the various performance obligations and recognition of revenue when entity satisfies the performance obligation. The Standard Scopes out lease agreements from its scope. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
Appendix B to Ind AS 21, Foreign Currency Transactions and Advance Consideration
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration 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 Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
5 Previous year financials have been audited by predecessor auditor.
6 Previous year figures in the financial statements, including the notes thereto, have been reclassified wherever required to conform to the current year presentation/ classification. These are not material and do not affect the previously reported net profit or equity.
Mar 31, 2017
Notes:
a The estimated useful lives of certain property plant and equipment items was revised with effect from January 1, 2015 to conform to the requirements of Ind AS and Schedule II to the Companies Act 2013. Pursuant to the above mentioned change, the depreciation expense for the fifteen months period ended March 31, 2016 was higher by Rs. 723. b Contractual obligations:
Refer to note 29 for disclosure of contractual commitments for the acquisition of property, plant and equipment. c Capital work-in-progress:
Capital work-in-progress mainly comprises of power supply enhancement project from 33KV to 66KV at the manufacturing facility at Ballabgarh.
(ii) Terms and rights attached to equity shares
The Company has only one class of equity shares having par value of Rs. 10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed, if any by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
(v) nature and purpose of other reserves
i. securities premium
Securities premium is used to record the premium on issue of shares and is utilised in accordance with the provisions of the Companies Act, 2013.
ii. General reserve
General reserve is kept aside out of company''s profits and are used to meet future obligations.
iii. other equity- revaluation
As the Company has opted for exemption under paragraph D7AA of Ind AS 101 and also elected the cost model under Ind AS 16 for subsequent measurement of Property, Plant and Equipment, the revaluation reserve recognized under previous GAAP has been transferred to ''Other equity- revaluation'' on the date of transition to Ind AS. This balance does not constitute free reserves available for distribution as dividend in accordance with the provisions of the Companies Act, 2013.
(a) Information about individual provisions and significant estimates
Provision for customs, excise and sales tax litigation: These represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes. It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.
Provision for replacement loss: Replacement loss reserves are based on past claims experience, sales history and other considerations. Replacement loss is provided on the sale of our products and an accrual for estimated future claims is recorded at the time revenue is recognized. Tyres replacement offered by the Company is on a prorated basis.
(c) Employee Benefit Obligations
A. Leave obligations
The leave obligations cover the Company liability for sick and earned leave.
The amount of the provision of Rs. 515 (March 31, 2016 - Rs.418, January 1, 2015 - Rs. 359) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is expected to be taken or paid within the next 12 months.
B. Defined Contribution Plans
a) Superannuation Fund
b) Employee''s Pension Scheme 1995 (State plan)
During the year/period, the Company has recognized the following amounts in the Statement of Profit and Loss:
C. Defined Benefit Plans
a) Gratuity
b) Provident Fund
(i) Balance Sheet amounts - Gratuity
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
(v) Risk Exposures:
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below :
Salary Increases:
Actual salary increases will increase the Plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
Investment Risk:
If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
Discount Rate:
Reduction in discount rate in subsequent valuations can increase the plan''s liability.
Mortality & disability:
Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities. Withdrawals:
Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan''s liability.
The Company through its Trusts ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans.
The Company through its Trusts actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.
A large portion of assets in 2017 consists of government and corporate bonds, although the Company through its Trusts also invests in equities and mutual funds. The plan asset mix is in compliance with the requirements of the respective local regulations.
(vi) Defined benefit liability and employer contributions
Expected contributions to post-employment benefit plans for the year ending 31 March 2018 are Rs. 721.
The weighted average duration of the defined benefit obligation is 13.95 years (Mar 31,2016- 13.67 years, Jan 1, 2015- 13.84 years).
1 (b) Corporate social responsibility expenditure
Amount required to be spent as per section 135 of the Companies Act 2013.
Details of expenditure towards Corporate Social Responsibility (CSR) activities:
a) Gross amount required to be spent by the Company during the period was Rs. 324 (Previous Year Rs. 252).
Figures in brackets represent previous period numbers.
Amount unspent during the year was Rs. 68 ( Mar 31, 2016 - Rs.1).
The lower spend was due to procedural delay in obtaining clearance for the project from the concerned authorities. The Company stays committed to its corporate social responsibility and intends to make concerted efforts to spend the shortfall in the next financial year over the prescribed CSR amount for that year.
(b) Significant estimate
In calculating the tax expense for the current period, the Company has treated certain expenditures as being deductible for tax purposes. However, the tax legislation in relation to these expenditures is not clear and the Company/ tax authorities are litigating these matters. If the ruling should not be favourable, this would increase the Companyâs current tax payable and current tax expense by Rs. 726, respectively. The impact in the prior year would have been an increase in current tax payable and current tax expense by Rs. 816.
*The surcharge on the Indian corporate tax rate was increased from 10% to 12% effective from 1 April 2015. As a result, the relevant deferred tax balances have been remeasured. The impact of the change in tax rate has been recognized in tax expense in profit or loss
(d) The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. For this purpose, the Company has appointed independent consultants for conducting Transfer Pricing Study. Management is of the opinion that its international transactions with associated enterprises have been undertaken at arms'' length basis at duly negotiated prices on usual commercial terms. The Company has submitted the Accountants'' Report in form 3CEB up to the financial year ended on March 31, 2016 as required under section 92E of the Income Tax Act, 1961.
(i) Fair value hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are:
(a) recognized and measured at fair value; and
(b) measured at amortized cost and for which fair value are disclosed in the financial statements
To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instrument into three levels prescribed under the accounting standards.
-Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
-Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
-Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. There are no transfers between levels 1, 2 and 3 during the year/ period.
(ii) Valuation technique and process used to determine fair value
The fair values for security deposits were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.
(iii) Fair value of financial assets and liabilities measured at amortized cost
The carrying amounts of trade receivables, trade payables, creditors for capital items, cash and cash equivalents, other bank balances and other financial assets/ liabilities are considered to be the same as their fair values, due to their short-term nature.
The fair values for security deposits were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.
The Company does not have any financial instruments where significant estimation was involved in determination of its fair value.
2 Financial Risk Management
The Company âs activities expose it to the market risk, liquidity risk and the credit risk. The Companyâs risk management is carried out by the treasury department for cash and cash equivalent, deposits with banks/ financial institutions, foreign currency risk exposure and liquidity risk under various approved policies. The risk management for trade receivables is carried out by controlling department of the Company.
(A) Credit Risk
Credit risk arises from cash and cash equivalents, trade receivables and other financial assets.
(i) Credit risk management
(a) Cash and cash equivalents:
The Company is in control of its exposure to these financial instruments by diversifying the deposit, by investing cash and equivalents based on counterparty credit strength as measured by long-term credit ratings of the three major rating agencies (Standard & Poors, Moodyâs and Fitch) and by monitoring the financial strength of these banks/ financial institutions on regular basis.
By controlling and monitoring exposure to financial institutions in this manner, the Company believe that it effectively manage the risk of loss due to non performance by a banks/ financial Institutions.
(b) Trade Receivables:
The Company has Credit Policy and the independent credit control department to review the credit worthiness of the customers and assess the recoverability of the asset. Finance Director is the authority to approve any exception to the Policy.
Customer credit risk is managed basis established policies of the Company, procedures and controls relating to customer credit risk management which helps in assessing the risk at the initial recognition of the asset. Outstanding customer receivables are regularly and closely monitored. The Company has a monthly process of following past due analysis leading to very few cases of bad debts and delayed payments. The same is evident from the earlier years receivable write-off. The Company provides for any outstanding beyond 180 days. The trade receivables on the respective reporting dates are net off the allowance which is sufficient to cover the entire lifetime loss of sales recognized including those that are currently less than 180 days outstanding.
A default on a financial asset is when the counterparty fails to make contractual payment within 180 days of when they fall due. This definition of default is determined by considering the business environment in which entity operates.
The Company believe that there are efficient processes established to monitor and control the risk of loss associated with receivables.
(c) Other financial assets:
Other financial assets of the Company mainly comprises of security deposit with Dakshin Haryana Bijli Vitran Limited, security deposits for the rental premises, accrued interest on fixed deposits with banks and financial institutions, deposits held as lien with Banks and other receivables from related parties.
There is no credit risk exposure with respect to other financial assets as they are either supported by legal agreement or are with Nationalized banks and Government organizations:
- Security deposit with Dakshin Haryana Bijli Vitran Limited, a public sector organization, represents low credit risk.
- Security deposits for the rental premises are with counter parties with strong capacity to meet the obligation, hence the risk of default is considered to be negligible.
- Deposits held as lien with Banks are with Nationalized Bank, hence the risk of default is considered to be negligible.
- Accrued interest on fixed deposits are with banks and financial institutions having strong financial strength as explained above, hence the risk of default is considered to be negligible.
- Other receivables from related parties are as per approved policy and the established procedure to monitor the dues from related parties which also ensures timely payments and no default, hence there is no credit risk exposure involved.
(ii) Provision for expected credit losses
Customer credit risk is managed basis established policies of the Company, procedures and controls relating to customer credit risk management. Outstanding customer receivables are regularly monitored. The Company has a diverse customer base, as its customers are located and operate in largely independent markets and does not see any significant concentration of risk related to reliance on any single customer. The credit quality of the customers is evaluated based on the approved policies and established processes.
(iii) Reconciliation of loss allowance provision - Trade receivable
Significant estimates and judgments Impairment of Trade Receivables:
The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
(B) Liquidity Risk
The Company''s primary sources of liquidity are cash generated from operation. The cash flows from operating activities are driven primarily by operating results and changes in the working capital requirements.
The Company intend to operate the business in a way that allows us to address these needs with our existing cash and available financing arrangement if they cannot be funded by cash generated from operations.
The Company believe that its liquidity position is adequate to fund the operating and investing needs and to provide with flexibility to respond to further changes in the business environment
(i) Financing arrangements
The Company had access to the following undrawn borrowing facilities at the end of the reporting period:
The bank overdraft facilities may be drawn at any time. No drawdown as at Mar 31, 2017, Mar 31, 2016 and Jan 1, 2015.
(ii) Maturities of financial liabilities
The table below analyses the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities.
The amount disclosed in the table are the undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
(C) Market Risk
(ia) Foreign Currency risk: The Company operates internationally and is exposed to foreign exchange risk in relation to operating activities (when revenue or expense is denominated in a foreign currency) arising from foreign currency transactions, primarily with respect to the USD and EUR. The Company have approved policies to enter into foreign currency contracts in order to manage the impact of changes in foreign exchange rates on the results of operations and future foreign currency-denominated cash flows. The Company does not have material foreign currency exposure currently.
The Company believe that there are efficient processes established to monitor and control the risk of loss associated with foreign currency exposure.
(ii) Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not have any borrowings therefore it it not impacted by interest rate risk.
(iii) Price Risk: Price risk arises from exposure to equity securities prices from investments held by the Company. The Company does not have any investments in equity shares.
25 Capital Management (a) Risk Management
The Companyâs objectives when managing capital is to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders.
There in no change in the Company capital structure since previous year.
3 segment Information
The Company is engaged in the business of sales of automotive tyres, tubes and flaps. The Company sells tyres of its own brand âGoodyearâ. The Company is domiciled in India.
The Company has monthly review and forecasting procedure in place. The review involves the operating results of the Company as a whole except for sales and sales volume information which is available on disaggregated basis.
The Chief Operating Decision Maker (CODM), Managing Director, performs a detailed review of the operating results including cash flow, working capital, headcount of the company as a whole and sales and sales volume on disaggregated basis and thereby makes decisions about the allocation of resources among the various functions. Since the operating results of each of the functions are not considered individually by the CODM, the functions do not meet the requirements of Ind AS 108 for classification as an operating segment, hence there is only one operating segment namely, "Automotive tyres, tubes & flaps".
B) Information about geographical areas:
The following information''s discloses Revenues from external customers:
(i) attributed to the entityâs country of domicile and
(ii) attributed to all foreign countries in total from which the entity derives revenues:
All the non-current assets of the Company are located in India.
C) Revenue of Rs. 35,278 ( Mar 31, 2016 - Rs. 32,620) are derived from a single external customer.
4 Related Party Transactions
(a) Parent entities
(c) (i) List of related parties:
Fellow subsidiaries with whom the Company had transactions during the year/period:
i) Goodyear International Corporation
ii) Compania Goodyear Del Peru SA
iii) Goodyear & Dunlop Tyres (Australia) Pty Limited
iv) Goodyear & Dunlop Tyres (Nz) Limited
v) Goodyear (Thailand) Public Company Limited
vi) Goodyear Dalian Tire Company Limited
vii) Goodyear De Chile S.A.I.C
viii) Goodyear Do Brasil Produtos De Borracha Ltda.
ix) Goodyear Dunlop Tires France
x) Goodyear Dunlop Tires Operations SA
xi) Goodyear Earthmover Pty Limited
xii) Goodyear Malaysia Berhad
xiii) Goodyear Middle East, FZE
xiv) Goodyear Philippines Inc.
xv) Goodyear Regional Business Services Inc.
xvi) Goodyear SA (Luxembourg)
xvii) Goodyear Singapore Tyres
xviii) Goodyear South Africa (Pty) Limited
xix) Goodyear South Asia Tyres Private Limited
xx) Nippon Giant Tire Co. Ltd.
xxi) PT. Goodyear Indonesia TBK
xxii) TC Debica S.A.
Other related parties:
i) Provident Fund of Goodyear India Limited
ii) Trustee Goodyear India Limited Factory Provident Fund
(e) Terms and conditions
Transactions relating to dividends were on the same terms and conditions that applied to other shareholders. All other transactions were made on normal commercial terms and conditions and at arm''s length.
All outstanding balances are unsecured and are repayable in cash.
F. Haryana Local Area development Tax (HLADT)
The Haryana Government introduced the Haryana Local Area Development Tax Act, 2000 (âHLADT Actâ). The liability of entry tax under the said HLADT Act was discharged by Goodyear till December 2006. In 2007, the Honâble Punjab and Haryana High Court held the HLADT Act was âunconstitutionalâ for the reason that the legislation was not compensatory in nature as the State of Haryana did not utilize the tax for its intended use of local area development. The HLADT Act was later repealed by the State without creation of any further liability.
In 2008, the State of Haryana introduced the âHaryana Tax on Entry of Goods into Local Areas Act, 2008â (âHET Actâ), which the Honâble Punjab and Haryana High Court declared as âunconstitutionalâ. The State did not frame and notify enabling âEntry Tax Rulesâ and no notice or demand was received by Goodyear under the HET Act. Accordingly, the amount of liability under the HET Act involved has not been quantified by the Company.
All the batch of entry tax petitions emerging from various High Courts were referred to the Honâble Nine Judge Bench of the Honâble Supreme Court. On November 11, 2016, the nine-judge bench of Honâble Supreme Court laid down certain principles on the basis of which the State entry tax legislations were to be tested. The question involving the interpretation of the term local area and the levy of entry tax on imports from outside India were referred to be heard by the division bench of the Supreme Court for each State on merits.
The division bench of Supreme Court on March 21, 2017 remanded the matter to the Punjab and Haryana High Court for the Haryana batch of petitions and directed that fresh petitions should be filed by the parties (including Goodyear) based on the principles laid down by the Honâble Supreme Court (nine Judge bench).
In view of above, Goodyear is in the process of filing a fresh petition in the High Court to protect its interest. Further, on the basis of the legal opinion in terms of the principles laid down by the Honâble Supreme Court (nine Judge bench), Goodyear has a strong case.
* The Company has given financial guarantee to Sarva Haryana Gramin Bank (Bank) in respect of loans taken by its employees. In case any employee on who''s behalf a guarantee has been provided by the Company, opts to leave his/ her employment, then the Company is required to pay the outstanding balance in his loan account to the Bank from the proceeds of the terminal benefits payable to him after adjusting the Companyâs dues. The Company is covered and is not exposed to any loss. Therefore the fair value of financial guarantee is not material.
** These represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes. It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.
(b) Non-cancellable operating leases
Cancellable: The Company''s cancellable operating lease arrangement mainly consists of residential premises, warehouses and offices taken on lease for periods between 1-10 years. Terms of lease include terms for renewal, increase in rents in future periods and terms of cancellation.
5 Events occurring after the reporting period
Refer to note 25 for the final dividend recommended by the directors which is subject to the approval of shareholders in the ensuing annual general meeting.
6 Share-based payments
The Goodyear Tire & Rubber Company, Akron, Ohio, USA (Ultimate holding company) issues stock-based awards to employees under their approved Performance Plan. The issue of grants of restricted stock units and stock appreciation rights to the employees of the Company are covered under the same Performance Plan as declared by the ultimate holding company.
Stock appreciation rights (SAR)
Grants of Stock Appreciation Right generally have a graded vesting period of four years whereby one-fourth of the awards vest on each of the first four anniversaries of the grant date, an exercise price equal to the fair market value of one share of the ultimate holding company on the date of grant (calculated as the average of the high and low price or the closing market price on that date depending on the terms of the related Plan) and a contractual term of ten years. Stock Appreciation Rights are cancelled on, or 90 days following, termination of employment unless termination is due to retirement, death or disability under certain circumstances, in which case, all outstanding options vest fully and remain outstanding for a term set forth in the related grant agreement. As the obligation to settle the share based transaction rests with the Company, hence these are accounted for as cash-settled options.
Restricted stock units (RSU)
Restricted stock units have vesting period of three years beginning on the date of grant. Restricted stock units will be settled through the issuance of an equivalent number of shares of The Goodyear Tire & Rubber Company, Akron, Ohio, USA common stock. The Company is required to reimburse the ultimate holding company the cost of the share issuance as on the date of vesting. As the obligation to settle the share based transaction rests with the Company, hence these are accounted for as cash-settled options.
iii. Measurement of fair values
The fair value of SARâs have been measured using the Black Scholes formula. Service and non-performance conditions attached to the arrangements were not taken into account in measuring fair value.
The fair value of grant of restricted stock unit is based on the closing market price of a share of Goodyear Tire and Rubber Company, Akronâs common stock on the date of grant, thereafter re-measuring the value on each reporting date at the closing market price of a share.
7 Standards issued but not yet effective
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, âStatement of cash flowsâ and Ind AS 102, âShare-based payment.â These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, âStatement of cash flowsâ and IFRS 2, âShare-based payment,â respectively. The amendments are applicable to the Company from April 1, 2017.
Amendment to Ind AS 7:
Liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.
The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated. Amendment to Ind AS 102:
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.
It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market based performance conditions and non-vesting conditions are reflected in the âfair valuesâ, but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
8 The Financial Year of the Company was changed during last reporting period from a ''January-December'' year to an ''April-March'' year, in accordance with the provisions of the Companies Act, 2013. Accordingly, the financial statements of the Company for the current year ended March 31, 2017 are for a period of twelve months, from April 1, 2016 to March 31, 2017 and are therefore not comparable with those of the previous period ended March 31, 2016 as those were for a period of fifteen months, from January 1, 2015 to March 31, 2016.
9 First time adoption of Ind As Transition to Ind As
These are the Companyâs first financial statement prepared in accordance with Ind AS.
The accounting policies set out in Note 1, have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the 15 month ended March 31, 2016 and in the preparation of opening Ind AS balance sheet as at January 1, 2015. In preparing its opening balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes:
A.1 Exemptions and exceptions availed Ind AS optional exemptions
A.1.1 Deemed cost: Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for decommissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying values as at January 1, 2015.
A.1.2 Leases: Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected not to be material.
The Company has elected to apply this exemption for such contracts/arrangements.
A.1.3 Decommissioning Liabilities included in the cost of property, plant and equipment: An entity need not to comply with the requirements of Appendix A of Ind AS 16 i.e. Changes in Existing Decommissioning, Restoration and Similar Liabilities for liabilities occurred before the date of transition to Ind AS. An entity can measure the liability as the date of transition.
The Company has elected to measure such liabilities as on the date of transition and on the basis of such evaluations no liabilities need to be recognized.
A.2 Ind AS mandatory exceptions
A.2.1 De-recognition of financial assets and liabilities: Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entityâs choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognized as a result of past transactions was obtained at the time of initially accounting for those transactions.
The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.
A.2.2 Classification and measurement of financial assets: Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
A.2.3 Impairment of financial assets: An entity shall determine the approximate credit risk at the date that financial instruments were initially recognized and compare that to the credit risk at the date of transition to Ind AS. This should be based on reasonable and supportable information that is available without undue cost or effort. If an entity is unable to make this determination without undue cost or effort, it shall recognize a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is derecognized.
The Company has availed this exception to analyze credit risk of the financial assets as on the date of transition instead of the date of initial recognition.
A.2.4 Embedded derivatives: Entity shall assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative either on the basis of conditions that existed on the date of contract or on the date of significant modification of the contract, whichever is later.
The Company has elected to analyze the requirements to separate the embedded derivative from host contract and account for as a derivative on the date of contract.
B reconciliation 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 reconciliation from previous GAAP to Ind AS reconciliation of equity as at the date of transition (January 1, 2015)
Notes to first time adoption
Note 10 Capitalization of spare parts
The previous GAAP required spares (other than spares used in connection with an item of fixed asset with irregular use) to be accounted for as an inventory and to be charged to the statement of profit and loss as and when consumed. Whereas under Ind AS, spares are recognized as property, plant and equipment (PPE) when they meet the recognition criteria under Ind AS 16. Due to this change in accounting standard, certain spare parts have been capitalized as PPE and accordingly depreciation has been charged on such assets. Spares capitalized as on January 1, 2015 and during the fifteen month period ending March 31,2016 amounted to Rs. 81 and Rs 45, respectively. Additional depreciation charged during the fifteen month period ending March 31,2016 amounted to Rs 33.
Note 11 security deposits
Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term ) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair cost. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transactional value of the security deposit has been recognized as prepaid rent. Consequent to this change, the amount of security deposits decreased by Rs. 69 as at March 31,2016 ( Rs. 100 as at January 1, 2015). The prepaid rent increased by Rs. 56 as at March 31,2016 ( Rs. 85 as at January 1,2015). Total equity decreased by Rs.15 as on January 1,2015. The profit for the period and the total equity as at March 31,2016 decreased by Rs. 2 due to amortization of the prepaid rent of Rs. 29 which was partially off-set by the notional interest income of Rs. 31 recognized on security deposits.
Note 12 Share-based payments
Under Ind AS, Liabilities for the stock-based payments (Stock Appreciation Right and Restricted Stock Units) are recognized as employee benefit expenses over the relevant service period. The liabilities are remeasured to fair value at each reporting date and are presented as under Provisions in the balance sheet. Consequently, a provision of Rs.186 was recognized as on January 1, 2015 with corresponding impact in retained earnings. Rs. 58 was credited in the statement of profit and loss for the fifteen month period ended March 31, 2016.
Note 13 Deferred tax
Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12, âIncome taxesâ, requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the Balance Sheet and its tax base. The application of Ind AS 12 has resulted in recognition of deferred tax on new temporary differences, which was not required under Indian GAAP.
In addition, the various transitional adjustments lead to additional temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity. On the date of transition, the net impact was increase in deferred tax assets/(liabilities) is of (Rs.25), whereas as on March 31, 2016, the net impact was increase in deferred tax assets/ (liabilities) is of (Rs.2).
Note 14 Deferred revenue - Customer loyalty program
The Company operates a customer reward points program. The programme allows customers to accumulate points on purchase of tyres. The points can be redeemed by the customers for free products.
Under the previous GAAP, the Company created a provision towards its liability under the programme. Under Ind AS, the consideration allocated to the customer reward points has been deferred and will be recognized as revenue when the reward points are redeemed or lapsed.
On the date of transition i.e. January 1, 2015, deferred revenue of Rs. 189 was recognized with corresponding decrease in trade payables. For the year ended March 31, 2016, total revenue and total expense of Rs. 426 were recognized.
Note 15 Proposed dividend
Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs. 3,347 as at March 31, 2016 (January 1, 2015 - Rs. 2,779) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity fluctuated by an equivalent amount.
Note 16 Excise duty
Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the fifteen month ended March 31, 2016 by Rs. 12,898. There is no impact on the total equity and profit.
Note 17 Cash Discount
Under In AS, all cash discounts are netted off from revenue, whereas in earlier Indian GAAP, cash discount was shown as part of other expenses. This change has resulted in decrease in total revenue and total expenses by Rs. 2270. There is no impact on total equity and profit.
Note 18 Remeasurements of post-employment benefit obligations
Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2016 increased by Rs. 15. There is no impact on total equity.
Note 19 Lease Assets
Under previous GAAP, arrangements that did not take the legal form of lease were accounted for based on the legal form of such arrangements e.g. job work arrangements. Under Ind AS, any arrangements (even if not legally structured as lease) which conveys a right to use an assets in return for a payment or series of payments are identified as leases provided certain conditions are met. In case of such arrangements are determined to be in nature of leases, such arrangements are required to be classified into finance or operating leases as per requirements of Ind AS 17, Leases.
The Company had entered into an agreement in the year 1997 for purchase of nitrogen gas wherein a gas plant was built in within the premises of the Company. The said plant was assessed to be a finance lease on the date of transition to Ind AS. The life of the plant under consideration has expired on the transition date, therefore, gross block and accumulated depreciation of Rs. 615 was recognized in plant and machinery. There is no impact on the total equity.
Note 20 Change in Useful life
Under previous GAAP, the estimated useful lives of certain fixed assets was revised in accordance with Schedule II to the Companies Act 2013, with effect from January 1, 2015. Pursuant to the above mentioned changes in useful life of assets, for certain assets whoâs revised useful life was over as on December 31, 2014, the net book value of Rs. 410 (net of deferred tax of Rs. 154) was deducted from the retained earnings and Rs. 110 relating to fixed assets revalued earlier, was released from revaluation reserve to general reserve.
Under Ind AS, as the Company has opted for exemption under paragraph D7AA of Ind AS 101 and also elected the cost model under Ind AS 16 for subsequent measurement of Property, Plant and Equipment, this change in accounting estimate has been accounted for prospectively and accordingly Rs. 564 has been charged to the statement of profit or loss for the fifteen months period ended March 31, 2016. The revaluation reserve recognized under previous GAAP has been transferred to âOther equity-revaluationâ on the date of transition to Ind AS.
Note 21 retained earnings
Retained earnings as at January 1, 2015 has been adjusted consequent to the above Ind AS transition adjustments.
Note 22 other comprehensive income
Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as âother comprehensive incomeâ includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP.
Mar 31, 2016
(b) Rights, preferences and restrictions attached to shares :
The Company has only one class of equity shares having par value of Rs. 10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed, if any by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
Deferred Tax Assets and Deferred Tax Liabilities have been offset as they relate to the same governing taxation laws.
* Includes adjustment on account of change in useful life of fixed assets (reversal of deferred tax liabilities) of Rs. 154 (Rs.Nil), adjusted with retained earnings. Also refer note ''11(c)'' of notes to the financial statements.
* No amount is due as at March 31, 2016 for credit to Investors'' Education and Protection Fund. Amount remaining due after adjustment to be claimed from the Company will be transferred on the respective due dates to the said Fund.
* Amount below the rounding off norm adopted by the company.
Notes:
a) Gross book value includes Rs.1,406 (Rs. 1,406) on account of revaluation of certain fixed assets in 1984. Amount added to fixed assets and revaluation was credited to revaluation reserve.
b) The depreciation charge for the current year represents gross Rs. 4,053 (Rs. 2,863) less transfer from revaluation reserve Rs. Nil (Rs. 12). Such transfer represents the amount equivalent to the additional charge necessitated on account of revaluation of certain fixed assets referred to in note (2)(ii) to the Financial Statements, being the difference between the depreciation charged and the depreciation calculated in accordance with the rates followed by the Company on such items if these were not revalued.
c) The estimated useful lives of certain fixed assets have been revised in accordance with Schedule II to the Companies Act 2013, with effect from January 1, 2015. Pursuant to the above mentioned changes in useful life of assets, the depreciation expense for the period is higher by Rs. 159 lacs and for the assets whose revised useful life was over as on December 31, 2014, the net book value of Rs. 410 lacs (net of deferred tax of Rs. 154 lacs) has been deducted from the retained earnings and Rs. 110 lakhs has been released from revaluation reserve relating to fixed assets revalued earlier.
E. Haryana Local Area Development Tax (HLADT)
In the year 2007, Hon''ble Punjab & Haryana High Court at Chandigarh, on a reference from the Hon''ble Supreme Court of India, had held the Haryana Local Area Development Tax (HLADT) as unconstitutional. Subsequently in the year 2008, the State of Haryana introduced "Haryana Tax on Entry of Goods Into Local Area Act, 2008 (Entry Tax)" by repealing the Haryana Local Area Development Tax Act, 2000 and the same was also held unconstitutional by the Hon''ble Punjab & Haryana High Court.
Earlier based on the legal opinion obtained by the Company and managementâs assessment, provision towards liability for Haryana Local Area Development Tax (HLADT) for the periods prior to March 2008 aggregating to Rs. 540 lakhs was written back during the year 2008. The amount already paid for HLADT till December 2006 and expensed in earlier years is Rs.1,938 lakhs.
Pursuant to an interim order of Hon''ble Supreme Court in October 2009, there is a stay on recovery of tax with a direction to assesses for filing their returns of tax and giving undertaking that in the event of their losing the matter, they will deposit the tax along with the interest at a rate which will be determined by the Court. During the year 2010, on the matter being heard by a bench of five Hon''ble judges of the Hon''ble Supreme Court, it was requested to Hon''ble Chief Justice of India to refer the matter to a suitable larger bench for deciding the constitutional validity of the levy. The larger bench of Hon''ble Supreme Court is yet to be constituted. However, based on legal opinion obtained by the Company and management''s assessment, no provision for HLADT and Entry tax has been considered necessary.
** These represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes. It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.
(1) The Companyâs business activity falls within a single primary business segment viz. âAutomotive tyres, tubes and flaps''. Secondary segment reporting is based on the geographical location of the customers. Details of secondary segments are not disclosed as more than 90% of the Companyâs revenues, results and assets relate to the domestic market. Therefore, no further disclosure is considered as required under Accounting Standard (AS-17) âSegment Reportingâ.
* Includes consumption of spare parts Rs. 685 (Rs. 406)
** Refer note ''33'' of notes to the financial statements.
*** A. Details of expenditure towards Corporate Social Responsibility (CSR) activities:
a) Gross amount required to be spent by the Company during the period was Rs. 252 (Previous Year Rs. Nil).
(2) DISCLOSURES UNDER ACCOUNTING STANDARD 18: i) List of related parties:
Ultimate holding company :
The Goodyear Tire & Rubber Company, Akron, Ohio, USA Holding company:
Goodyear Orient Company (Private) Limited, Singapore Fellow subsidiaries with whom the Company had transactions during the period/year:
i) Goodyear International Corporation
ii) Goodyear Dunlop Tires Operations SA
iii) Goodyear Middle East, FZE
iv) Goodyear Earthmover Pty Limited
v) Goodyear Dalian Tire Company Limited
vi) Goodyear & Dunlop Tyres (NZ) Limited
vii) Goodyear (Thailand) Public Company Limited
viii) Goodyear Do Brasil Produtos De Borracha Ltda.
ix) PT. Goodyear Indonesia TBK
x) Goodyear SA (Luxembourg)
xi) Compania Goodyear Del Peru SA
xii) Goodyear South Africa (Pty) Limited
xiii) Goodyear Singapore Tyres
xiv) Goodyear Marketing & Sales SDN BHD
xv) TC Debica SA
xvi) Goodyear & Dunlop Tyres (Australia) Pty Limited
xvii) Goodyear South Asia Tyres Private Limited
xviii) Goodyear Regional Business Services Inc.
xix) Goodyear De Chile S.A.I.C
xx) Nippon Giant Tire Co. Ltd.
xxi) Goodyear Philippines Inc.
xxii) Goodyear Wingfoot Kabushiki Kiasha
xxiii) Goodyear Dunlop Tires France
Key management personnel:
i) Mr. Rajeev Anand
ii) Mr. Yashwant Singh Yadav
iii) Mr. Leopoldo Estefano Maggiolo Gonzalez (with effect from August 13, 2015)
iv) Mr. Mark C Ravunni (upto August 12, 2015)
(3) Leases
Cancellable: The Company''s cancellable operating lease arrangement mainly consists of residential premises, warehouses and offices taken on lease for periods between 1-10 years. Terms of lease include terms for renewal, increase in rents in future periods and terms of cancellation.
** Gratuity is included under Employee Benefits Expenses (Refer note â27â).
Best estimate of contribution during next year for Gratuity is Rs. 268 lakhs (Rs. 292 lakhs).
(4) The Goodyear Tire & Rubber Company, Akron, Ohio, USA (Ultimate holding company) has various ânon - qualified stock appreciation rights planâ (SARs) whereby certain employees of its subsidiaries are granted cash-settled SARs. These SARs entitles the holder to receive cash payout equivalent to the fair market value of the underlying shares on the date of exercise as reduced by the designated exercise price of SARs. The eligible employees do not receive / own shares directly / as a beneficiary at any point of time under the SARs. The said SARs generally have a graded vesting period of four years. Once a SAR vests, an employee can exercise it at any time prior to its expiration. The cost related to these SARs exercised by the employees of Goodyear India Limited (âCompanyâ) is accounted for in the books of the Company. Accordingly, a sum of Rs. 158 lakhs (Rs. 28 lakhs) has been included under Employee Benefits Expense (Refer note â27â). These SARs are administered and governed by the Ultimate Holding Company. Accordingly, other detailed disclosures required by the Guidance Note on âAccounting for Employee Share based Paymentsâ issued by Institute of Chartered Accountants of India have not been made, as these do not pertain to information relating to the Company and such information is not available with the Company.
(5) Stock and book debts are subject to a maximum charge of Rs. 3,500 lakhs (Rs. 3,500 lakhs) for all credit facilities/guarantees sanctioned by BNP Paribas Bank.
(6) The Financial Year of the Company has been changed from January-December to April-March in line with the provisions of the Companies Act, 2013. Accordingly, current yearâs financial statements of the Company are for a period of fifteen months, from January 1, 2015 to March 31, 2016 and are therefore not comparable with those of the previous year ended December 31, 2014.
(7) Previous year figures have been regrouped and recanted, wherever necessary, to conform to the current year''s classification.
Mr James Constantine Venizelos was appointed as an Alternate Director to Mr Daniel Lawrence Smytka effective August 13, 2015 and ceased to be director w.e.f. close of business hours on December 31, 2015 on resignation of Mr Smytka. Thereafter, Mr James Constantine Venizelos has been appointed as an Alternate Director to Mr Christopher Raymond Delaney w.e.f. February 05, 2016.
Dec 31, 2014
(1) GENERAL INFORMATION
Goodyear India Limited (the "Company"), an existing company under the
Companies Act,1956, is a step-down subsidiary of The Goodyear Tire &
Rubber Company, Akron, Ohio, USA ("GTRC"). The Company was originally
registered and incorporated as a private company on October 10, 1922
and converted into a public company on March 24,1961. The Company is
engaged in the business of manufacturing and trading of tyres, tubes
and flaps with manufacturing facility at Ballabgarh, Haryana, India.
The Company is presently listed with the Mumbai stock exchange (BSE
Limited).
(2) Contingent Liabilities
i) Guarantee to Sarva Haryana Gramin Bank 102 133
ii) Other moneys for which Company is 474 474
contingently liable Price Differential
pending settlement
iii) Claims against the Company disputed
and not acknowledged as debts**
A. Excise duty and Service tax matters
a) Cases decided in the Company''s favour
by Appellate authorities and for which 484 484
Department has filed further appeal.
b) Cases pending before Appellate authorities
in respect of which the Company has filed 1,570 1,241
appeals.Amounts deposited under protest
Rs. 386 (Rs. 386).
B. Income tax matters
Cases pending before Appellate authorities
/Dispute Resolution Panel in respect 3,365 1,932
of which the Company has filed appeals.
Amounts deposited under protest
Rs. 271 (Rs. 133).
C. Sales tax matters
Cases pending before Appellate authorities
in respect of which the Company has filed 383 663
appeals. Amounts deposited under protest
Rs. 142 (Rs. 284).
D. Haryana Urban Development Authority - 662
(HUDA) demand matter *
Demand for proportionate external development
charges by HUDA.
E. Other matters
These include claims against the Company for
recovery lodged by various parties. 294 266
* During the year 2003, a demand of Rs. 662 lakhs besides interest, was
raised by the Haryana Urban Development Authority (HUDA)
towards external development charges (EDC) which was challenged by the
Company. During June 2009, the Court of Hon''ble Additional Civil Judge
(Senior Division) (First Court) passed an interim order whereby the
Company was directed to pay interest @ 10% for delayed payment
amounting to Rs. 5 lakhs and which was duly paid. In the year 2010, the
entire demand had been set aside by the First Court. However, HUDA
challenged the same before the Court of Hon''ble District & Session
Judge, Faridabad. In December 2011, the said appeal was dismissed by
Hon''ble District and Session Judge. HUDA has further gone into appeal
before the Hon''ble High Court of Punjab and Haryana. The matter was
heard by Hon''ble High Court and as per order dated May 27, 2014 the
Appeal filed by HUDA has been dismissed. The Company has also not
received any information of Huda filing any further appeal before the
Supreme Court.
(3) Haryana Local Area Development Tax (HLADT)
In the year 2007, Hon''ble Punjab & Haryana High Court at Chandigarh, on
a reference from the Hon''ble Supreme Court of India, had held the
Haryana Local Area Development Tax (HLADT) as unconstitutional.
Subsequently in the year 2008, the State of Haryana introduced "Haryana
Tax on Entry of Goods Into Local Area Act, 2008 (Entry Tax)" by
repealing the Haryana Local Area Development Tax Act, 2000 and the same
was also held unconstitutional by the Hon''ble Punjab & Haryana High
Court.
Earlier based on the legal opinion obtained by the Company and
management''s assessment, provision towards liability for Haryana Local
Area Development Tax (HLADT) for the periods prior to March 2008
aggregating to Rs. 540 lakhs was written back during the year 2008. The
amount already paid for HLADT till December 2006 and expensed in
earlier years is Rs.1,938 lakhs.
Pursuant to an interim order of Hon''ble Supreme Court in October 2009,
there is a stay on recovery of tax with a direction to assessees for
filing their returns of tax and giving undertaking that in the event of
their losing the matter, they will deposit the tax along with the
interest at a rate which will be determined by the Court. During the
year 2010, on the matter being heard by a bench of five Hon''ble judges
of the Hon''ble Supreme Court, it was requested to Hon''ble Chief Justice
of India to refer the matter to a suitable larger bench for deciding
the constitutional validity of the levy. The larger bench of Hon''ble
Supreme Court is yet to be constituted. However, based on legal opinion
obtained by the Company and management''s assessment, no provision for
HLADT and Entry tax has been considered necessary.
** These represent the best possible estimates arrived at on the basis
of available information. The uncertainties and possible reimbursements
are dependent on the outcome of the different legal processes which
have been invoked by the Company or the claimants as the case may be
and therefore cannot be predicted accurately. The Company engages
reputed professional advisors to protect its interests and has been
advised that it has strong legal positions against such disputes.
(4) The Company''s business activity falls within a single primary
business segment viz. ''Automotive tyres, tubes and flaps''. Secondary
segment reporting is based on the geographical location of the
customers. Details of secondary segments are not disclosed as more than
90% of the Company''s revenues, results and assets relate to the
domestic market. Therefore, no further disclosure is considered as
required under Accounting Standard (AS-17) "Segment Reporting".
(5) Disclosures under Accounting Standard 18:
i) List of related parties with whom the Company had transactions
during the year :
Ultimate holding company :
The Goodyear Tire & Rubber Company, Akron, Ohio, USA
* Holding company until November 28, 2011
Ultimate holding company since November 29, 2011
Holding company :
Goodyear Orient Company (Private) Limited, Singapore
(Holding company since November 29, 2011)
Fellow subsidiaries:
i) Goodyear SA (Luxembourg)
ii) Goodyear Middle East, FZE
iii) Goodyear Dalian Tire Company Limited
iv) Goodyear Dunlop Tires France
v) Goodyear (Thailand) Public Company Limited
vi) Goodyear do Brasil Produtos de Borracha Ltda.
vii) PT. Goodyear Indonesia Tbk
viii) Goodyear South Africa (Pty.) Limited
ix) Goodyear Singapore Tyres
x) Goodyear & Dunlop Tyres (NZ) Limited
xi) Goodyear Marketing & Sales SDN Bhd
xii) TC Debica SA
xiii) Goodyear & Dunlop Tyres (Australia) Pty Limited
xiv) Goodyear South Asia Tyres Private Limited
xv) Goodyear Earthmover Pty Limited
xvi) Goodyear International Corporation
xvii) Goodyear Dunlop Tires Operations SA
xviii) Compania Goodyear Del Peru SA
xix) Goodyear SA R&D (Luxembourg)
xx) Goodyear Dunlop Tires Germany
xxi) GRBS Inc., Philippines
xxii) Nippon Giant Tire Co. Ltd.
xxiii) Goodyear Philippines Inc.
Key management personnel:
i) Mr. Rajeev Anand
ii) Mr. Yashwant Singh Yadav
iii) Mr. Mark C Ravunni
(6) Leases
Cancellable : The Company''s cancellable operating lease arrangement
mainly consists of residential premises, warehouses and offices taken
on lease for periods between 1-10 years. Terms of lease include terms
for renewal, increase in rents in future periods and terms of
cancellation.
(7) The management is of the opinion that its international
transactions with associated enterprises have been undertaken at arm''s
length basis at duly negotiated prices on usual commercial terms. The
Company has submitted the Accountant''s Report in form 3CEB upto the
financial year ended on March 31, 2014 as required under section 92E of
the Income Tax Act, 1961. In respect of the proposed transfer pricing
adjustments suggested by the Assessing Officers in the Assessments
already completed, the matters are pending before the Appellate
Authorities/Dispute Resolution Panel. Based on expert opinion, the
management is of the view that in all likelihood there will be not
material liability.
(8) Disclosures under the Micro, Small and Medium Enterprises
Development Act, 2006 (as amended in Schedule VI to the Companies Act,
1956 vide notification dated November 16, 2007) based on the
information available with the Company :
i) Principal amount due to suppliers registered under the MSMED Act and
remaining unpaid as at year end -Rs. NIL (Rs. NIL)
ii) Interest due to suppliers registered under the MSMED Act and
remaining unpaid as at year end -Rs. NIL (Rs. NIL)
iii) Principal amounts paid to suppliers registered under the MSMED
Act, beyond the appointed day during the year -Rs. NIL (Rs. NIL)
iv) Interest paid, other than under Section 16 of MSMED Act, to
suppliers registered under the MSMED Act, beyond the appointed day
during the year -Rs. NIL (Rs. NIL)
v) Interest paid, under Section 16 of MSMED Act, to suppliers
registered under the MSMED Act, beyond the appointed day during the
year -Rs. NIL (Rs. NIL)
vi) Interest due and payable towards suppliers registered under MSMED
Act, for payments already made -Rs. NIL (Rs. NIL)
vii) Further interest remaining due and payable for earlier years -Rs.
NIL (Rs. NIL)
(9) In accordance with AS-15 (revised) "Employee Benefits", the
Company has calculated the various benefits provided to employees as
under :
A. Defined Contribution Plans
a) Superannuation Fund
b) Employee''s State Insurance (State Plan)
c) Employee''s Pension Scheme 1995 (State plan)
(10) The Goodyear Tire & Rubber Company, Akron, Ohio, USA (Ultimate
holding company) has various ''non - qualified stock appreciation rights
plan'' (SARs) whereby certain employees of its subsidiaries are granted
cash-settled SARs. These SARs entitles the holder to receive cash
payout equivalent to the fair market value of the underlying shares on
the date of exercise as reduced by the designated exercise price of
SARs. The eligible employees do not receive / own shares directly / as
a beneficiary at any point of time under the SARs. The said SARs
generally have a graded vesting period of four years. Once a SAR vests,
an employee can exercise it at any time prior to its expiration. The
cost related to these SARs exercised by the employees of Goodyear India
Limited (''Company'') is accounted for in the books of the Company.
Accordingly, a sum of Rs. 28 lakhs (Rs. 72 lakhs) has been included
under Employee Benefits Expense (Refer note ''27'').
(11) Stock and book debts are subject to a maximum charge of Rs. 3,500
lakhs (Rs. 3,500 lakhs) for all credit facilities/guarantees sanctioned
by BNP Paribas Bank.
(12) Previous year figures have been regrouped and recasted, wherever
necessary, to conform to the current year''s classification.
Dec 31, 2013
(1) GENERAL INFORMATION
Goodyear India Limited (the "Company"), an existing company under the
Companies Act,1956, is a step-down subsidiary of The Goodyear Tire &
Rubber Company, Akron, Ohio, USA ("GTRC"). The Company was originally
registered and incorporated as a private company on October 10, 1922
and converted into a public company on March 24,1961. The Company is
engaged in the business of manufacturing and trading of tyres, tubes
and faps with manufacturing facility at Ballabgarh, Haryana, India.
The Company is presently listed with the Mumbai stock exchange (BSE
Limited).
Contingent Liabilities : Contingent liabilities are disclosed when
there is a possible obligation arising from past events, the existence
of which will be confirmed only by the occurrence or non occurrence of
one or more uncertain future events not wholly within the control of
the Company or a present obligation that arises from past events where
it is either not probable that an outflow of resources will be required
to settle or a reliable estimate of the amount cannot be made.
As at As at
Dec 31, 2013 Dec 31, 2012
(Rs.'' lakhs) (Rs.'' lakhs)
(2) Contingent liabilities :
i) Guarantee to Gurgaon Gramin Bank 133 126
ii) Other moneys for which Company is
contingently liable Price Differential
pending settlement 474 474
iii) Claims against the Company disputed
and not acknowledged as debts **
A. Excise duty and Service tax matters
a) Cases decided in the Company''s favor
by Appellate authorities and for which 484 484
Department has fled further appeal.
b) Cases pending before Appellate
authorities in respect of which the
Company has fled 1,241 1,152
appeals. Amounts deposited under protest
Rs. 386 (Rs. 376).
B. Income tax matters
Cases pending before Appellate
authorities/Dispute Resolution Panel in
respect of which 1,932 1,295
the Company has fled appeals. Amounts
deposited under protest Rs. 133 (Rs. 63).
C. Sales tax matters
Cases pending before Appellate
authorities in respect of which the
Company has fled 663 676
appeals. Amounts deposited under
protest Rs. 284 (Rs. 250).
D. Haryana Urban Development Authority
(HUDA) demand matter * 662 662
Demand for proportionate external
development charges by HUDA.
E. Other matters 266 909
These include claims against the Company
for recovery lodged by various parties.
Amounts deposited under protest Rs. Nil
(Rs. 443).
* During the year 2003, a demand of Rs. 662 lakhs besides interest, was
raised by the Haryana Urban Development Authority
(HUDA) towards external development charges (EDC) which was challenged
by the Company. During June 2009, the Court of Hon''ble Additional Civil
Judge (Senior Division) (First Court) passed an interim order whereby
the Company was directed to pay interest @ 10% for delayed payment
amounting to Rs. 5 lakhs and which was duly paid. In the year 2010, the
entire demand had been set aside by the First Court. However, HUDA
challenged the same before the Court of Hon''ble District & Session
Judge, Faridabad. In December 2011, the said appeal was dismissed by
Hon''ble District and Session Judge. HUDA has further gone into appeal
before the Hon''ble High Court of Punjab and Haryana, to our knowledge
the same has not yet been admitted.
F. Haryana Local Area Development Tax (HLADT)
In the year 2007, Hon''ble Punjab & Haryana High Court at Chandigarh, on
a reference from the Hon''ble Supreme Court of India, had held the
Haryana Local Area Development Tax (HLADT) as unconstitutional.
Subsequently in the year 2008, the State of Haryana introduced "Haryana
Tax on Entry of Goods Into Local Area Act, 2008 (Entry Tax)" by
repealing the Haryana Local Area Development Tax Act, 2000 and the same
was also held unconstitutional by the Hon''ble Punjab & Haryana High
Court.
Earlier based on the legal opinion obtained by the Company and
management''s assessment, provision towards liability for Haryana Local
Area Development Tax (HLADT) for the periods prior to March 2008
aggregating to Rs. 540 lakhs was written back during the year 2008. The
amount already paid for HLADT till December 2006 and expensed in
earlier years is Rs.1,938 lakhs.
Pursuant to an interim order of Hon''ble Supreme Court in October 2009,
there is a stay on recovery of tax with a direction to assessees for
fling their returns of tax and giving undertaking that in the event of
their losing the matter, they will deposit the tax along with the
interest at a rate which will be determined by the Court. During the
year 2010, on the matter being heard by a bench of fve Hon''ble judges
of the Hon''ble Supreme Court, it was requested to Hon''ble Chief Justice
of India to refer the matter to a suitable larger bench for deciding
the constitutional validity of the levy. The larger bench of Hon''ble
Supreme Court is yet to be constituted. However, based on legal opinion
obtained by the Company and management''s assessment, no provision for
HLADT and Entry tax has been considered necessary.
(3) The Company''s business activity falls within a single primary
business segment viz. ''Automotive tyres, tubes and faps''. Secondary
segment reporting is based on the geographical location of the
customers. Details of secondary segments are not disclosed as more than
90% of the Company''s revenues, results and assets relate to the
domestic market. Therefore, no further disclosure is considered as
required under Accounting Standard (AS-17) "Segment Reporting".
(4) Disclosures under Accounting Standard 18 :
i) List of related parties with whom the Company had transactions
during the year : Ultimate Holding Company :
The Goodyear Tire & Rubber Company, Akron, Ohio, USA
Holding Company :
Goodyear Orient Company (Private) Limited, Singapore (Holding company
since November 29, 2011)
Fellow Subsidiaries :
i) Goodyear SA (Luxembourg)
ii) Goodyear Middle East, FZE
iii) Goodyear Dalian Tire Company Limited
iv) Goodyear Dunlop Tires France
v) Goodyear (Thailand) Public Company Limited
vi) Goodyear do Brasil Products de Borracha Ltda
vii) Goodyear De Colombia S.A
viii) PT. Goodyear Indonesia Tbk
ix) Goodyear South Africa (Pty.) Limited
x) Goodyear Singapore Tyres
xi) Goodyear & Dunlop Tyres (NZ) Limited
xii) Goodyear Marketing & Sales SDN Bhd
xiii) TC Debica SA
xiv) Goodyear & Dunlop Tyres (Australia) Pty Limited
xv) Goodyear South Asia Tyres Private Limited
xvi) Goodyear Earthmover Pty Limited
xvii) Goodyear International Corporation
xviii) Goodyear Dunlop Tires Operations SA
xix) Compania Goodyear Del Peru SA
xx) Goodyear SA R&D (Luxembourg)
xxi) Goodyear Dunlop Tires Germany
xxii) GRBS Inc., Philippines
Key management personnel :
i) Mr Rajeev Anand
ii) Mr Yashwant Singh Yadav
iii) Mr Mark C Ravunni
(5) Leases
Cancellable : The Company''s cancellable operating lease arrangement
mainly consists of residential premises, warehouses and offices taken on
lease for periods between 1-10 years. Terms of lease include terms for
renewal, increase in rents in future periods and terms of cancellation.
(6) The management is of the opinion that its international
transactions with associated enterprises have been undertaken at arm''s
length basis at duly negotiated prices on usual commercial terms. The
Company has submitted the Accountant''s Report in form 3CEB up to the
financial year ended on March 31, 2013 as required under section 92E of
the Income Tax Act, 1961. In respect of the proposed transfer pricing
adjustments suggested by the Assessing Officers in the Assessments
already completed, the matters are pending before the Appellate
Authorities/Dispute Resolution Panel. Based on expert opinion, the
management is of the view that in all likelihood there will be no
material liability.
(7) Disclosures under the Micro, Small and Medium Enterprises
Development Act, 2006 (as amended in Schedule VI to the Companies Act,
1956 vide notification dated November 16, 2007) based on the information
available with the Company :
i) Delayed payments due as at the end of accounting year on account of
principal - Rs. Nil (Rs. Nil) and Interest due thereon - Rs. Nil (Rs.
Nil)
ii) Total interest paid on all delayed payments during the year under
the provisions of the Act - Rs. Nil (Rs. Nil)
iii) Interest due on principal amounts paid beyond the due date during
the year but without the interest amounts under this Act - Rs. Nil (Rs.
Nil)
iv) Interest accrued but not due - Rs. Nil (Rs. Nil)
v) Total interest due but not paid - Rs. Nil (Rs. Nil)
(8) In accordance with AS-15 (revised) "Employee Benefits", the Company
has calculated the various benefits provided to employees as under :
A. Defend Contribution Plans
a) Superannuation Fund
b) Employee''s State Insurance (State Plan)
c) Employee''s Pension Scheme 1995 (State plan)
(9) The Goodyear Tire & Rubber Company, Akron, Ohio, USA (Ultimate
holding company) has various ''non - qualified stock appreciation rights
plan'' (SARs) whereby certain employees of its subsidiaries are granted
cash-settled SARs. These SARs entitles the holder to receive cash
payout equivalent to the fair market value of the underlying shares on
the date of exercise as reduced by the designated exercise price of
SARs. The eligible employees do not receive / own shares directly / as
a beneficiary at any point of time under the SARs. The said SARs
generally have a graded vesting period of four years. Once a SAR vests,
an employee can exercise it at any time prior to its expiration. The
cost related to these SARs exercised by the employees of Goodyear India
Limited (''Company'') is accounted for in the books of the Company.
Accordingly, a sum of Rs. 72 lakhs (Rs. Nil) has been included under
Employee Benefits Expense (Refer note ''27'').
(10) Stock and book debts are subject to a maximum charge of Rs. 3,500
lakhs (Rs. 3,500 lakhs) for all credit facilities/guarantees sanctioned
by BNP Paribas Bank.
(11) Previous year figures have been regrouped and recanted, wherever
necessary, to conform to the current year''s classification.
Dec 31, 2012
(1) GENERAL INFORMATION
Goodyear India Limited (the "Company"), an existing company under
the Companies Act - 1956, is a step down subsidiary of The Goodyear
Tire & Rubber Company, Akron, Ohio, USA ("GTRC"). The Company was
originally registered and incorporated as a private company on October
10, 1922 and converted into a Public Company on March 24, 1961. The
Company is engaged in the business of manufacturing and sale of tyres,
tubes, flaps with manufacturing facility at Ballabgarh, Haryana, India.
The Company is presently listed with the Mumbai stock exchange (BSE
Limited).
* During the year 2003, a demand of Rs. 662 lakhs besides interest, was
raised by the Haryana Urban Development Authority (HUDA) towards
external development charges (EDC) which was challenged by the Company.
During June 2009, the court of Hon''ble Additional Civil Judge (Senior
Division) (First Court) passed an interim order whereby the Company was
directed to pay interest @ 10% for delayed payment amounting to Rs. 5
lakhs and which was duly paid. In the year 2010 the entire demand had
been set aside by the First Court. However, HUDA challenged the same
before the Court of Hon''ble District & Session Judge, Faridabad. In
December 2011 the said appeal was dismissed by Hon''ble District and
Session Judge. HUDA has further gone into appeal before the Hon''ble
High Court of Punjab and Haryana, to our knowledge the same has not yet
been admitted.
A. Haryana Local Area Development Tax (HLADT)
In the year 2007 Hon''ble Punjab & Haryana High Court at Chandigarh,
on a reference from the Hon''ble Supreme Court of India, had held the
Haryana Local Area Development Tax (HLADT) as unconstitutional.
Subsequently in the year 2008 the state of Haryana introduced
"Haryana Tax on Entry of Goods Into Local Area Act, 2008 (Entry Tax)
by repealing the Haryana Local Area Development Tax Act, 2000 and the
same was also held unconstitutional by the Hon''ble Punjab & Haryana
High Court.
Earlier based on the legal opinion obtained by the Company and
management''s assessment, provision towards liability for Haryana
Local Area Development Tax (HLADT) for the periods prior to March 2008
aggregating to Rs. 540 lakhs was written back during the year 2008. The
amount already paid for HLADT till December 2006 and expensed in
earlier years is Rs.1,938 lakhs.
Pursuant to an interim order of Hon''ble Supreme Court in October
2009, there is a stay on recovery of tax with a direction to assessees
for filing their returns of tax and giving undertaking that in the
event of their losing the matter, they will deposit the tax along with
the interest at a rate which will be determined by the court. During
the year 2010 on the matter being heard by a bench of five Hon''ble
judges of the Hon''ble Supreme Court, it was requested to Hon''ble
Chief Justice of India to refer the matter to a suitable larger bench
for deciding the constitutional validity of the levy The larger bench
of Hon''ble Supreme Court is yet to be constituted. However, based on
legal opinion obtained by the Company and management assessment, no
provision for HLADT and Entry tax has been considered necessary
** These represent the best possible estimates arrived at on the basis
of available information. The uncertainties and possible reimbursements
are dependent on the outcome of the different legal processes which
have been invoked by the Company or the claimants as the case may be
and therefore cannot be predicted accurately. The Company engages
reputed professional advisors to protect its interests and has been
advised that it has strong legal positions against such disputes.
(2) Disclosures under Accounting Standard 18:
i) List of related parties with whom the Company had transactions
during the year. Ultimate holding company :
The Goodyear Tire & Rubber Co., Akron, Ohio, USA. (since November 29,
2011) Holding company:
The Goodyear Tire & Rubber Co., Akron, Ohio, USA. (until November 28,
2011) Goodyear Orient Company (Private) Ltd., Singapore (since November
29, 2011)
Fellow subsidiaries:
i) Goodyear SA (Luxembourg)
ii) Goodyear Middle East, FZE
iii) Goodyear Dalian Tire Company Limited
iv) Goodyear Dunlop Tires France
v) Goodyear (Thailand) Public Company Limited
vi) Goodyear do Brasil Produtos de Borracha Ltda.
vii) Goodyear De Colombia S.A
viii) PT. Goodyear Indonesia Tbk
ix) Goodyear South Africa (Pty.) Limited
x) Goodyear Philippines Inc.
xi) Goodyear Singapore Tyres
xii) Goodyear & Dunlop Tyres (NZ) Limited.
xiii) Goodyear Marketing & Sales SDN Bhd
xiv) TC Debica SA
xv) Goodyear & Dunlop Tyres (Australia) Pty Limited.
xvi) Goodyear South Asia Tyres Private Limited
xvii) Goodyear Earthmover Pty Limited.
xviii) Goodyear International Corporation
xix) Goodyear Dunlop Tires Operations SA
xx) Compania Goodyear Del Peru SA
xxi) Goodyear Nippon Giant (Japan NGT)
xxii) Goodyear SA R&D (Luxembourg)
xxiii) Goodyear Chile S.A.I.C
xxiv) Goodyear Dunlop Tires Germany
Key management personnel:
i) Mr. Rajeev Anand
ii) Mr. Yashwant Singh Yadav
iii) Mr. Mark C Ravunni (Effective July 16, 2012)
iv) Mr. Jean Philippe Lecerf (upto July 15, 2012)
(3)Leases
Cancellable : The Company''s cancellable operating lease arrangement
mainly consists of residential premises, warehouses and offices taken
on lease for periods between 1-10 years. Terms of lease include terms
for renewal, increase in rents in future periods and terms of
cancellation.
(4) The management is of the opinion that its international
transactions with associated enterprises have been undertaken at
arms'' length basis at duly negotiated prices on usual commercial
terms. The Company has submitted the Accountant''s Report in form 3CEB
upto the financial year ended on March 31, 2012 as required under
section 92E of the Income Tax Act, 1961. In respect of the proposed
transfer pricing adjustments suggested by the Assessing Officers in the
Assessments already completed, the matters are pending before the
Appelllate Authorities / Dispute Resolution Panel. Based on expert
opinion the management is of the view that in all likelihood there will
be no material liability.
(5) Disclosures under the Micro, Small & Medium Enterprise Development
Act, 2006 (as amended in Schedule VI to the Companies Act, 1956 vide
notification dated November 16, 2007) based on the information
available with the company:
i) Delayed payments due as at the end of accounting year on account of
Principal - Rs. Nil (Nil) and Interest due thereon - Rs. Nil (Nil)
ii) Total interest paid on all delayed payments during the year under
the provisions of the Act - Rs. Nil (Nil)
iii) Interest due on principal amounts paid beyond the due date during
the year but without the interest amounts under this Act - Rs. Nil
(Nil)
iv) Interest accrued but not due- Rs. Nil (Nil)
v) Total Interest Due but not paid - Rs. Nil (Nil)
(6)In accordance with AS-15 (revised) "Employee Benefits", the
Company has calculated the various benefits provided to employees as
under:
A. Defined Contribution Plans
a) Superannuation Fund
b) Employer''s Contribution to Employee state insurance (State Plan)
c) Employer''s contribution to Employee''s Pension Scheme 1995. *
(State plan)
(7) Stock and book debts are subject to a maximum charge of Rs.3,500
lakhs (Rs. 3,500 lakhs) for all credit facilities / guarantees
sanctioned by BNP Paribas Bank.
(8) In the Board Meeting held on Feb. 21, 2011, the Board considered
and approved the sale of a part of land located in Ballabgarh, subject
to obtaining of necessary approvals for such sale. In the absence of
said approvals, pursuant to a circular resolution passed by the Board
of Directors on June 21, 2012, the Board considered and terminated the
process of sale. During October, 2012 the Company has appropriately
dealt with and replied to a notice received for a full refund of
deposit along with interest and damages. There has not been any
development thereafter.
(9) The financial statements for the year ended December 31, 2011 had
been prepared as per the then applicable, pre-revised Schedule VI to
the Companies Act, 1956. Consequent to the notification of Revised
Schedule VI under the Companies Act, 1956, the financial statements for
the year ended December 31, 2012 are prepared as per Revised Schedule
VI. Accordingly, the previous year figures have also been regrouped and
reclassified to conform to this year''s classification. The adoption
of Revised Schedule VI for previous year figures does not impact
recognition and measurement principles followed for preparation of
financial statements. Figures in brackets, wherever given are in
respect of previous year unless stated otherwise.
Dec 31, 2011
(a) Contingent liabilities*
As at As at
December 31, December 31,
2011 2010
(Rs.'000) (Rs.'000)
i) Bills discounted - 14,957
ii) Guarantee to 11,500 11,765
Gurgaon Gramin Bank
iii) Claims against the Company not
acknowledged as debts Rent case** - 43,875
Sales Tax 45,166 30,176
Excise &
Service Tax Matters 100,228 82,714
Income Tax Matters 107,328 48,447
Price Differential
pending settlement 47,392 47,392
Others 27,956 28,146
* (excluding interest and penalty, if any)
** During the year, in compliance of order passed by the Hon'ble
Delhi High Court in August 2011 in respect of Delhi branch rent case,
the Company deposited with the court a sum of Rs.162 lakhs (including
interest Rs. 81 lakhs) by way of demand drafts in the name of
landlord(s), after deducting applicable TDS. However subsequent to such
deposit, the Company received notice from Hon'ble Supreme Court of
India revealing that the landlord(s) have preferred Special Leave
Petition challenging the said order of High Court.
iv) During the year 2003, a demand of Rs. 66,222 thousand besides
interest, was raised by the Haryana Urban Development Authority (HUDA)
towards external development charges (EDC) which was challenged by the
Company. During June 2009, the court of Hon'ble Additional Civil
Judge (Senior Division) (First Court) passed an interim order whereby
the Company was directed to pay interest @ 10% for delayed payment
amounting to Rs. 476 thousand which was duly paid. In the year 2010 the
entire demand had been set aside by the First Court. However, HUDA had
challenged the same before the Court of Hon'ble District & Session
Judge, Faridabad. During the year, the said appeal was dismissed by
Hon'ble District & Session Judge.
v) In the year 2007 Hon'ble Punjab & Haryana High Court at
Chandigarh, on a reference from the Hon'ble Supreme Court of India,
had held the Haryana Local Area Development Tax (HLADT) as
unconstitutional. Subsequently in the year 2008 the state of Haryana
introduced Haryana Tax on Entry of Goods Into Local Area Act, 2008
(Entry Tax) by repealing the Haryana Local Area Development Tax Act,
2000 and the same was also held unconstitutional by the Hon'ble
Punjab & Haryana High Court.
Based on the legal opinion obtained by the Company and management's
assessment, provision towards liability for Haryana Local Area
Development Tax (HLADT) for the periods prior to March 2008 aggregating
to Rs. 540 lacs was written back during the year 2008. The amount
already paid for HLADT till December 2006 and expensed in earlier years
is Rs.1,938 lacs.
Pursuant to an interim order of Hon'ble Supreme Court in October
2009, there is a stay on recovery of tax with a direction to assessees
for filing their returns of tax and giving undertaking that in the
event of their losing the matter, they will deposit the tax along with
the interest at a rate which will be determined by the court. During
the year 2010 on the matter being heard by a bench of five Hon'ble
judges of the Hon'ble Supreme Court, it was requested to Hon'ble
Chief Justice of India to refer the matter to a suitable larger bench
for deciding the constitutional validity of the levy. The larger bench
of Hon'ble Supreme Court is yet to be constituted. However, based on
legal opinion obtained by the Company and management assessment, no
provision for HLADT and Entry tax has been considered necessary
vi) In respect of certain assessment years under Income Tax laws there
are appeals / objections pending before the Hon'ble Supreme Court /
Hon'ble High Court / Income tax Appellate Tribunal / Dispute
Resolution Panel etc., against which based on the expert opinion the
management does not consider any cash outflow at this stage.
(a) The depreciation charge for the current year represents gross Rs
198,105 (Rs. 154,625) less transfer from revaluation reserve Rs 1,212
(Rs 1,239). Such transfer represents the amount equivalent to the
additional charge necessitated on account of revaluation of certain
fixed assets referred to in (a) (ii) above, being the difference
between the depreciation charged and the depreciation calculated in
accordance with the rates followed by the Company on such items not
revalued.
(b) Depreciation charge for the year includes an amount of Rs.3,196
(Rs. 5,323) provided for on an accelerated basis in respect of a
category of equipment due for replacement as per technical assessment
by the management.
* Net of utilisation / reversals during the year.
The above provision represents the estimated outflow in respect of the
above items. However, considering the nature of items, the uncertainty
and timing relating to these outflows cannot be estimated.
(c) Leases
Cancellable : The Company's cancellable operating lease arrangement
mainly consists of residential premises, warehouses and offices taken
on lease for periods between 1- 10 years. Terms of lease include terms
for renewal, increase in rents in future periods and terms of
cancellation.
(d) The management is of the opinion that its international
transactions with associated enterprises have been undertaken at
arms' length basis at duly negotiated prices on usual commercial
terms. The Company has submitted the Accountant's Report in form 3CEB
upto the financial year ended on March 31, 2011 as required under
section 92E of the Income Tax Act, 1961. In respect of the proposed
transfer pricing adjustments suggested by the Assessing Officers in the
Assessments already completed, the matters are pending before the
Appelllate Authorities / Dispute Resolution Panel. Based on expert
opinion the management is of the view that in all likelihood there will
be no material liability.
(e) Disclosures under the Micro, Small & Medium Enterprise Development
Act, 2006 (as amended in Schedule VI to the Companies Act, 1956 vide
notification dated November 16, 2007) based on the information
available with the company:
i) Delayed payments due as at the end of accounting year on account of
Principal - Rs. Nil (Nil) and Interest due thereon - Rs. Nil (Nil)
ii) Total interest paid on all delayed payments during the year under
the provisions of the Act - Rs. Nil (Nil)
iii) Interest due on principal amounts paid beyond the due date during
the year but without the interest amounts under this Act - Rs. Nil
(Nil)
iv) Interest accrued but not due- Rs. Nil (Nil)
v) Total Interest Due but not paid - Rs. Nil (Nil)
(f) In the Board Meeting held on Feb. 21, 2011, the board considered
and approved the sale of a part of land located in Ballabgarh subject
to obtaining of necessary approvals for such sale. As of February 27,
2012, the Company had still not received any Government approval and
therefore the sale had not yet happened.
(g) Stock and book debts are subject to a maximum charge of Rs. 350,000
(Rs. 350,000) for all credit facilities / guarantees sanctioned by BNP
Paribas Bank.
(h) Previous year figures have been regrouped and recast, wherever
necessary, to make them comparable to those of the current year.
Figures in brackets, wherever given are in respect of previous year
unless stated otherwise.
(i) All the figures are in rupee thousand unless stated otherwise.
Dec 31, 2010
As at As at
(a) CONTINGENT LIABILITIES* December31,
2010 December 31, 2009
(RS.000) (RS.000)
(i) Bills discounted 14,957 --
(ii) Guarantee to Gurgaon
Gramin Bank 11,765 11,833
(iii) Claims against the Company
not acknowledged as debts
Rent cases 43,875 43,875
Sales Tax 30,176 19,733
Excise & Service Tax Matters 82,714 50,552
Income Tax Matters 48,447 15,281
Price Differential pending
settlement 47,392 -
Others 28,146 31,856
*(excluding interest and penalty, if any)
(iv) During the year 2003, a demand of Rs. 66,222 thousand besides
interest, was raised by the Haryana Urban Development Authority (HUDA)
towards external development charges (EDC) which was challenged by the
Company. During June 2009, the court of Honble Additional Civil Judge
(Senior Division) (First Court) passed an interim order whereby the
Company was directed to pay interest @ 10% for delayed payment
amounting to Rs. 476 thousand which was duly paid. During the year the
entire demand has been set aside by the First Court. However, HUDA
challenged the same before the Court of Honble District & Session
Judge, Faridabad. As the Company had, in earlier years, already paid
EDC, based on legal opinion and management assessment the Company is of
the view that no additional demand is legally tenable.
(v) Intheyear2007, Honble Punjab & Haryana High Court at Chandigarh,
on a reference from the Honble Supreme Court of India, had held the
Haryana Local Area Development Tax (HLADT) as unconstitutional.
Subsequently in the year 2008 the state of Haryana introduced "Haryana
Tax on Entry of Goods Into Local Area Act, 2008" (Entry Tax) by
repealing the Haryana Local Area Development Tax Act, 2000 and the same
was also held unconstitutional by the Honble Punjab & Haryana High
Court.
Earlier based on the legal opinion obtained by the
Company and managements assessment, provision towards liability for
Haryana Local Area Development Tax (HLADT) for the periods prior to
March 2008 aggregating to Rs. 540 lacs was written back during the year
2008. The amount already paid for HLADT till December 2006 and
expensed in earlier years is Rs. 1,938 lacs.
Pursuant to an interim order of Honble Supreme Court in October 2009,
there is a stay on recovery of tax with a direction to assessees for
filing their returns of tax and giving undertaking that in the event of
their losing the matter, they will deposit the tax along with the
interest at a rate which will be determined by the court. During the
year 2010 on the matter being heard by a bench of five Honble judges
of the Honble Supreme Court, it was requested to Honble Chief Justice
of India to refer the matter to a suitable larger bench for deciding
the consitutional validity of the levy. The larger bench of Honble
Supreme Court is yet to be constituted. However, based on legal
opinion obtained by the Company and management assessment, no provision
for HLADT and Entry tax has been considered necessary.
(vi) In respect of certain assessment years under Income Tax laws there
are appeals / objections pending before the Honble Supreme
Court/Honble High Court/Income tax Appellate Tribunal/Dispute
Resolution Panel etc., against which based on the expert opinion the
management does not consider any cash outflow at this stage.
(b) As the Companys business activity falls within a single primary
business segment viz. Automotive tyres, tubes, flaps and related
rubber products, the disclosure requirements of Accounting Standard
(AS-17) "Segment Reporting" are not applicable.
(c) Disclosures under Accounting Standard 18: I) List of related
parties with whom the Company had transactions during the year.
Holding company:
The Goodyear Tire & Rubber Co., Akron, Ohio, USA.
Fellow subsidiaries:
i) Goodyear International Corporation
ii) Goodyear Dunlop Tires Operations SA
iii) Goodyear Middle East, FZE
iv) Goodyear Earthmovers Pty Ltd.
v) Goodyear Dalian Tire Company Limited
vi) Goodyear & Dunlop Tyres (NZ) Ltd.
vii) Goodyear Dunlop Italia
viii) Goodyear (Thailand) Public Company Limited
ix) Goodyear Taiwan Limited
x) Goodyear Do Brasil Produtos De Borracha Ltd.
xi) Goodyear De Colombia S.A.
xii) Goodyear Great Britain Ltd.
xiii) PT Goodyear Indonesia TBK
xiv) Goodyear SA (Luxembourg)
xv) Compania Goodyear Del Peru SA
xvi) Goodyear South Africa (Pty) Limited
xvii) Goodyear Wingfoot KK
xviii) Goodyear Philippines Inc.
xix) Goodyear Lastikleri T.A.S.
xx) Goodyear Dunlop Tires, France
xxi) Goodyear Singapore Tyres
xxii) Goodyear Marketing & Sales SDN Bhd.
xxiii) TC Debica SA.
xxiv) Goodyear & Dunlop Tyres (Australia) Pty Ltd.
xxv) Goodyear South Asia Tyres Private Limited
Key management personnel:
i) Mr. RajeevAnand
li) Mr. Hugo 0 Dedekind (upto March 31, 2010)
lii) Mr. Yashwant Singh Yadav (effective November 01, 2010)
iv) Mr. Jean Philippe Lecerf (effective July 01, 2010)
(d) Depreciation charge for the year includes an amount of Rs. 5,323
(Rs. 5,943) provided for on an accelerated basis in respect of a
category of equipment due for replacement as per technical assessment
by the management.
(e) Leases:
Cancellable : The Companys cancellable operating lease arrangement
mainly consists of residential premises, warehouses and offices taken
on lease for periods between 1-10 years. Terms of lease include terms
for renewal, increase in rents in future periods and terms of
cancellation.
(f) The management is of the opinion that its international
transactions with associated enterprises have been undertaken at arms
length basis at duly negotiated prices on usual commercial terms. The
Company has submitted the Accountants Report in form 3CEB upto the
financial year ended on March 31,2010 as required under section 92E of
the Income Tax Act, 1961. In respect of the proposed transfer pricing
adjustments suggested by the Assessing Officers in the Assessments
already completed, the matters are pending before the Appellate
Authorities / Dispute Resolution Panel. Based on expert opinion the
management is of the view that in all likelihood there will be no
material liability.
(g) Disclosures under the Micro, Small & Medium Enterprise Development
Act, 2006 (as amended in Schedule VI to the Companies Act, 1956 vide
notification dated November 16, 2007) based on the information
available with the company:
h) Delayed payments due as at the end of accounting year on account of
Principal - Rs. Nil (Nil) and Interest due thereon-Rs. Nil (Nil) li)
Total interest paid on all delayed payments during the year under the
provisions of the Act - Rs. Nil (Nil) lii) Interest due on principal
amounts paid beyond the due date during the year but without the
interest amounts under this Act - Rs. Nil (Nil) iv) Interest accrued
but not due - Rs. Nil (Nil) v) Total Interest Due but not paid - Rs.
Nil (Nil)
(i) During the year Goodyear Orient Company Private Limited, a wholly
owned subsidiary of the promoter. The Goodyear Tire & Rubber Company,
invited bids by way of public announcement dated May 13,2010, to
acquire, in accordance with the Securities and Exchange Board of India
(Delisting of Equity Shares) Regulations, 2009 ("Delisting
Regulations") and terms and conditions set out in the Public
Announcement, up to 5,997,292 equity shares of the company,
representing 26% of the equity capital (the "Offer Shares") for which
the approval was obtained from shareholders by way of postal ballot.
The number of Offer Shares tendered by the public shareholders at or
below the discovered price was less than the minimum number of Offer
Shares required to be accepted for the delisting offer to be successful
in terms of Delisting Regulations. Accordingly, the delisting offer is
deemed to have failed in terms of the Delisting Regulations.
(j) In accordance with AS-15 (revised) "Employee Benefits", the Company
has calculated the various benefits provided to employees as under:
A. Defined Contribution Plans
a) Superannuation Fund
b) Provident Fund
(k) Stock and book debts are subject to a maximum charge of Rs. 350,000
(Rs. 350,000) for all credit facilities / guarantees sanctioned by BNP
Paribas Bank.
(l) Previous year figures have been regrouped and recast, wherever
necessary, to make them comparable to those of the current year.
Figures in brackets, wherever given are in respect of previous year
unless stated otherwise.
Dec 31, 2009
(a) CONTINGENT LIABILITIES* As at As at
December 31, 2009 December 31, 2008
(Rs.000) (Rs.000)
i) Bills discounted -- 30,341
ii) Claims against the Company not
acknowledged as debts
Rent cases 43,875 43,875
Sales Tax 19,733 16,605
Additional Excise Duty 48,413 48,413
Others 33,995 28,083
*(excluding interest and penalty, if any)
iii) During the year 2003, a demand of Rs. 66,222 besides interest, was
raised by the Haryana Urban Development Authority towards external
development charges (EDC) which has been challenged by the Company.
During June 2009, the first court passed an interim order whereby the
company was directed to pay interest @ 10% for delayed payment
amounting to Rs. 476 which was duly paid. As the Company had, in
earlier years, already paid EDC, then demanded by the concerned
authorities, the management is of the view that no additional demand
against the Company is legally tenable.
iv) In the year 2007 Honble Punjab & Haryana High Court at Chandigarh,
on a reference from the Honble Supreme Court of India, had held the
Haryana Local Area Development Tax (HLADT) as unconstitutional.
Subsequently in the year 2008 the state of Haryana introduced "Haryana
Tax on Entry of Goods Into Local Area Act, 2008 (Entry Tax) by
repealing the Haryana Local Area Development Tax Act, 2000 and the same
was also held unconstitutional by the Honble Punjab & Haryana High
Court.
Earlier based on the legal opinion obtained by the Company and
managements assessment, provision towards liability for Haryana Local
Area Development Tax (HLADT) for the periods prior to March 2008
aggregating to Rs. 540 lacs has been written back during the year 2008.
The amount already paid for HLADT till December 2006 and expensed in
earlier years is Rs.1,938 lacs.
During the year 2009, as per an interim order of Honble Supreme Court,
there is a stay on recovery of tax With a direction to assessees for
filing their returns of tax and giving undertaking that in the event of
their losing the matter, they will deposit the tax along with the
interest at a rate which will be determined by this court. The matter
is pending before Constitutional bench of Honble Supreme court. Based
on the fresh legal opinion obtained by the Company and management
assessment, no provision for HLADT and Entry tax has been considered
necessary.
v) In respect of certain assessment years under Income Tax laws there
are appeals pending before the Honble Supreme Court / Honble High
Court / Income tax Appellate Tribunal etc., against which the
Management does not consider any contingent liability at this stage.
(b) Disclosures under Accounting Standard 18:
c) List of related parties with whom the Company had transactions
during the year.
Holding company:
The Goodyear Tire & Rubber Co., Akron, Ohio, USA.
Fellow subsidiaries:
i) Goodyear do Brasil Produtos de Borracha Ltd.
ii) Goodyear Dunlop Tires Operations SA
iii) PT Goodyear Indonesia Tbk
iv) Goodyear South Africa (Pty.) Limited
v) Goodyear Philippines Inc.
vi) Goodyear Lastikleri TAS
vii) Goodyear Dunlop Tires Germany Gmbh
viii) Goodyear Marketing & Sales SDN Bhd
ix) Goodyear South Asia Tyres Private Limited
x) Goodyear Dalian Tire Company Limited
xi) Compania Goodyear Del Peru SA.
xii) Goodyear (Thailand) Public Co. Ltd.
xiii) Goodyear Middle East, FZE
xiv) Goodyear De Colombia S.A
xv) TC Debica SA
xvi) South Pacific Tyres, Australia
xvii) C.A.Goodyear De Venezuela
xviii) Goodyear Earthmover Pty Ltd, Australia
xix) Goodyear Luxemburg Tires, SA
xx) Goodyear Guatemala
xxi) Goodyear Great Britain Ltd.
xxii) Goodyear Singapore Pvt. Ltd.
xxiii) Goodyear Dunlop Tires France
xxiv) Goodyear Dunlop Tyres (NZ) Ltd.
xxv) Goodyear International Corporation
xxvi) Goodyear Dunlop Tyres Italia SPA PT
xxvii) Goodyear Taiwan Limited
xxviii) Goodyear Australia Pty. Limited
xxix) Goodyear Nippon Giant (Japan NGT)
Key management personnel:
i) Mr. Rajeev Anand (effective February 20, 2009)
ii) Mr. Hugo 0 Dedekind
iii) Mr. Prabhakar Jain (resigned effective April 30, 2009)
d) The depreciation charge for the current year represents gross Rs.
127,357 (Rs. 113,171) less transfer from revaluation reserve Rs.1,268
(Rs. 1,288). Such transfer represents the amount equivalent to the
additional charge necessitated on account of revaluation of certain
fixed assets referred to in (a) (ii) above, being the difference
between the depreciation charged arid the depreciation calculated in
accordance with the rates followed by the Company on such items not
revalued.
(f) i) Depreciation charge for the year includes an amount of Rs. 5,943
(Rs. 7,427) provided for on an accelerated basis in respect of a
category of equipment due for replacement as per technical assessment
by the management.
ii) Depreciation for the year is net of Rs, Nil (Rs, 5,550) on account
of adjustment made for the earlier years,
(g) The management is of the opinion that its international
transactions with associated enterprises have been undertaken at arms
length basis at duly negotiated prices on usual commerciai terms, The
company has submitted the Transfer Pricing (TP) report upto the
financial year ended March 31, 2009 and there is no materia! liability
on assessments completed by the income Tax Authorities,
(h) Disclosures under the Micro, Smaii & Medium Enterprise Development
Act, 2006 (as amended in Schedule VI to the Companies Act, 1956 vide
notification dated November 16, 2007} based on the
i) Delayed payments due as at the end of accounting year on account of
Principal - Rs. Nil (Nil) and Interest due thereon-Rs. Nil (Nil)
ii) Total interest paid on all delayed payments during the year under
the provisions of the Act - Rs. Nil (Nil)
iii) Interest due on principal amounts paid beyond the due date during
the year but without the interest amountsunderthisAct-Rs. Nil (Nil)
iv) Interest accrued but not due - Rs. Nil (Nil)
v) Total Interest Due but not paid -Rs. Nil (Nil)
C. Defined Benefit Plans
a) Gratuity
b) Leave Encashment / Compensated Absence
c) Employers Contribution to Provident Fund (shortfall in interest on
Provident Fund balance).
(i) Previous year figures have been regrouped and recast, wherever
necessary to make them comparable to those of the current year. Figures
in brackets, wherever given are in respect of previous year unless
stated otherwise.
(j) All the figures in rupee thousand unless strated otherwise.