Mar 31, 2018
1. Corporate Information :
Hindustan Motors Limited ("the Company") is a company limited by shares, incorporated and domiciled in India having its Registered Office at Kolkata. The Shares of the Company are publicly traded on the National Stock exchange of India and BSE Limited. The company is primarily engaged in manufacture and sale of Vehicles, Spare Parts of Vehicles, Steel Products and Components. The Company is also engaged in Trading of Spare Parts of Vehicles.
ii. Rights and preferences attached to equity shares :
The Company has only one class of equity shares issued and subscribed of face value of INR 5 per share. Each holder of equity share is entitled to one vote per share.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive assets of the Company remaining after settlement of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders. In the event of declaration of dividend by the Company, approval of shareholders will be required in its Annual General Meeting.
Nature and purpose of Reserves
(i) Securities premium reserve
Securities premium reserve represents amount received in excess of per value of issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act.
(ii) Revaluation Reserve
Revaluation Reserve was created under previous GAAP on upward revaluation of land and building.
a) Security
These Debentures were secured by a charge on the assets of Uttarpara Plant which were released during the year.
b) Terms of repayment and Interest rate :
10.25% Debentures of INR 2053Lakhs were redeemable in three equal installments of INR 684.33 Lakhs each alongwith interest on September 29,2015, September 29,2016 and September 29,2017.
Note : Cash credit facilities together with interest and other charges thereon, were secured by mortgage on a part of the Company''s land together with other immovable assets thereon,both present and future, and by way of a hypothecation charge over all the movable assets including book debts of the company. Cash credit was repayable on demand and carries [email protected]% to 16.20% p.a. on monthly rest.
(a) Fair value
The fair value of the financial assets and liabilities approximates their carrying amounts as the Balance Sheet date
(b) Fair valuation Techniques
The fair value of the financial assets and liabilities are included at the amount that would be received to sell anasset or paid to transfer a liability in an orderly transactions between market participants at the measurement date.
The following method of assumption were used to estimate the fair values :
(i) The fair value of cash and cash equivalents, trade receivables, trade payables, current financial liabilities / financial assets approximate their carrying amount largely due to theshort term nature of these instruments. The management considers that the carrying amounts of financial assets and financial liabilities recognised at nominal cost /amortised cost in the financial statements approximate their fair value.
(ii) A substaintial portion of the company''s long-term debts has been contracted at fixed rate of interest. Fair value of variable interest borrowings approximates their carrying value subject to adjustments made for transaction cost.
2 FINANCIAL RISK MANAGEMENT
The company''s risk management is carried out by a treasury department under policies approved by the Board of Directors, Company Treasury identifies, evaluates and hedges financial risks in close co-operation with the company''s operating units. The board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, liquidity risk and investment of excess liquidity.
(A) Market Risk
(i) Foreign currency risk
The Company does not operates internationally. The company does not have significant foreign currency exposure.
(ii) Interest rate risk
The company does not have borrowing as at 31st March 2018. As such there is no interest rate risk
(iii) Price risk
The company does not have a practice of investing in market equity securities with a view to earn fair value changes gain. At the reporting date company does not hold quoted securities. Accordingly, company is not exposed to significant market price risk.
(B) Credit Risk
The Company is exposed to credit risk from its activities and from its financing activities including deposits with banks.
(C) Liquidity Risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collatoral obligations without incurring unexpectable loses.
3 CAPITAL MANAGEMENT - RISK MANAGEMENT
The company''s objectives when managing capital are 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. In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Management believes that the outcome of the above will not have any material adverse effect on the financial position of the company. Against the above claims/demands, payments have been made under protest and/or debts have been withheld by the respective parties, to the extent of Rs. 78.38 lakhs (Rs.377.09 lakhs).
Included in the above are contingent liabilities to the extent of Rs 886.41 (2017-INR 1187.20 Lakhs; 2016-INR 1187.20 Lakhs) relating to the pre transfer period of the earstwhile Power Unit Plant and Power Product Division of the Company, which were transferred to AVTEC Limited in June 2005, Rs 502.21 (2017 - INR 502.21 Lakhs; 2016-INR 502.21 Lakhs) relating to the pre-transfer period of the earstwhile Earthmoving Equipment division of the Company,which was transferred to Caterpillar India Private Limited in February 2001 and Rs 701.11 (2017-INR 1393.89 Lakhs; 2016 - INR 1814.41 Lakhs) relating to the pre transfer period of the earstwhile Chennai Car Plant of the Company, which has been tranferred to Hindustan Motor Finance Corporation Limited in March 2014. However, demands to the extent of Rs 667.29 (2017 - INR 667.29 Lakhs; 2016 - INR 667.29 Lakhs) in case of earstwhile Power unit Plant are covered by counter guarantees by the customers.
b) Bonus for the years 1963-64 to 1967 - 68 at Uttarpara unit is under adjudication (amount indeterminate). The Company contends that no liability exists in this regard under the Payment of Bonus Act, 1965.
4 LEASES
Disclosure regarding leases as per IND AS -17 "Leases"
Finance Lease As a lessee
In case of leasehold land, tenure of the lease is 99 years with effect from 23th May, 1989. The lease will be renewed on mutually agreed terms on the expiry of current lease period.
5 DESCRIPTION OF PLANS
i) Description of Plans
A. Defined benefit plans
a) Provident Fund
The company also has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the company is limited to the amount contributed and it has no further contractual nor any constructive obligation.
b) Gratuity
The company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972.
B. Other Employee Benefits Leave Encashment
The amount of the provision of Rs. (April 1, 2016 - Rs 7.31 Lakhs and March31, 2017 Rs 8.79 Lakhs and March 31, 2018 Rs. 11.47 Lakhs) is considered as current and the accumulated leave expected to be carried forward beyond twelve months as long term employee benefit for measurement purpose.
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 i.e. projected unit credit method has been applied as that used for calculating the defined benefit liability recognised in the balance sheet.
vi) Risk exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below :
Description of Risk Exposers : Valuations are based on certain assumption which are dynamic in nature and vary overtime. As such Company is exposed to various risk as follows:
Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.
Salary Inflation risk : Higher than expected increases in salary will increase the defined benefit obligation. Demographic risk : This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. Withdrawls : Actuals withdrawls providing higher or lower than assumed withdrawls can impact plan''s liability. Discount Rate : Reduction in discount rate in subsequent valuations can increase the plans liability.
vii) Defined benefit liability and employer contributions
Expected contribution to post employment benefit plan for the year ending March 31, 2018 is INR The weighted average duration of the defined benefit obligation is 10 years in case of Gratuity and 10 years in case of Leave encashment in all the three years. The expected maturity analysis of undiscounted gratuity and leave encashment is as follows :
6 SEGMENT REPORTING
As the Company''s business activity falls within a single primary business segment viz "Automobiles" and there is no reportable secondary segment i.e. geographical segment, the disclosure requirement of IND AS 108 - "OperaingSegments " is not applicable.
7 FIRST-TIME ADOPTION OF IND AS (Transition from Indian GAAP to Ind As)
These financial statements, for the year ended March 31, 2018, are the Company''s first financial statements 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, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS balance sheet at April 1, 2016 (date of transition to Ind AS). In preparing itsopening Ind AS balance sheet, the company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act. An explanation of how the transition from previous GAAP to IND AS has affected the Company''s financial position, financial performance and cash flow is set out in the following tables and notes.
A) Exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
A.1 Ind AS optional exemptions
(a) 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 recognised 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. This exemption is also 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 value, which has been considered as deemed cost.
(b) Investments in subsidiaries
Ind AS 101 permits a first-time adopter to measure its investments in subsidiaries, joint ventures and associates at deemed cost, which should be either:
(i) fair value at the entity''s date of transition to Ind ASs in its separate financial statements; or
(ii) previous GAAP carrying amount at that date
The company has elected to measure in its separate financial statements all of its investments in subsidiaries at their previous GAAP carrying amount on the date of transition.
(c) Classification and measurement of Lease land
In accordance with Ind AS 101, when a lease includes both land and building elements, a first time adopter may assess the classification of each element as finance or an operating lease at the date of transition to Ind AS on the basis of the facts and circumstances existing as at the date of transition. Accordingly, applying the same exemption, the Company has classified its Pithampur land leases into finance lease on the basis of the facts and circumstances existing as at the date of transition.
A.2 Ind AS Mandatory Exceptions
(a) Estimates
Estimates made under Ind AS as at April 1, 2016 are consistent with the estimates as under previous GAAP.
(b) Classification and measurement of financial assets
Ind AS 101 requires that an entity should assess the classification of its financial assets on the basis of facts and circumstances exist on the date of transition. Accordingly, in its Opening Ind AS Balance Sheet, the company has classified all the financial assets on basis of facts and circumstances that existed on the date of transition, i.e., April 1, 2016.
1 Fair valuation of security deposits paid
Under the previous GAAP, interest free lease security deposits assets (that are refundable in cash on completion of the contract term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value at initial recognition and subsequently at amortised cost. Accordingly, the company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognised as prepaid rent.
2 Tax effects of adjustments
Additional deferred tax asset/(liability) has been recognised corresponding to the adjustments to retained earnings/profit or loss as a result of Ind AS Implementation.
3 Remeasurement of Post-employment benefit obligations (Net of Tax)
Under Ind AS, all items of income and expense recognised 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 recognised in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP. Accordingly, loss on remeasurements of post-employment benefit obligation has been reclassified to the Other Comprehensive Income for the period.
4 Cash and Cash Equivalents
Under IndAs,unpaid dividend account should be included in Other Bank Balances, whereas in previous IGAAP the same was included in cash and cash equivalents.
8 The operating results have been adversely affected due to adverse market conditions and the accumulated losses of the Company as at 31st March, 2018 stand at Rs. 19623.81 lacs as against the share capital of Rs. 10441.44 lacs. Also current liabilities as at 31st March, 2018 exceed current assets by Rs.7864.26 lacs. The Company had also declared "Suspension of work" at its Uttarpara plant w.e.f. 24th May, 2014 & layoff at its Pithampur plant w.e.f. 4th December, 2014. These conditions indicate the existence of material uncertainty about the Company''s ability to continue as a going concern, which is dependent on the Company establishing profitable operations and sustainable cash flows. The Management is in the process of further rationalizing the expenses as well as considering the measures to generate additional revenue apart from revenue generated during the year. Accordingly, the Company continues to prepare its accounts on a "Going Concern" basis. The Auditors in their audit report for the year ended 31st March, 2018 had also given Emphasis of Matter on above.
9 Due to low productivity, growing indiscipline, shortage of funds and lack of demand of products, the management declared "Suspension of work" at Company''s Uttarpara Plant with effect from 24th May, 2014. The Company also declared layoff at its Pithampur plant with effect from 4th December, 2014 due to lack of orders. Based on legal opinion obtained, the employees and workmen, falling under the purview of "Suspension of work" at Uttarpara plant, are not entitled to any salary & wages during that period and accordingly the Company has not provided for such salary & wages.
10 The financial statements of the Company for the financial year 2017-18 have been signed by two Non-Executive Directors, the Chief Financial Officer and the Company Secretary as there is no Chairperson, Managing Director or Chief Executive Officer on the basis of expert opinion obtained by the Company in the earlier year.
11 The wholly owned immaterial foreign subsidiary of the Company namely Hindustan Motors Limited, USA was already dissolved on 16th February, 2017 as per the laws appliacble in USA as such not in existence since after dissolution. Further, the application made by the Company to Reserve Bank of India seeking permission for writing off its entire investment in Hindustan Motors Limited, USA (Capital, Loan and other receivables/payables) for which necessary provision has been made in the accounts of the Company, is under consideration.
12 The Company has executed an agreement with Peuget S.A. on 10th February, 2017 for the sale of the Ambassador brand and certain related rights (Ambassador Brand) for a consideration foreign currency equivilent to INR 8000 lakhs, received during the year INR 7897 lakhs, net of exchange loss of Rs 103 lakhs upon fulfilment of the terms and conditions as prescribed in the said above mentioned agreement.
13 Previous year''s figures have been regrouped / rearranged wherewere necessary.
Mar 31, 2016
b) Terms / Rights attached to Equity Shares
The Company has only one class of equity shares issued and subscribed of face value of ? 5 per share. Each holder of equity share is entitled to one vote per share.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive assets of the Company remaining after settlement of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders. In the event of declaration of dividend by the Company, approval of shareholders will be required in its Annual General Meeting.
As per records of the Company, including its register of Shareholders / Members and other declarations received from Shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of Shares.
Note:
1. Cash Credits facilities from Banks Rs.280.90 lacs (Rs. 238.87 lacs) together with interest and other charges thereon, are secured by a mortgage on a part of the Companyâs land together with other immovable assets thereon, both present and future, and by way of a hypothecation charge over all the movable assets including book debts of the Company. Cash Credit is repayable on demand and carries interest @ 10.397% to 16.20% p.a. on monthly rest.
The charges referred above rank pari-passu amongst various Banks.
2. Cash Credit limit excludes Rs.13259967 being the Bank Guarantee for electricity bill invoked during the year by UCO Bank.
B. Defined Benefit Plan
The Company has a Defined Benefit Gratuity Plan / Long Term Compensated Leave. Every employee who has completed five years or more of service gets Gratuity on terms not lower than the amount payable under the Payment of Gratuity Act, 1972. The aforesaid scheme is funded with an Insurance Company. The following table summarizes the components of net benefit expenses recognized in Statement of Profit and Loss and the funded status and amount recognized in the Balance Sheet for the respective plan / Long Term Compensated Leave.
Note : a) The estimates of future salary increase considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
b) The Company expects to contribute Rs.42.64 lacs (Rs. 122.53 lacs) to Gratuity fund for 2016-17.
c) Experience adjustment on plan assets & liabilities has been considered in the valuation report as certified by the actuary, which is not readily available and hence not disclosed separately.
1. As the Company''s business activity falls within a single primary business segment viz, ''Automobiles" and there is no reportable secondary segment i.e. geographical segment, the disclosure requirement of Accounting Standard -17 "Segment Reporting" is not applicable.
2. The operating results have been adversely affected due to adverse market conditions and the accumulated losses of the Company as at 31st March, 2016 stand at ? 23305.46 lacs as against the share capital of Rs. 10441.44 lacs. Also current liabilities as at 31st March, 2016 exceed current assets by Rs. 11507.60 lacs. The Company has already made reference to the Board for Industrial and Financial Reconstruction (BIFR) under Section 15 of the Sick Industrial Companies (Special Provision) Act, 1985. The reference has also been registered by BIFR and proceedings are going on. Further the Company has also declared "Suspension of work" at its Uttarpara plant w.e.f. May 24, 2014 & layoff at its Pithampur plant w.e.f. December 4, 2014. These conditions indicate the existence of material uncertainty about the Company''s ability to continue as a going concern, which is dependent on the Company establishing profitable operations and sustainable cash flows. The Management is in the process of restructuring the operations including rationalizing the costs. The Management believes that these measures may result in sustainable cash flows and accordingly, the Company continues to prepare its accounts on a "Going Concern" basis.
3. During the year, the Company reached a compensation settlement with the permanent employees/workmen of the Company through a Voluntary Retirement Scheme (VRS) and paid Compensation Rs.644 lacs which has been charged in employee benefits expense.
4. Due to low productivity, growing indiscipline, shortage of funds and lack of demand of products, the management has declared "Suspension of work" at Companyâs Uttarpara Plant with effect from May 24, 2014 and declared layoff at its Pithampur plant with effect from December 4, 2014 due to lack of orders.
Based on legal opinion obtained, the employees and workmen, falling under the purview of "Suspension of work" at Uttarpara plant, are not entitled to any salary & wages during that period and accordingly the Company has not provided for such salary & wages.
5. The financial statements of the Company for the financial year 2015-16 have been signed by two Non-Executive Directors, the Chief Financial Officer and the Company Secretary as there is no Chairperson, Managing Director or Chief Executive Officer on the basis of expert opinion obtained by the Company in this regard.
6. Previous yearâs figures have been regrouped / rearranged wherever necessary.
Sep 30, 2013
1.0 Nature of Operation:
Hindustan Motors Limited having its manufacturing facilities at
Uttarpara, Tiruvallur and Pithampur, is primarily engaged in the
manufacture and sale of Vehicles, Spare Parts of Vehicles, Steel
Products and Components. The Company is also engaged in Trading of
Vehicles and Spare Parts of Vehicles.
1.1 Basis of Preparation:
The financial statements have been prepared to comply in all material
respects with the accounting principles generally accepted in India,
including mandatory Accounting Standards notified under the Companies
(Accounting Standard) Rules, 2006 (as amended) under the historical
cost convention and on an accrual basis. The accounting policies, in
all material respects, have been consistently applied by the Company
and are consistent with those used in the previous year.
2. Estimated amount of contracts remaining to be executed on capital
account and other Commitments and not provided for (Net of advances.)
215.21 1327.11
3. Contingent Liabilities not provided for in respect of :
(a) Claims & Government demands against the Company not acknowledged as
debts
i) Excise Duty 3062.13 6397.44
ii) Sales Tax 3843.80 726.12
iii) Customs Duty 373.50 370.72
iv) Service Tax 911.83 797.49
v) Others 738.59 740.01
The Company does not expect any major impact to arise out of the above
claims /demands. Against the above claims / demands, payments have been
made under protest and / or debts have been withheld by the respective
parties, to the extent of Rs. 454.32 lacs (Rs. 452.59 lacs).
Included in the above are contingent liabilities to the extent of Rs.
1187.20 lacs (Rs. 1617.57 lacs) relating to the pre-transfer period of
the erstwhile Power Unit Plant and Power Products Division of the
Company, which were transferred to AVTEC Limited in June 2005. However,
demands to the extent of Rs. 667.29 lacs (Rs. 1171.54 lacs) are covered by
counter guarantees by the customers.
(b) Outstanding Bank Guarantees for import of materials and other
accounts. 527.42 521.36
(c) Bonus for the years 1963-64 to 1967-68 at Uttarpara unit is under
adjudication (amount indeterminate). The Company contends that no
liability exists in this regard under the Payment of Bonus Act, 1965.
(d) Demands for incremental Dearness Allowance during the years 2001 to
2007 at Uttarpara Unit are under adjudication (amount not ascertained).
However, majority of the employees unions have filed joint petition for
withdrawal of the case.
(e) The Company is under Corporate Debt Restructuring Scheme. In view
of recent circular about "windfall profit / extra ordinary income"
triggering the right of recompense and the Company''s sale of property
at Halol, Gujarat, the Lenders of the Company have quantified the claim
of recompense of interest at Rs. 6554 lacs. The Company has requested the
Lenders to take a reasonable view based on Company''s financial position
and past track record, which the Lenders have agreed to consider.
Pending final decision in the matter, the Company had paid a sum of Rs.
1500 lacs to the Lenders in April 2011, which was accounted for under
Interest Expense during the year 2010-11. In view of the above, no
further provision there against is considered necessary by the
Management.
(f) The Company had sold 314 acres of land at Hindmotor, West Bengal,
in earlier years, in pursuance of a development agreement, after taking
prior approval from Government of West Bengal (GoWB) and in accordance
with the Government Order issued by the GoWB.
The GoWB has alleged that the Company has realized an excess sum of Rs.
19447 lacs from the sale of said land and it should refund the said
amount along with interest thereon. The Company is of the view that it
has not committed any default of the said Government Order. The Company
has also been legally advised that there is no liability on the Company
to make any payment against the alleged demand. Accordingly, the
Company has denied and disputed the allegations Since the contentions
of GoWB are being contested by the Company, including in the
proceedings for demerger initiated by the Company, no provision is
considered necessary by the management against the said claim.
4. Derivative instruments, which are not intended for trading or
speculation but hedge for underlying transactions and forward exchange
contract outstanding as at period end are as follows :
(i) JPY / USD of JPY 430.00 lacs (JPY / USD of JPY 4569.50 lacs). (ii)
USD / INR of USD 6.55 lacs (USD / INR of USD 29.10 lacs).
The above forward contracts have been taken to cover the exchange risk
on import payment liabilities of the Company.
5. As the Company''s business activity falls within a single primary
business segment viz, "Automobiles" and there is no reportable
secondary segment i.e. geographical segment, the disclosure requirement
of Accounting Standard-17 "Segment Reporting" as notified by Companies
(Accounting Standards) Rules, 2006 (as amended) is not applicable.
6. The operating results for the current period have been adversely
affected due to adverse market conditions as well as adverse exchange
rate of US $ / Japanese Yen. The Management is in the process of taking
necessary measures to augment the net worth and to improve the
operating results including but not limited to sale of non-core assets,
introduction of new variants of vehicles and sale of certain
manufacturing facilities. The Management is confident that these
measures are expected to result in sustainable cash flows and
accordingly the Company continues to present its financial statements
on a "Going Concern" basis.
7. The Board of Directors in its meetings held on January 10, 2013
and February 9, 2013 approved a scheme of arrangement for demerger of
the "Chennai Car Plant" of the Company to its wholly owned subsidiary
namely Hindustan Motor Finance Corporation Limited w.e.f. April 1,
2012. The scheme is subject to requisite approvals, including sanction
of the High Court. Pending the same, no accounting adjustment thereof
has been made in the financial statements. The following statement
shows the revenue and expenses of discontinuing operations:
8. The accounting year 2012-13 has been extended by six months till
September 30, 2013 and as such, current period''s figures being for
eighteen months are not comparable with previous period''s figures being
for twelve months.
9. Previous year''s figures have been regrouped / rearranged wherever
necessary.
Mar 31, 2012
Nature of Operation:
Hindustan Motors Limited having its manufacturing facilities at
Uttarpara, Tiruvallur and Pithampur, is primarily engaged in the
manufacture and sale of Vehicles, Spare Parts of Vehicles, Steel
Products and Components. The Company is also engaged in Trading of
Vehicles and Spare Parts of Vehicles.
Basis of Preparation :
The financial statements have been prepared to comply in all material
respects with the accounting principles generally accepted in India,
including mandatory Accounting Standards notified under the Companies
(Accounting Standard) Rules, 2006 (as amended) under the historical
cost convention and on an accrual basis. The accounting policies, in
all material respects, have been consistently applied by the Company
and are consistent with those used in the previous year, except for
changes in the presentation and disclosures of the financial statements
as described in Note nos. 1(i) and 49 below.
a) Terms / Rights attached to Equity Shares
The Company has only one class of equity shares issued and subscribed
of face value of Rs 5 per share. Each holder of equity share is
entitled to one vote per share.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive assets of the Company remaining
after settlement of all liabilities. The distribution will be in
proportion to the number of equity shares held by the shareholders. In
the event of declaration of dividend by the Company, approval of
shareholders will be required in its Annual General Meeting. As the
Company is under Corporate Debt Restructuring Scheme, declaration of
dividend would also require approval of the Lenders.
b) During the year, the Company's promoter/promoter group companies
were allotted 1,18,00,000 Equity Shares of face value of Rs 5 each on
preferential basis, at a premium of Rs 7.25 per share on 12th March,
2012 which are locked in up to 11th March, 2015 i.e. for a period of
three years from the date of allotment. The existing holding of such
promoter/promoter group companies to the extent of 1,20,30,106 Equity
Shares are also locked in up to 25th September, 2012 i.e. for a period
of six months from the date of allotment.
a) Term Loans Rs 1758.66 lacs (Rs 1758.66 lacs) from the Financial
Institutions and Banks together with interest and other charges
thereon, are secured by a mortgage on a part of the Company's land with
other immovable assets thereon, both present and future, and by way of
a hypothecation charge over all the movable assets including book debts
of the Company. These charges along with those referred to in Note 8
rank pari- passu amongst various Financial Institutions and Banks and
are yet to be additionally secured by way of pledge of 45,50,000 equity
shares of HM Export Ltd., a subsidiary company.
b) Term Loans from Banks carry interest @ 10.897% p.a. on monthly rest.
These Loans are due for repayment during the year 2013-14 in equal
monthly installments.
c) Term Loans from Financial Institutions carry interest @11% p.a. on
quarterly rest. These Loans are due for repayment during the year
2013-14 in equal quarterly installments.
d) Sales Tax Deferral Credit is interest free and payable in 6
quarterly installments asper payment schedule, from April 2013 to July
2014. Amount of remaining installments range between < 50.00 lacs to Rs
279.00 lacs per quarter.
a) Cash Credits facilities from Banks Rs 268.25 lacs (Rs 302.45 lacs) and
buyers credit Rs 1493.24 lacs (Rs 1387.63 lacs) together with interest
and other charges thereon, are secured by a mortgage on a part of the
Company's land together with other immovable assets thereon, both
present and future, and by way of a hypothecation charge over all the
movable assets including book debts of the Company. Cash Credit is
repayable on demand and carries interest @ 10.897% p.a. on monthly
rest. Buyers credit is taken for period ranging from 3to6 months and
carries interest ranging from Libor plus 0.45 % to 3.5 % p.a.
In respect of non-cancellable operating leases taken by the Company,
the significant leasing agreements relating to certain premises are
renewable on expiry of mutually acceptable terms. Such lease payments
of Rs 37.36 lacs (Rs 72.97 lacs) are recognized in the Statement of
Profit and Loss as rent and the particulars of future lease payment are
as follows:
1. Contingent Liabilities not provided for in respect of :
(a) Claims & Government demands against the Company not acknowledged as
debts.
i) Excise Duty 6397.44 6291.39
ii) Sales Tax 726.12 802.25
iii) Customs Duty 370.72 373.50
iv) Service Tax 797.49 958.99
v) Others 740.01 734.60
The Company does not expect any major impact to arise out of the above
claims / demands. Against the above claims / demands, payments have
been made under protest and / or debts have been withheld by the
respective parties, to the extent of Rs 452.59 lacs (Rs 426.19 lacs).
Included in the above are contingent liabilities to the extent of Rs
1617.57 lacs (Rs 1638.17 lacs) relating to the pre transfer period of
the erstwhile Power Unit Plant and Power Products Division of the
Company, which were transferred to AVTEC Limited in June 2005. However,
demands to the extent of Rs 1171.54 lacs (Rs 1171.54 lacs) are covered by
counter guarantees by the customers.
(b) Outstanding Bank Guarantees for import of materials and other
accounts. 521.36 544.92
(c) Differential Duty on import of Capital goods under Export Promotion
Capital Goods Scheme is Rs 25.07 lacs (Rs 21.80 lacs).
(d) Bonus for the years 1963-64 to 1967-68 at Hindmotor Unit which is
under adjudication (amount indeterminate). The Company contends that no
liability exists in this regard under the Payment of Bonus Act, 1965.
(e) Demands for incremental Dearness Allowance during the years 2001 to
2007 at Hindmotor Unit which are under adjudication (amount not
ascertained). However, majority of the employees unions have filed
joint petition for withdrawal of the case.
(f) The Company is under Corporate Debt Restructuring Scheme. In view
of recent circular about "windfall profit / extra ordinary income"
triggering the right of recompense and the Company's sale of property
at Halol, Gujarat, the Lenders of the Company have quantified the claim
of recompense of interest at Rs 6554 lacs. The Company has requested the
Lenders to take a reasonable view based on Company's financial position
and past track record, which the Lenders have agreed to consider.
Pending final decision in the matter, the Company has paid a sum of Rs
1500 lacs to the Lenders in April 2011, which was accounted for under
Interest Expense during the year 2010-11. In view of the above, no
further provision there against is considered necessary by the
Management.
2. On 12th March, 2012 the Company has allotted 1,18,00,000 Warrants
to promoter/promoter group companies on preferential basis with each
Warrant convertible into one Equity Share of face value of Rs 5 each at
a premium of Rs 7.25 per share at the option of the Warrant holder at
any time within a period of 18 months from the date of allotment on
payment of balance consideration. The Company has already received 25%
consideration for such Warrants aggregating to Rs 361.38 lacs during the
year.
3. Derivative instruments, which are not intended for trading or
speculation but hedge for underlying transactions, Forward exchange
contract outstanding as at year end are as follows :
(i) JPY / USD of JPY 4569.50 lacs (JPY / USD of JPY 750 lacs).
(ii) USD / INR of USD 29.10 lacs (USD / INR of USD 22.25 lacs).
The above forward contracts have been taken to cover the exchange risk
on import payment liability of the Company.
B. Defined Benefit Plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets Gratuity on terms not
lower than the amount payable under the Payment of Gratuity Act, 1972.
The aforesaid scheme is funded with an Insurance Company. The following
table summarises the components of net benefit expenses recognised in
Statement of Profit & Loss and the funded status and amount recognised
in the Balance Sheet for the respective plan.
Note :
a) The estimates of future salary increase considered in actuarial
valuation, takes account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
b) The Company expects to contribute Rs 120.00 lacs (Rs 120.00 lacs) to
Gratuity fund in 2012-2013.
c) Experience adjustment on plan assets & liabilities has been
considered in the valuation report as certified by the actuary.
During the year, Mr. Manoj Jha resigned as Managing Director of the
Company with effect from 1st February, 2012. Pursuant to his resignation,
the post of Managing Director of the Company remained vacant for the
period from 1st February, 2012 to 31st March, 2012. The Company appointed
Mr. Uttam Bose as Managing Director with effect from 2nd April, 2012.
4. The Company had sold 314 acres of land at Uttarpara, West Bengal
in earlier years, in pursuance of a development agreement, after taking
prior approval from Government of West Bengal. As per the Order issued
by the Government of West Bengal, the Company has committed to make
capital expenditure of Rs 70 crores for revival of the Uttarpara Plant.
5. As the Company's business activity falls within a single primary
business segment. Viz; "Automobiles" and there is no reportable
secondary segment i.e. geographical segment, the disclosure requirement
of Accounting Standard-17 "Segment Reporting" as notified by Companies
(Accounting Standards) Rules, 2006 (as amended) is not applicable.
6. The operating results for the current year have been adversely
affected due to adverse exchange rate of US $ /Japanese Yen as well as
market conditions. The Management is in the process of taking necessary
measures to augment the net worth and to improve the operating results
including but not limited to preferential issue of capital to
promoter/promoter group companies, sale of non-core assets and
introduction of new variants of cars. The Management is confident that
these measures are expected to result in sustainable cash flows and
accordingly, the Company continues to present its financial statements
on a "Going Concern" basis.
7. Previous year figures :
During the year ended 31st March 2012, revised Schedule VI notified
under the Companies Act, 1956 became applicable to the Company, for
preparation and presentation of its financial statements. The adoption
of revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
it has significant impact on presentation and disclosures made in the
financial statements. The Company has also reclassified the previous
year figures in accordance with the requirements applicable in the
current year.
Mar 31, 2011
Nature of Operation:
Hindustan Motors Limited having its manufacturing facilities at
Uttarpara, Tiruvallur and Pithampur, is primarily engaged in the
manufacture & sale of Motor Vehicles, Spare Parts & accessories thereof
and Components, Steel Products etc. The Company is also engaged in
Trading of Motor vehicles, Spare parts and Components.
Rs. in lacs
March 31,2011 March 31,2010
2. Contingent Liabilities not
provided for in respect of :
(a) Claims & Government demands
against the Company not acknowledged as
debts.
i) Excise Duty 6291.39 5987.69
ii) Sales Tax 802.25 10408.09
iii) Customs Duty 373.50 362.87
iv) Service Tax 958.99 350.46
v) Others 734.60 837.30
The Company does not expect any major
impact to arise out of the above
claims/demands.
Against the above claims / demands,
payments have been made under
protest and / or debts have been
withheld by the respective parties, to
the extent of Rs. 426.19 lacs
(Rs. 2531.80 lacs).
Included in the above are contingent
liabilities to the extent of Rs.
1638.17 lacs (Rs. 1571.17 lacs) relating
to the pre transfer period of
the erstwhile Power Unit Plant and Power
Products Division of the Company, which
were transferred to AVTEC Limited in
June 2005. However, demands to the
extent of Rs. 1171.54 lacs
(Rs. 1171.54 lacs) are covered by
counter guarantees by the customers.
(b) Outstanding Bank Guarantees for
import of materials and other
accounts. 544.92 598.52
(c) Differential Duty on import of Capital goods under Export Promotion
Capital Goods Scheme is Rs. 21.80 lacs (Rs. 18.96 lacs).
(d) Bonus for the years 1963-64 to 1967-68 at Hindmotor unit which is
under adjudication (amount indeterminate). The Company contends that
no liability exists in this regard under the Payment of Bonus Act,
1965.
(e) Demands for incremental Dearness Allowance during the years 2001 to
2007 at Hindmotor Unit which are under adjudication (amount not
ascertained). However, majority of the employees unions have filed
joint petition for withdrawal of the case.
(f) The Company is under Corporate Debt Restructuring Scheme. In view
of recent circular about "windfall profit / extra ordinary income"
triggering the right of recompense and the Companys sale of property
at Halol, Gujarat, the Lenders of the Company have quantified the claim
of recompense of interest at Rs. 6554 lacs. The Company has requested
the Lenders to take a reasonable view based on Companys financial
position and past track record, which the Lenders have agreed to
consider. Pending final decision in the matter, the Company has paid a
sum of Rs. 1500 lacs to the Lenders in April 2011, which has been
accounted for under Interest expense, in these accounts. In view of the
above, no further provision there against is considered necessary by
the Management.
3. (a) Term Loans Rs. 1758.66 lacs (Rs. 1758.66 lacs) from the
Financial Institutions and Banks together with interest and other
charges thereon, are secured by a mortgage on a part of the Companys
land with other immovable assets thereon, both present and future and
by way of a hypothecation charge over all the movable assets including
book debts of the Company.
(b) Cash Credit facilities from Banks Rs. 302.45 lacs (Rs. 301.05
lacs), and buyers credit Rs. 1387.63 lacs (Rs. Nil) together with
interest and other charges thereon are secured by a mortgage on a part
of the Companys land together with other immovable assets thereon,
both present and future, and by way of a hypothecation charge over all
the movable assets including book debts of the Company.
(c) Short Term Loan Rs. Nil (Rs. 1009.56 lacs) from a Bank together
with interest thereon, is secured by way of a hypothecation charge over
all the movable assets including book debts of the Company.
(d) Short Term Loan Rs. 604.10 lacs (Rs. Nil) from a Bank together with
interest thereon, is secured by way of subservient charge on all the
movable fixed assets and the current assets of the Company.
(e) The Charges referred to in (a), (b) and (c) above rank pari-passu
amongst various Financial Institutions and Banks, and (a) & (b) are yet
to be additionally secured by way of pledge of 4550000 equity shares of
HM Export Ltd., a subsidiary company.
4. The break-up of net deferred tax liability as on 31st March 2011 is
as under :
In terms of accounting policy disclosed vide Note No. 1 (XVI) above,
Deferred tax assets of Rs. 2879.30 lacs (Rs. 3188.82 lacs) arising on
account of carried forward unabsorbed business losses have not been
recognised in he accounts.
5. Derivative contracts outstanding as at year end are as follows :
(i) In respect of cross currency JPY / USD of JPY 750 lacs (JPY / USD
of JPY 6400 lacs).
(ii) Forward cover of USD / INR of USD 22.25 lacs (USD / INR of USD 66
lacs).
The above derivative / forward contracts have been taken to cover the
exchange risk on import payment liability of the Company.
6. Consumption of Raw materials, stores and spare parts includes
profit / loss on sale thereof.
7. In certain cases, excise duty on items transferred from one
division to another for captive use has been accounted for based on
actual payments at provisional rates. Additional liability, if any, in
this regard will be accounted for on determination of the final rates,
but it will have no impact on the Companys profitability, since the
same will be claimable as Cenvat benefit by the transferee unit.
8. Excise duty on stocks represents differential excise duty on
opening and closing inventories.
9. Shareholders of the Company have approved Capital reduction on
16th November, 2010 through postal ballot which was duly confirmed by
the Honble High Court at Calcutta vide its Order dated 15th December,
2010 and Certificate of Registration of the said Order was issued by
the Registrar of Companies, West Bengal on 11th January, 2011. Pursuant
to this, debit balance in Profit & Loss Account as on 31st March, 2010
has been reduced by Rs. 8375.88 lacs by reducing the paid up value of
the Equity Shares from Rs. 10/- each to Rs. 5/- each with effect from
11th January, 2011 resulting in reduction of Rs. 8058.60 lacs in the
Subscribed and Paid up Equity Share Capital from Rs. 16117.20 lacs
(16,11,71,993 Equity Shares of Rs. 10/- each) to Rs. 8058.60 lacs
(16,11,71,993 Equity Shares of Rs. 5/- each) and adjusting the
Securities Premium Account to the extent of Rs. 317.28 lacs.
10. The movement in Provisions for Warranties during the year is as
follows:
A Provision is recognized for expected warranty claims on products
based on managements estimate of present obligation in this regard
during the warranty period, computed on the basis of past experience of
the level of repairs.
11. Disclosure under Accounting Standard-15 (Revised) on Employee
Benefits
B. Defined Benefit Plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets Gratuity on terms not
lower than the amount payable under the Payment of Gratuity Act, 1972.
The aforesaid scheme is funded with an Insurance Company. The following
table summarises the components of net benefit expenses recognised in
profit & loss account and the funded status and amount recognised in
the balance sheet for the respective plan.
Note:
a) The estimates of future salary increase considered in actuarial
valuation, takes account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market
b) The Company expects to contribute Rs. 120.00 lacs (Rs. 120.00 lacs)
to Gratuity fund in 2011-2012.
c) Experience adjustment on plan assets & liabilities has been
considered in the valuation report as certified by the actuary
12. Related Party Disclosures:
(a) Name of the related parties:
Subsidiary Companies HM Export Ltd.
Hindustan Motor Finance Corporation Ltd.
Hindustan Motors Ltd., U.S.A.
Associate Company AVTEC Limited
Key Management Personnel Mr. R. Santhanam,
Managing Director (Upto 18th May 2010)
Mr. Manoj Jha,
Managing Director (From 19th May 2010)
13. As the Companys business activity falls within a single primary
business segment. Viz; Automobiles in India, the disclosure
requirement of Accounting Standard-17 "Segment Reporting" as notified
by Companies (Accounting Standards) Rules, 2006(as amended) is not
applicable.
14. Quantitative Information :
(a) Includes excise duty, sales tax, export incentives, insurance
claims, transportation & delivery charges and after adjusting
incentives / discounts and returns against sales made in earlier years
Rs. 76.74 lacs
(Rs. 77.20 lacs) and including items capitalised Rs. 97.64 lacs (Rs.
298.27 lacs).
(b) The installed capacity of the plants is not balanced in different
manufacturing stages. As a result, in many stages, the capacity is more
whereas in some stages, it is less than that mentioned above.
(c) Includes Alloy Steel and Mild Steel Forgings & Grey Iron Castings.
(d) Including 1423 Tonnes (1746 Tonnes) used for own consumption and
for different end-products.
(e) At estimated sale value.
(f) Sales value of own manufactured spare parts being unascertainable,
the same have been grouped under this head.
(g) Installed Capacities are certified by the Management and accepted
as correct by the Auditors. (h) Licensed Capacity has not been given
above in view of the delicensing of various products.
15. Previous years figures (including those which are in brackets)
have been regrouped / rearranged wherever necessary
Mar 31, 2010
Nature of Operation:
Hindustan Motors Limited having its manufacturing facilities at
Uttarpara, Tiruvallur and Pithampur, is primarily engaged in the
manufacture & sale of Motor Vehicles, Spare Parts & accessories thereof
and Components, Steel Products etc. The Company is also engaged in
Engineering Services, Trading of Motor vehicles, Spare parts and
Components.
Rupees in lacs
March 31,2010 March 31, 2009
2. Contingent Liabilities not
provided for in respect of :
(a) Claims & Government demands
against the Company not
acknowledged as debts.
i) Excise Duty 5987.69 4619.53
ii) Sales Tax 10408.09 9311.94
iii) Customs Duty 362.87 409.69
iv) Others 1187.76 985.82
The Company does not expect any major impact to arise out of the above
claims/demands.
Against the above claims / demands, payments have been made under
protest and / or debts have been withheld by the respective parties, to
the extent of Rs.2531.80 lacs (Rs. 2565.31 lacs).
Included in the above are contingent liabilities to the extent of
Rs.1571.17 lacs (Rs. 1604.07 lacs) relating to the pre transfer period
of the erstwhile Power Unit Plant and Power Products Division of the
Company, which were transferred to AVTEC Limited in June 2005. However,
demands to the extent of Rs.1171.54 lacs (Rs.1171.54 lacs) are covered
by counter guarantees by the customers.
(c) Duty on import of Capital goods under Export Promotion Capital
Goods Scheme is Rs.18.96 lacs (Rs.l6.481acs).
(d) Bonus for the years 1963-64 to 1967-68 at Hindmotor unit which is
under adjudication (amount indeterminate)! The Company contends that no
liability exists in this regard under the Payment of Bonus Act, 1965.
(e) Demands for incremental Dearness Allowance during the years 2001 to
2007 at Hindmotor Unit which are under adjudication (amount not
ascertained) However, majority of the employees unions have filed joint
petition for withdrawal of the case.
3. (a) Term Loans Rs.1758.66 lacs (Rs. 3314.11 lacs) from the
Financial Institutions and Banks together with interest and other
charges thereon, are secured by a mortgage of a part of the Companys
land with other immovable assets thereon, both present and future, and
by way of a hypothecation charge over all the movable assets including
book debts of the Company.
(b) Cash Credit facilities from Banks Rs.301.05 lacs ( Rs.729.07 lacs
), together with interest and other charges thereon, are secured by a
mortgage of a part of the Companys land together with other immovable
assets thereon, both present and future and by way of a hypothecation
charge over all the movable assets including book debts of the Company.
(c) Short Term Loan Rs.1009.56 lacs (Rs.Nil) from a Bank together with
interest thereon, is secured by way of a hypothecation charge over all
the movable assets including book debts of the Company.
(d) The Charges referred to in (a), (b) and (c) above rank pari passu
amongst various Financial Institutions andBanks.
4. The Companys agreement with workmen of Hindmotor unit has expired
on 31st March, 2003. The Companys liability, if any, towards
additional salaries / wages, being presently^ascertainable, would be
accounted for after finalisation of the said agreement.
5. Total Derivative contracts in respect of cross currency forward
covers of JPÃÂ¥ 6400 lacs (JPÃÂ¥ 1680 lacs) are outstanding at the balance
sheet date.
6. Finance Lease agreement for assets valuing Rs.45.11 Lacs has
already expired. However these assets are yet to be transferred to the
Company by the lessor pending compliance of necessary formalities.
7. Consumption of Raw materials, stores and spare parts includes
profit / loss on sale thereof.
8. In certain cases, excise duty on items transferred from one
division to another for captive use has been accounted for based on
actual payments at provisional rates. Additional liability, if any, in
this regard will be accounted for on determination of the final rates,
but it will have no impact on the Companys profitability, since the
same will be claimable as Cenvat benefit by the transferee unit.
9. Excise duty on stocks represents differential excise duty on
opening and closing inventories.
10. In terms of a Development Agreement entered by the Company, the
Company has duly transferred the balance land measuring 62.791 acres
(62.80 acres ) at Hindmotor by handing over physical possession thereof
against payment to thl developer, and profit of Rs 5136.58 lacs ( Rs.
5631.75 lacs ) thereon has been included under The head "Other Income"
in Schedule 15.
The Company has given a non-compete undertaking to the developer for a
period of five years from the date of agreement or three years from the
date of the completion of the development of the property, whichever is
earlier, for which it would receive non-compete fee @ 4 % of the sale
proceeds of the developed property as and when sold by the developer.
11. Related Party Disclosures:
(a) Name of the related parties:
Subsidiary Companies HM Export Ltd.
Hindustan Motor Finance Corporation Ltd.
Hindustan Motors Ltd., U.S.A.
Associate Company AVTEC Limited
Key Management Personnel Mr. R. Santhanam, Managing Director
12. Previous years figures (including those which are in brackets)
have been regrouped / rearranged wherever necessary.