Mar 31, 2022
(iii) Basis of measurement
Minda Corporation Limited (the ''Company'') is a company domiciled in India, with its registered office situated at A-15, Phase -1 Ashok Vihar, Delhi - 110052. The principal place of business is 5th Floor, Plot no-404/405, Sector -20, Udyog Vihar, Phase-III, Gurugram, Haryana, 122016. The Company has been incorporated under the provisions of Indian Companies Act, 1956 and its equity shares are listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The Company is primarily involved in manufacturing of Automobile Components and Parts thereof.
Pursuant to the Scheme of Amalgamation (''Scheme'') under the provisions of Section 230 to 232 of the Companies Act, 2013, for amalgamation of Minda SAI Limited, Minda Automotive Solutions Limited, Minda Management Services Limited, Minda Autoelektrik Limited and Minda Telematics and Electric Mobility Solutions Private Limited (formerly EI Labs India Private Limited) (together referred to as âtransferor companiesâ), into Minda Corporation Limited (âTransferee Companyâ) as approved by the Hon''ble National Company Law Tribunal vide its order dated 19 July 2019, all the assets, liabilities, reserves and surplus of the transferor companies have been transferred to and vested in the Company without any consideration.
The financial statements were authorized for issue by the Company''s Board of Directors on 17 May 2022.
2. Significant Accounting Policies
The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III) as amended from time to time and other relevant provisions of the Act (âfinancial statementsâ).
The management has determined the currency of the primary economic environment in which the Company operates i.e., functional currency, to be Indian Rupees (Rs.). All amounts have been rounded-off to the nearest million Rupees unless otherwise indicated. Further, at some places ''-'' are also put up to values below Rs. 500,000 to make financials in round off to Rupees in millions.
These Standalone Financial Statements have been prepared on a historical cost basis, except for the following items which have been measured at fair value or revalued amount:
Items |
Measurement Basis |
Certain financial assets and liabilities (including derivatives instruments) |
Fair Value |
Liabilities for equity-settled share-based payment Arrangements |
Fair Value |
Net defined benefit (asset)/ liability |
Fair value of plan assets less present value of defined benefit obligations |
In preparation of these standalone financial statements, management has made judgements, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognized prospectively. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the Standalone Financial Statements is included in the following notes.
⢠Recognition and estimation of tax expense including deferred tax- Note 2.19
⢠Estimated impairment of financial and nonfinancial assets - Note 2B(viii) and Note 2.1
⢠Assessment of useful life of property, plant and equipment and intangible asset - Note 2B(iv) and Note 2B(v)
⢠Estimation of obligations relating to employee benefits: key actuarial assumptions -Note 2.20.2
⢠Valuation of Inventories - Note 2B(vii)
⢠Share based payments - Note 2.41
⢠Recognition and measurement of provisions and contingency: Key assumption about the likelihood and magnitude of an outflow of resources - Note 2.39A, Note 2.20 and Note 2.28
⢠Fair value measurement - Note 2.49
A number of accounting policies and disclosures require measurement of fair values, for both financial and nonfinancial assets and liabilities.
Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Further information about the assumptions made in measuring fair values is included in Note 2.49 - Financial instruments.
i) Current and non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is classified as current when it satisfies any of the following criteria:
a) it is expects to be realise the assets, or intends to sell or consume it, in its normal operating cycle;
b) it hold the asset primarily for the purpose of trading;
c) it is expects to realise the asset within 12 months after the reporting period; or
d) the asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.
Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the following criteria:
a) it is expects to settle in its normal operating cycle;
b) it hold primarily for the purpose of trading;
c) the liability is due to be settled within 12 months after the reporting period; or
d) i t does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of transactions and monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, are translated at the balance sheet date exchange rates. Foreign exchange gains and losses resulting from settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the balance sheet date exchange rates are generally recognised in standalone statement of profit and loss.
Foreign exchange differences regarded as an adjustment to borrowing cost are presented in the standalone statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the standalone statement of profit and loss on a net basis within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equity instruments (other than investment in subsidiaries and joint ventures) held at fair value through profit or loss are recognized in standalone statement of profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equity investments (other than investment in subsidiaries and joint ventures) classified as FVOCI are recognized in other comprehensive income.
The derivative financial instruments such as forward exchange contracts to hedge its risk associated with foreign currency fluctuation are stated at fair value. Any gains or losses arising from changes in fair value are taken directly to the standalone statement of profit or loss.
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
However, Goods and Services Tax (GST) is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognized.
The Company recognized revenue when (or as) a performance obligation was satisfied, i.e. when ''control'' of the goods underlying the particular performance obligation were transferred to the customer.
Further, revenue from sale of goods is recognized based on a 5-Step Methodology which is as follows:
Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligation in contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.
Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.
Unearned or deferred revenue is recognised when there is billings in excess of revenues.
Contracts are subject to modification to account for changes in contract specification and requirements. The Company reviews modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new performance obligation, or transaction price of an existing obligation could undergo a change. In the event transaction price is revised for existing obligation, a cumulative adjustment is accounted for.
a) The Company''s contracts with customers could include promises to transfer products to a customer. The Company assesses the products promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables.
b) Judgement is also required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, price concessions and incentives. The transaction price is also adjusted for the effects of the time value of money if the contract includes a significant financing component. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period.
The Company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations.
c) The Company uses judgement to determine an appropriate standalone selling price for a performance obligation. The Company allocates the transaction price to each performance obligation on the basis of the relative standalone selling price of each distinct product or service promised in the contract.
d) The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc.
Export incentive entitlements are recognized as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made, and where there is no uncertainty regarding the ultimate collection of the relevant export proceeds.
Service income including job work income is recognized as per the terms of contracts with customers when the related services are rendered. Income from royalty, technical know-how arrangements is recognized on an accrual basis in accordance with the terms of the relevant agreement.
Dividend income is recognized when the right to receive the income is established. Income from interest on deposits, loans and interest bearing securities is recognized using the effective interest method.
IItem of property, plant and equipment are carried at cost, which includes capitalized borrowing costs, less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment includes its purchase price, import duties and nonrefundable purchase taxes, duties or levies, after deducting trade discounts and rebates, any other directly attributable cost of bringing the property, plant and equipment to its working condition for its intended use and estimated cost of dismantling and removing the items and restoring the site on which it is located. The present value of the expected cost for the decommissioning of an property, plant and equipment after its use is included in the cost of the respective property, plant and equipment if the recognition criteria for a provision are met. Refer to note 2(A) (iv) regarding significant accounting judgements, estimates and assumptions. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labor, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
An item of property, plant and equipment and any significant part initially recognized is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the property, plant and equipment (calculated as the difference between the net disposal proceeds and the carrying amount of the property, plant and equipment) is included in the Standalone Statement of Profit and Loss when the property, plant and equipment is derecognized.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
A property, plant and equipment is derecognized from the Standalone Financial Statements on disposal or when no further benefit is expected from its use and disposal. Property, plant and equipment retired from active use and held for disposal are generally stated at the lower of their net book value and net realizable value. Any gain or losses arising disposal of property, plant and equipment is recognized in the Standalone Statement of Profit and Loss.
Once classified as held-for-sale, property, plant and equipment are no longer depreciated.
Gains or losses arising from de-recognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the property, plant and equipment and are recognized in the Standalone Statement of Profit and Loss when the property, plant and equipment is derecognized.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Advance paid towards the acquisition of property, plant and equipment are shown under non-current asset and property, plant and equipment under construction are disclosed as capital work-inprogress. Capital work in progress includes cost of property, plant and equipment at site, direct and indirect expenditure incidental to construction and interest on the funds deployed for construction.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. The costs of the day to day servicing of property, plant and equipment are recognised in the standalone statement of profit and loss as incurred.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized in the standalone statement of profit and loss.
Depreciation on property, plant and equipment is provided on the straight-line method at the rates reflective of the estimated useful life of the assets estimated by the management.
The identified components are depreciated over their useful life, the remaining property, plant and equipment is depreciated over the life of the principal property, plant and equipment. Leasehold improvements are depreciated over the shorter of the lease term and their useful lives. Freehold land is not depreciated
The Company has used the following rates to provide depreciation.
Property, plant and equipment category |
Rates estimated by Company |
As per Schedule II |
Factory Buildings |
30 years |
30 Years |
Plant and Machinery |
5 - 15 years |
15 years |
Tools |
5 years |
15 years |
Electrical Installations |
10 years |
10 years |
Office Equipment |
5 years |
5 years |
Furniture & Fixtures |
10 years |
10 years |
Computer hardware |
3 years |
3 years |
Vehicles |
4 Years |
8 Years |
Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted, if appropriate. Based on technical evaluation and consequent advice, the management believes that its estimates of useful lives as given above best represent the period over which management expects to use these property, plant and equipment.
Depreciation is calculated using the straight-line method to allocate the cost of the property, plant and equipment, net of their residual values, over the estimated useful lives.
Residual value considered as 5% for all the property, plant & equipment.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (up to) the date on which property, plant and equipment is ready for use (disposed of).
Intangible assets comprise of goodwill, computer software, brands and trademarks acquired for internal use and are recorded at the consideration paid for acquisition of such assets are carried at cost less accumulated amortization and accumulated impairment, if any. Goodwill represents the excess of purchase consideration over the fair value of net assets/liabilities purchased.
The useful lives of intangible assets are assessed as either finite or indefinite
Raw materials, |
Cost is determined |
components and stores |
on weighted average |
and spares and stock in trade |
basis. |
Finished goods : |
Material cost plus appropriate share of labour and production overheads. |
Material cost plus appropriate share of the labour and |
|
Work in progress : |
production overheads depending upon the stage of completion, wherever applicable. |
Tools, moulds and dies : |
Material cost plus appropriate share of the labour and production overheads, depending upon the stage of completion. |
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Gains and losses on disposal of an item of intangible assets are determined by comparing the proceeds from disposal with the carrying amount of intangible assets and are recognized in the standalone statement of profit and loss.
The intangible (except goodwill) assets are amortised over the period of five years, which in the management''s view represent the economic useful life. Amortisation expense is charged on a pro-rata basis for assets purchased during the year. The amortization period and the amortization method for an intangible asset are reviewed at the end of each reporting period. Goodwill is tested for impairment on an annual basis.
Intangible assets are derecognised on disposal or when no future economic benefits are expected from its use and disposal. Losses arising from retirement and gains or losses arising from disposal of intangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the standalone statement of profit and loss.
Borrowing costs that are directly attributable to the acquisition, construction or development of qualifying assets are capitalized. Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Other borrowing costs are recognized as an expense in the standalone statement of profit and loss in the year in which they are incurred
Inventories which includes raw materials, components, stores, work in progress, finished goods and spares
are valued at lower of cost and net realizable value. However, raw materials, components and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost or in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realisable value. The basis of determination of cost for various categories of inventory is as follows:
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. The net realizable value of work-in-progress is determined with reference to the selling prices of related finished products.
The comparison of cost and net realizable value is made on an item-by-item basis.
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest Group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
An asset''s recoverable amount is the higher of an individual asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
The Company''s corporate assets do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses, if any, are recognized in the Standalone Statement of Profit and Loss. Impairment losses of continuing operations, including impairment on inventories, are recognized in the statement of profit and loss.
In regard to assets for which impairment loss has been recognized in prior period, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
Goodwill is tested for impairment annually at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate:
- The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
- Its intention to complete and its ability and intention to use or sell the asset
- How the asset will generate future economic benefits
- The availability of resources to complete the asset
- The ability to measure reliably the expenditure during development
CSR expenditure incurred by the Company is charged to the Standalone Statement of the Profit and Loss.
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all the attached conditions.
Government grant relating to income are deferred and recognised in the standalone statement of profit and loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income other than export benefits which are accounted for in the year of export based on eligibility and there is no uncertainty in receiving the same.
Government grants relating to purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to the standalone statement of profit and loss on a straight line basis over the expected lives of the related assets and presented within income.
When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual instalments.
The Company recognizes a liability to make cash distributions to equity holders when the distribution
is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.
All employee benefits payable/available within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and bonus etc., are recognized in the standalone statement of profit and loss in the period in which the employee renders the related service on an undiscounted basis.
Provident fund: Eligible employees receive benefits from the provident fund, which is a defined contribution plan. Both the employees and the employer make monthly contributions to the provident fund (with Regional Provident Fund Commissioner) equal to specified percentage of the covered employee''s basic salary. The Company has no further obligations under the plan beyond its monthly contributions.
Gratuity: The Company provide for gratuity, a defined benefit retirement Plan (the âGratuity Planâ) covering eligible employees. The Plan provides payment to vested employees at retirement, death or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment with the Company. Liabilities related to the Gratuity Plan are determined by actuarial valuation as at the balance sheet date.
Compensated absence: : Un-availed leaves for the year are accumulated and allowed to carried over to the next year and are within service period of the employees in accordance with the service rules of the Company. Provision for compensated absence is made by the Indian entities based on the amount payable as per the above service, based on actuarial valuation as at the balance sheet date.
Actuarial valuation:
The liability in respect of all defined benefit plans and other long term employee benefit is accrued in the
books of account on the basis of actuarial valuation carried out by an independent actuary primarily using the Projected Unit Credit Method, which recognizes each year of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation. The obligation is measured at the present value of estimated future cash flows.
The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the Balance Sheet date, having maturity periods approximating to the terms of related obligations.
Actuarial gains and losses are recognized immediately in the Standalone Statement of profit and loss. Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in ''other equity'' in the standalone statement of Changes in Equity and in the standalone Balance Sheet.
xiv) Accounting for warranty
Warranty costs are estimated by the Company on the basis of past experience of costs. Provision is made for the estimated liability in respect of warranty costs in the year of recognition of revenue and is included in the standalone statement of profit and loss. The estimates used for accounting for warranty costs are reviewed periodically and revisions are made, as and when required.
xv) Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
Right of Use Asset
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (p) Impairment of non-financial assets. Note 2B(viii) Impairment of non-financial assets
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset is classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
xvi) Investments
Investments that are readily realisable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as non-current investments and are valued at historical cost.
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. The Company is primarily engaged in the manufacturing and assembling of safety and security systems and its associated
components for the automotive industry. All operating segments'' operating results are reviewed regularly by the Company''s Chief Operating Decision Maker (âCODMâ) to make decisions about resources to be allocated to the segments and assess their performance. CODM believes that these are governed by same set of risk and returns hence CODM reviews as one balance sheet component.
Income tax expense comprises current and deferred tax. It is recognised in standalone statement of profit and loss except to the extent that it relates to items recognised directly in equity.
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Company operates and generates taxable income.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
When the Company concludes that it is not probable that the taxation authority will accept an uncertain tax treatment, the Company reflects the effect of uncertainty in determining the related taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates. The Company reflects the effect of uncertainty for each uncertain tax treatment by using the most likely amount method.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets unrecognised or recognised, are reviewed at each reporting date and are recognised / reduced to the extent that it is probable / no longer probable respectively that the related tax benefit will be realised. Significant management judgement is required to determine the probability of deferred tax asset. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
The criteria for recognising deferred tax assets arising from the carryforward of unused tax losses and tax credits are the same as the criteria for recognising deferred tax assets arising from deductible temporary differences. However, the existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, the Company recognises a deferred tax asset arising from unused tax losses or tax credits only to the extent that the entity has
sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilised.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Basic earnings/ (loss) per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue, if any, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings/ (loss) per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares except where the results will be anti-dilutive.
The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors
A provision is created when there is a present obligation as a result of a past event and it is more likely than not that there will be an outflow of resources embodying economic benefits to settle such obligation and the amount of such obligation can be reliably estimated. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value money and risks specific to the liability. When discounting is used, the increase in the provision due to passage of time is recognised as finance cost. These are reviewed at each Balance Sheet date and adjusted to reflect current management estimates.
Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events not wholly within the control of the Company. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Provision for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognized when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.
The Company does not recognise assets which are of contingent nature until there is virtual certainty of realisability of such assets. However, subsequently, if it becomes virtually certain that an inflow of economic benefits will arise, asset and related income is recognised in the standalone financial statements of the period in which the change occurs.
xxi) Cash and cash equivalents
Cash and cash equivalents comprise cash balances on hand, cash balance with bank and cheques in hands and highly liquid investments with maturity period of three months or less from the date of investment.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash at bank, cash on hand and cheques on hand as they are considered an integral part of the Company''s cash management.
xxii) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Trade receivables and debt securities are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (''FVTPL''), transaction costs that are directly attributable to its acquisition or issue
On initial recognition, a financial asset is classified as measured at:
- Amortized cost;
- Fair Value through Other Comprehensive Income (''FVOCI'') - debt instrument;
- FVOCI - equity investment; or
- FVTPL
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- t he contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables. Company has recognized financial assets viz. security deposit, trade receivables, employee advances at amortized cost.
A debt instrument is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the Standalone Statement of Profit and Loss. On de-recognition of the asset, cumulative gain or loss previously recognized in OCI is re-classified from the equity to Standalone Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''s fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies are cla
Mar 31, 2018
i) Foreign currency transactions and translations
Functional and presentation currency
The management has determined the currency of the primary economic environment in which the Company operates i.e., functional currency, to be Indian Rupees (â). All amount have been rounded-off to the nearest million Rupees unless otherwise indicated. Further, at some places â-â are also put up to value below Rs.500,000 to make financial in round off to Rupees in millions.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of transactions and monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, are translated at the balance sheet date exchange rates. Foreign exchange gains and losses resulting from settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the balance sheet date exchange rates are generally recognised in statement of profit and loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equity instruments (other than investment in subsidiaries and joint ventures) held at fair value through profit or loss are recognised in statement of profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equity investments (other than investment in subsidiaries and joint ventures) classified as FVOCI are recognised in other comprehensive income.
The derivative financial instruments such as forward exchange contracts to hedge its risk associated with foreign currency fluctuation are stated at fair value. Any gains or losses arising from changes in fair value are taken directly to the statement of profit or loss.
ii) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criterion must also be met before revenue is recognised:
Sale of goods
Sales include sale of manufactured goods, traded goods, tools, moulds and dies. Revenue is recognised on transfer of significant risks and rewards of ownership to the customers. and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of products as well as regarding its collection. Sale of goods is inclusive of excise duty and is net of sales tax, GST, value added tax, applicable discounts and allowances and sales returns, if any.
Export benefits
Export incentive entitlements are recognised as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made, and where there is no uncertainty regarding the ultimate collection of the relevant export proceeds.
Other operating income
Service income including job work income is recognised as per the terms of contracts with customers when the related services are rendered. Income from royalty, technical knowhow arrangements is recognised on an accrual basis in accordance with the terms of the relevant agreement.
Dividend and interest income
Dividend income is recognised when the right to receive the income is established. Income from interest on deposits, loans and interest bearing securities is recognised using the effective interest method.
iii) Property, plant and equipment
(a) Recognition and measurement
Item of property, plant and equipment are carried at cost of acquisition or construction less accumulated depreciation. Cost comprises the purchase price and any cost attributable for bringing the asset to its working condition for its intended use.
Advance paid towards the acquisition of fixed assets are shown under non-current asset and tangible fixed assets under construction are disclosed as capital work-in-progress. Capital work in progress includes cost of assets at site, direct and indirect expenditure incidental to construction and interest on the funds deployed for construction.
(b) Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as at April 1,2016 measured as per the previous GAAP and use that carrying value as the deemed cost of property, plant and equipment.
(c) Subsequent costs
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. The costs of the day to day servicing of property, plant and equipment are recognised in the standalone statement of profit and loss as incurred.
(d) Derecognition
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised in the standalone statement of profit and loss.
(e) Depreciation
Depreciation on property, plant and equipment is provided on the straight-line method at the rates reflective of the estimated useful life of the assets estimated by the management.
Depreciation on addition to property plant and equipment is provided on pro-rata basis from the date the assets are ready to use. Depreciation on sale/deduction from property, plant and equipment is provided upto the date of sale, deduction as the case may be.
Premium paid on leasehold land and site development is amortised over the period of lease. Leasehold improvements are amortised on the straight-line basis over the lower of primary period of lease.
Depreciation on leased assets is in line with the depreciation policy of the Company and is depreciated over the lower of useful life of such assets and the lease period.
iv) Intangible Asset
a) Recognition and measurement
Intangible assets comprises computer software and patents at cost less accumulated amortization and accumulated impairment, if any.
Cost of intangible assets under development as at the reporting date are disclosed as intangible assets under development.
b) Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognised as at April 1,2016 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.
c) Subsequent costs
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
(d) Derecognition
Gains and losses on disposal of an item of intangible assets are determined by comparing the proceeds from disposal with the carrying amount of intangible assets and are recognised in the standalone statement of profit and loss.
(e) Amortisation
The intangible assets are amortised over the period of five years, which in the managementâs view represent the economic useful life. Amortisation expense is charged on a pro-rata basis for assets purchased during the year. The amortization period and the amortization method for an intangible asset are reviewed at the end of each reporting period.
v) Borrowing Cost
Borrowing costs that are directly attributable to the acquisition, construction or development of qualifying assets are capitalized. Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Other borrowing costs are recognised as an expense in the standalone statement of profit and loss in the year in which they are incurred.
vi) Inventories
Inventories are valued at lower of cost and net realizable value. The basis of determination of cost for various categories of inventory is as follows:
vii) Impairment of non-financial assets
The carrying amounts of the Companyâs non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 âImpairment of Assetsâ. If any such indication exists, then the assetâs recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ, or âCGUâ).
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are reduced from the carrying amounts of the assets of the CGU.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognised.
viii) research and Development
Revenue expenditure on research is expensed off under the respective heads of account in the year in which it is incurred.
Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses, if any. Property, plant and equipment used for research and development are depreciated in accordance with the Companyâs policy as stated above. Expenditure incurred at development phase, where it is reasonably certain that outcome of development will be commercially exploited to yield economic benefits to the Company, is considered as an intangible asset and amortized over the estimated life of the assets.
ix) Government Grant and subsidies
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all the attached conditions.
Government grant relating to income are deferred and recognised in the standalone statement of profit and loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income other than export benefits which are accounted for in the year of export based on eligibility and there is no uncertainty in receiving the same.
Government grants relating to purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to the standalone statement of profit and loss on a straight line basis over the expected lifes of the related assets and presented within income.
x) Employee Benefits Short - term employee benefits
All employee benefits payable / available within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and bonus etc., are recognised in the standalone statement of profit and loss in the period in which the employee renders the related service.
Defined contribution plan:
Provident fund: Eligible employees of the Indian entities receive benefits from the provident fund, which is a defined contribution plan. Both the employees and the Indian entity make monthly contributions to the provident fund (with Regional Provident Fund Commissioner) equal to specified percentage of the covered employeeâs basic salary. The Company has no further obligations under the plan beyond its monthly contributions.
Eligible employees of certain overseas entities receive benefits from the social security contribution plans, which is a defined contribution plan. These entities have no further obligations under the plan beyond its monthly contributions.
Defined benefit plan:
Gratuity: The Indian entities provide for gratuity, a defined benefit retirement Plan (the âGratuity Planâ) covering eligible employees. The Plan provides payment to vested employees at retirement, death or termination of employment, of an amount based on the respective employeeâs salary and the tenure of employment with the Company. Liabilities related to the Gratuity Plan are determined by actuarial valuation as at the balance sheet date.
Other long term employee benefit:
Compensated absence: Un-availed leaves for the year are accumulated and allowed to carried over to the next year and are within service period of the employees in accordance with the service rules of the Company. Provision for compensated absence is made by the Indian entities based on the amount payable as per the above service, based on actuarial valuation as at the balance sheet date.
Other employee benefit plans:
Actuarial valuation:
The liability in respect of all defined benefit plans and other long term employee benefit is accrued in the books of account on the basis of actuarial valuation carried out by an independent actuary primarily using the Projected Unit Credit Method, which recognizes each year of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation. The obligation is measured at the present value of estimated future cash flows.
The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the Balance Sheet date, having maturity periods approximating to the terms of related obligations.
Actuarial gains and losses are recognised immediately in the Standalone Statement of profit and loss. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in âother equityâ in the standalone statement of Changes in Equity and in the standalone Balance Sheet.
xi) accounting for warranty
Warranty costs are estimated by the Company on the basis of technical evaluation and past experience of costs. Provision is made for the estimated liability in respect of warranty costs in the year of recognition of revenue and is included in the standalone statement of profit and loss. The estimates used for accounting for warranty costs are reviewed periodically and revisions are made, as and when required.
xii) Leases
Leases are classified as finance leases whenever the terms of the lease, transfers substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
a) determining whether an arrangement contains a lease
For arrangements entered into prior to 1 April 2016, the Company has determined whether the arrangement contains lease on the basis of facts and circumstances existing on the date of transition.
At inception or on reassessment of the arrangement that contains a lease, the payments and other consideration required by such an arrangement are separated into those for the lease and those for other elements on the basis of their relative fair values. If it is concluded for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. The liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the incremental borrowing rate.
Where the Company is lessee
Assets taken on lease by the Company in the capacity of a lessee, where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalized at the inception of the lease at the lower of the fair value or the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognised as operating leases. Lease rentals under operating leases are recognised in the standalone statement of profit and loss on a straight line basis.
Where the Company is lessor
Leases in which the Company transfers substantially all the risks and benefits of ownership of the asset are classified as finance leases. Assets given under finance lease are recognised as a receivable at an amount equal to the net investments in the lease.
After initial recognition, the Company apportions lease rentals between the principal repayment and interest income so as to achieve a constant periodic rate of return on the net investment outstanding in respect of the finance lease. The interest income is recognised in the standalone statement of profit and loss. Initial direct costs such as legal costs, brokerage costs etc, are recognised immediately in the standalone statement of profit and loss.
Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on operating lease is recognised in the standalone statement of profit and loss on a straight line basis over the lease term. Costs including depreciation are recognised as an expense in the standalone statement of profit and loss. Initial direct costs such as legal costs, brokerage costs etc, are recognised immediately in the standalone statement of profit and loss.
xiii) Investments
Investments that are readily realisable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as noncurrent investments. However, that part of long term investments which is expected to be realised within 12 months after the reporting date is also presented under âcurrent assetsâ as âcurrent portion of long term investmentsâ in consonance with the current/ non-current classification scheme.
Investments in subsidiaries
Investments in subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and Loss.
Upon first-time adoption of Ind AS, the Company has elected to measure its investments in subsidiaries at the previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS i.e., 1 April 2016.
xiv) Income taxes
Income Income tax expense comprises current and deferred tax. It is recognised in standalone statement of profit and loss except to the extent that it relates to items recognised directly in equity.
(a) Current tax
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted and as applicable at the reporting date, and any adjustment to tax payable in respect of previous years.
(b) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets unrecognised or recognised, are reviewed at each reporting date and are recognised / reduced to the extent that it is probable / no longer probable respectively that the related tax benefit will be realised. Significant management judgement is required to determine the probability of deferred tax asset. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Minimum Alternative Tax (âMATâ) credit entitlement under the provisions of the Income-tax Act, 1961 is recognised as a deferred tax asset when it is probable that future economic benefit associated with it in the form of adjustment of future income tax liability, will flow to the Company and the asset can be measured reliably. MAT credit entitlement is set off to the extent allowed in the year in which the Company becomes liable to pay income taxes at the enacted tax rates. MAT credit entitlement is reviewed at each reporting date and is recognised to the extent that is probable that future taxable profits will be available against which they can be used. MAT credit entitlement has been presented as deferred tax asset in consolidated balance sheet. Significant management judgement is required to determine the probability of recognition of MAT credit entitlement.
Deferred tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
xv) Earnings per Share
Basic earnings/ (loss) per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue and share split. For the purpose of calculating diluted earnings/ (loss) per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed converted as of the beginning of the period, unless they have been issued at a later date.
The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.
xvi) Provisions, contingent liabilities and contingent assets
A provision is created when there is a present obligation as a result of a past event and it is more likely than not that there will be an outflow of resources embodying economic benefits to settle such obligation and the amount of such obligation can be reliably estimated. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value money and risks specific to the liability. When discounting is used, the increase in the provision due to passage of time is recognised as finance cost. These are reviewed at each Balance Sheet date and adjusted to reflect current management estimates.
Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events not wholly within the control of the Company. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Provision for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.
The Company does not recognise assets which are of contingent nature until there is virtual certainty of realisability of such assets. However, subsequently, if it becomes virtually certain that an inflow of economic benefits will arise, asset and related income is recognised in the standalone financial statements of the period in which the change occurs.
xvii) Cash and cash equivalents
Cash and cash equivalents comprise cash balances on hand, cash balance with bank, and highly liquid investments with maturity period of three months or less from the date of investment.
xviii) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial recognition and measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at
- Amortised cost;
- Fair value through profit and loss (FVTPL)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.Financial assets are measured at FVTPL. This includes all derivatives financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirement to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
- the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether managementâs strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;
- how the performance of the portfolio is evaluated and reported to the Companyâs management;
- the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
- how managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
- the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Companyâs continuing recognition of the assets.
Financial Assets: Assessment whether contractual cash flows are solely payments of principal and interest.
For the purposes of this assessment, âprincipalâ is defined as the fair value of the financial asset on initial recognition. âInterestâ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:
- contingent events that would change the amount or timing of cash flows;
- terms that may adjust the contractual coupon rate, including variable interest rate features;
- prepayment and extension features; and
- terms that limit the Companyâs claim to cash flows from specified assets (e.g. non recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss.
Derecognition
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Derivative financial instruments and hedge accounting
The company holds derivative financial instruments such as foreign exchange forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss.
The Company designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates.
At inception of designated hedging relationships, the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
Compound financial instruments - convertible preference shares
Compound financial instruments issued by the Company comprise of convertible preference shares that can be converted to equity shares of the Company. Convertible preference shares are bifurcated into liability and equity components based on the terms of the contract.
The liability component of convertible preference shares is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of convertible preference shares is not remeasured subsequently.
Interest related to the liability component is recognised in Standalone Statement of Profit and Loss. On conversion, the liability component is reclassified to equity and no gain or loss is recognised.
Impairment of financial assets
The Company recognises loss allowances for expected credit losses on:
- financial assets measured at amortised cost;
At each reporting date, the Company assesses whether financial assets carried at amortised cost. A financial asset is âcredit-impairedâ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit- impaired includes the following observable data:
- significant financial difficulty of the borrower or issuer;
- a breach of contract such as a default or being past due for 90 days or more;
- the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;
- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
- the disappearance of an active market for a security because of financial difficulties.
The Company measures loss allowances at an amount equal to lifetime expected credit losses, except for the following, which are measured as 12 month expected credit losses:
- debt securities that are determined to have low credit risk at the reporting date; and
- other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.
Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit losses.
Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Group is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This include both quantitative and qualitative information and analysis, based on the Companyâs historical experience and informed credit assessment and including forward-looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.
The Company considers a financial asset to be in default when:
- the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realising security (if any is held); or
- the financial asset is 90 days or more past due.
The Company considers a debt security to have low credit risk when its credit risk rating is equivalent to âinvestment gradeâ e.g. BBB or higher as per rating agency [S&P and/ or CRISIL].
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive).
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write.off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Companyâs procedures for recovery of amounts due.
a. Employee stock option schemes
The Company has adopted the policy to account for Employees Welfare Trust as a legal entity separate from the company but as a subsidiary of the company. Any loan from the company to the trust is accounted for as a loan in accordance with its term. The cost is calculated based on the fair value method i.e. the excess of fair value of underlying equity shares as of the date of the grant of options over the exercise price of such options is regarded as employee compensation and in respect of the number of options that are expected to ultimately vest, such cost is recognised on a straight line basis over the period over which the employees would become unconditionally entitled to apply for the shares. The grant date fair value of options granted to employees of the Company is recognised as an employee expense, and those granted to employees of subsidiaries is considered as the Companyâs equity contribution and is added to the carrying value of investment in the respective subsidiaries, with a corresponding increase in share option outstanding account, over the period that the employees become unconditionally entitled to the options. The cost recognised at any date at least equals the fair value of the vested portion of the option at that date. Adjustment, if any, for difference in initial estimate for number of options that are expected to ultimately vest and related actual experience is recognised in the Statement of Profit and Loss of that period. In respect of vested options expire unexercised, the related cumulative cost is credited to the General Reserve. Note - 2.38.
The expense is recorded for each separately vesting portion of the award as if the award was, in substance, multiple awards. The increase in equity recognised in connection with share based payment transaction is presented as a separate component in equity under âemployee stock option outstanding accountâ. The amount recognised as an expense is adjusted to reflect the actual number of stock options that vest. For the option awards, grant date fair value is determined under the option-pricing model (BlackScholes Merton). Corresponding balance of a share based payment reserve is transferred to general reserve upon expiry of grants or upon exercise of stock options by an employee, as the Company is operating the Employee Stock Option schemes through Minda Corporation Ltd. Employee Stock Option Scheme Trust, which has purchased share from the company.
xix) recent accounting pronouncements
A. Ind AS 115- revenue from Contract with Customers: On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Ind AS 115, Revenue from Contract with Customers.
Ind AS 115, establishes a comprehensive framework for determining whether, how much and when revenue should be recognised. It replaces existing revenue recognition guidance, including Ind AS 18 Revenue. Ind
AS 115 is effective for annual periods beginning on or after 1 April 2018 and will be applied accordingly.
The Company has completed an initial assessment of the potential impact of the adoption of Ind AS 115 on accounting policies followed in its standalone financial statements. The quantitative impact of adoption of Ind AS 115 on the standalone financial statements in the period of initial application is not reasonably estimable as at present.
Sale of goods
For the sale of products, revenue is currently recognised when the goods are delivered to the customersâ premises, which is taken to be the point in time at which the customer accepts the goods and the related risks and rewards of ownership are transferred. Revenue is recognised at this point provided that the revenue and costs can be measured reliably, the recovery of the consideration is probable and there is no continuing management involvement with the goods.
Under Ind AS 115, revenue will be recognised when a customer obtains control of the goods.
Transition
The Company plans to apply Ind AS 115 using the cumulative effect method, with the effect of initially applying this standard recognised at the date of initial application (i.e. 1 April 2018) in retained earnings. As a result, the Company will not present relevant individual line items appearing under comparative period presentation.
B. Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:
On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.
Mar 31, 2017
. SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of accounting
These financial statements have been prepared and presented on a going concern basis, under the historical cost convention on an accrual basis of accounting and comply with the Indian Generally Accepted Accounting Principles (GAAP) and comply with the accounting standards, as prescribed by the Section 133 of the Companies Act, 2013 (''Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, other pronouncements of the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India to the extent applicable, as adopted consistently by the Company. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
1.2 Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities, at the end of the reporting period and the reported amounts of income and expenses during the reporting period. Examples of estimates amongst others, includes provisions of future obligations under employee benefit plans, the useful lives of fixed assets, provision for warranties and sales returns, customer claims, provision for price changes and impairment of assets. Actual result could differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in the current and future periods.
1.3 Current-non-current classification
All assets and liabilities are classified into current and noncurrent.
Assets
An asset is classified as current when it satisfies any of the following criteria:
(i) It is expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating cycle;
(ii) It is held primarily for the purpose of being traded;
(iii) It is expected to be realized within 12 months after the reporting date; or
(iv) It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
(i) It is expected to be settled in the Company''s normal operating cycle;
(ii) It is held primarily for the purpose of being traded;
(iii) It is due to be settled within 12 months after the reporting date; or
(iv) The company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents.
.4 Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criterion must also be met before revenue is recognized.
Sale of goods
Sales include sale of manufactured goods, stock-in-trade, tools, moulds and dies. Revenue from sale of goods is recognized on transfer of significant risks and rewards of ownership to the customers. Sale of goods is inclusive of excise duty and is net of sales tax, value added tax, applicable discounts and allowances and sales returns.
Export benefits
Export incentive entitlements are recognized as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made, and where there is no uncertainty regarding the ultimate collection of the relevant export proceeds.
Other operating income
Service income including job work income is recognized as per the terms of contracts with customers when the related services are rendered. Income from royalty, technical knowhow arrangements is recognized on an accrual basis in accordance with the terms of the relevant agreement.
Dividend and interest income
Dividend income is recognized when the right to receive the income is established. Income from interest on deposits, loans and interest bearing securities is recognized on the time proportion method taking into account the amount outstanding and the interest rate applicable.
1.5 Tangible assets
Fixed assets are carried at cost of acquisition or construction less accumulated depreciation and impairment. Cost includes freight, duties, taxes and expenses incidental to acquisition and installation of fixed assets. In case of self-constructed fixed assets, appropriate overheads including salaries and wages are allocated to the cost of the asset. The cost of capital spares is capitalized along with the cost of the related asset.
Advance paid towards the acquisition of fixed assets are shown under long-term loans and advances and tangible fixed assets under construction are disclosed as capital work-in-progress. Capital work in progress includes cost of assets at site, direct and indirect expenditure incidental to construction and interest on the funds deployed for construction.
Moulds, dies and tools represent Company owned tools, dies and other items used in the manufacture of components specific to a customer. Cost includes engineering, testing and other direct expenses related to such tools.
1.6 Borrowing Cost
Borrowing costs directly attributable to acquisition, construction or production of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalized. Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Other borrowing costs are recognized as an expense in the statement of profit and loss in the year in which they are incurred.
1.7 Intangible assets
Intangible assets (comprising computer software, patents and technical know-how acquired for internal use) are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment, if any.
1.8 Depreciation and amortization
Depreciation on fixed assets is provided using the straight line method as per the estimated useful lives of the fixed assets estimated by the management.
Pursuant to Companies Act, 2013 (''the Act'') being effective from 1 April 2014, the Company has aligned the depreciation rates based on the useful lives as specified in Part ''C'' of Schedule II to the Act, except for the Plant and equipment specific to tools and dies which has been depreciated over life of five years being the managements estimate of the useful life is lower than the life arrived at on the basis of Schedule II of the Act. Based on internal technical evaluation, the management believes that the useful lives as considered for arriving at depreciation rates, best represent the period over which management expects to use these assets.
Depreciation on addition to fixed assets is provided on prorata basis from the first day of month when the assets are put to use. Depreciation on sale/deduction from fixed assets is provided for up to the date of sale or deduction as the case may be.
Premium paid on leasehold land and site development is amortized over the period of the lease. Leasehold improvements are amortized on the straight-line basis over the lower of primary period of lease and the estimated useful life of such assets.
Depreciation on leased assets is in line with the depreciation policy of the Company and is depreciated over the useful life of such assets.
The intangible assets are amortized over a period of five years, which in the management''s view represents the economic useful life. Amortization expense is charged on a pro-rata basis for assets purchased during the year. The appropriateness of the amortization period and the amortization method is reviewed at each financial year-end.
1.9 Inventories
Inventories are valued at lower of cost and net realizable value. The basis of determination of cost for various categories of inventory is as follows:
Raw materials, : Cost is determined on weighted
components, stores moving average basis.
and spares and Stock-in-trade
Finished goods : Material cost plus appropriate
share of labour and production overheads. Cost of finished goods includes excise duty.
Work in progress : Material cost plus appropriate
share of the labour and production overheads
depending upon the stage of completion, wherever applicable.
Tools, moulds and dies : Material cost plus appropriate
share of the labour and production overheads,
depending upon the stage of completion and includes excise duty, wherever applicable.
1.10 Impairment of assets
The carrying amounts of assets are reviewed at each reporting date in accordance with Accounting Standard - 28 on '' Impairment of assets'' to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated. An impairment loss is recognized whenever the carrying amount of an asset or cash generating unit exceeds its recoverable amount. Impairment losses are recognized in the statement of profit and loss. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortization, if no impairment loss had been recognized.
1.11 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate prevailing at the date of the transaction. Exchange differences arising on foreign currency transactions settled during the year are recognized in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, are translated at year end rates. The resultant exchange differences are recognized in the statement of profit and loss. Non-monetary assets are recorded at the rates prevailing on the date of the transaction.
In the case of forward contracts:
a) The premium or discount on all such contracts arising at the inception of each contract is amortized over the life of the contract.
b) The exchange difference is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the contract and the last reporting date. Such exchange differences are recognized in the statement of profit and loss in the reporting period in which the exchange rates change.
c) Any profit or loss arising on the cancellation or renewal of forward contracts is recognized in the statement of profit and loss.
Investment in foreign entities is recorded at the exchange rate prevailing on the date of making the investment.
1.12 Research and development
Revenue expenditure on research is expensed off under the respective heads of account in the year in which it is incurred.
Capitalized development expenditure is stated at cost less accumulated amortization and impairment losses, if any. Fixed assets used for research and development are depreciated in accordance with the Company''s policy as stated above. Expenditure incurred at development phase, where it is reasonably certain that outcome of development will be commercially exploited to yield economic benefits to the Company, is considered as an intangible asset and amortized over the estimated life of the assets.
1.13 Government grant and subsidies
Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the Company will comply all the conditions attached with them; and (ii) the grant/subsidy will be received.
When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate. Where the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related asset.
Where the Company receives non-monetary grants, the asset is accounted for on the basis of its acquisition cost. In case a non-monetary asset is given free of cost, it is recognized at a nominal value.
Government grants of the nature of promoters'' contribution are credited to capital reserve and treated as a part of the shareholder''s funds.
1.14 Employee benefits
Short term employee benefits
All employee benefits payable / available within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and bonus etc., are recognized in the statement of profit and loss in the period in which the employee renders the related service.
Defined contribution plan
Provident fund: Eligible employees receive benefits from the provident fund, which is a defined contribution plan. Both the employees and the Company make monthly contributions to the provident fund (with Regional Provident Fund Commissioner) equal to specified percentage of the covered employee''s basic salary. The Company has no further obligations under the plan beyond its monthly contributions.
Defined benefit plan gratuity: The Company provides for gratuity, a defined benefit retirement Plan (the ''Gratuity Plan") covering eligible employees. The Plan provides payment to vested employees at retirement, death or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment with the Company. Liabilities related to the Gratuity Plan are determined by actuarial valuation as at the balance sheet date.
Other long term employee benefit
Compensated absences: Un-availed leaves for the year are accumulated and allowed to be carried over to the next year and within service period of the employees in accordance with the service rules of the Company. Provision for compensated absences is made by the Company based on the amount payable as per the above service, based on actuarial valuation as at the balance sheet date.
Actuarial valuation: The liability in respect of all defined benefit plans and other long term employee benefit is accrued in the books of account on the basis of actuarial valuation carried out by an independent actuary primarily using the Projected Unit Credit Method, which recognizes each year of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation. The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Actuarial gains and losses are recognized immediately in the statement of profit and loss. Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs.
1.15 Accounting for warranty
Warranty costs are estimated by the management on the basis of technical evaluation and past experience of costs. Provision is made for the estimated liability in respect of warranty costs in the year of recognition of revenue and is included in the statement of profit and loss. The estimates used for accounting for warranty costs are reviewed periodically and revisions are made, as and when required.
1.16 Leases
Where the Company is lessee
Assets taken on lease by the Company in the capacity of a lessee, where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalized at the inception of the lease at the lower of the fair value or the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or, are recognized as operating leases. Lease rentals under operating leases are recognized in the statement of profit and loss on a straight line basis.
Where the Company is less or
Leases in which the Company transfers substantially all the risks and benefits of ownership of the asset are classified as finance leases. Assets given under finance lease are recognized as a receivable at an amount equal to the net investments in the lease. After initial recognition, the Company apportions lease rentals between the principal repayment and interest income so as to achieve a constant periodic rate of return on the net investment outstanding in respect of the finance lease. The interest income is recognized in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs etc, are recognized immediately in the statement of profit and loss.
Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the assets are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on operating lease is recognized in the statement of profit and loss on a straight line basis over the lease term. Costs including depreciation are recognized as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc, are recognized immediately in the statement of profit and loss.
1.17 Investments
Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as noncurrent investments. However, that part of long term investments which is expected to be realized within
12 months after the reporting date is also presented under ''current assets'' as ''current portion of long term investments" in consonance with the current/ non-current classification scheme of Schedule III.
Long term investments (including current portion thereof) are carried at cost less any other-than-temporary diminution in value, determined separately for each individual investment.
Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments i.e., equity shares, preference shares, convertible debentures etc.
Any reduction in the carrying amount and any reversals of such reductions are charged or credited to the statement of profit and loss.
1.18 Income taxes
The current income tax charge is determined in accordance with the relevant tax regulations applicable to the Company. Deferred tax charge or credits are recognized for the future tax consequences attributable to timing differences that result between the profit / (loss) offered for income taxes and the profit / (loss) as per the financial statements. Deferred tax in respect of a timing difference which originates during the tax holiday period but reverses after the tax holiday period is recognized in the year in which the timing difference originates. For this purpose the timing differences which originate first are considered to reverse first. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, when there is a brought forward loss or unabsorbed depreciation under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each Balance Sheet date and written down or written up to reflect the amount that is reasonably/ virtually certain to be realized.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset, in accordance with the provisions contained in the Guidance Note on Accounting for Credit Available under Minimum Alternative Tax, issued by the ICAI, the said asset is created by way of a credit to the statement of profit and loss and shown as ''MAT Credit Entitlement". The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT, if required.
1.19 Earnings per share
Basic earnings/ (loss) per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average numbers of equity shares outstanding during the year are adjusted for events of bonus issue and share split. For the purpose of calculating diluted earnings/ (loss) per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed to be converted as of the beginning of the period, unless they have been issued at a later date.
The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.
1.20 Provisions, contingent liabilities and contingent assets
A provision is created when there is a present obligation as a result of a past event and it is more likely than not that there will be an outflow of resources embodying economic benefits to settle such obligation and the amount of such obligation can be reliably estimated. Provisions are not discounted to its present value, and are determined based on the management''s best estimate of the amount of obligation required at the year end. These are reviewed at each Balance Sheet date and adjusted to reflect current management estimates.
Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events not wholly within the control of the Company. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Provision for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognized when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.
The Company does not recognize assets which are of contingent nature until there is virtual certainty of reliability of such assets. However, subsequently, if it becomes virtually certain that an inflow of economic benefits will arise, asset and related income is recognized in the financial statements of the period in which the change occurs.
1.21 Cash and cash equivalents
Cash and cash equivalents comprise cash balances on hand, cash balance with bank, and highly liquid investments with maturity period of three months or less from the date of investment.
1.22 Employee stock option schemes
The Company follows Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (''guidelines'') for accounting of employee stock options According to the guidelines, any company implementing any of the share based schemes shall follow the requirements of the ''Guidance Note on Accounting for Employee Share-based Payments'' (Guidance Note) or Accounting Standards as may be prescribed by the ICAI from time to time, including the disclosure requirements prescribed therein. The cost is calculated based on the intrinsic value method i.e. the excess of market price of underlying equity shares as of the date of the grant of options over the exercise price of such options is regarded as employee compensation and in respect of the number of options that are expected to ultimately vest, such cost is recognized on a straight line basis over the period over which the employees would become unconditionally entitled to apply for the shares. The cost recognized at any date at least equals the intrinsic value of the vested portion of the option at that date. Adjustment, if any, for difference in initial estimate for number of options that are expected to ultimately vest and related actual experience is recognized in the Statement of Profit and Loss of that period. In respect of vested options expire unexercised, the related cumulative cost is credited to the General Reserve. Refer Note-2.31.
2.1.4 Rights, preferences and restrictions attached to each class of shares
a) Equity shares of Rs, 2 each (previous year Rs, 2 each) fully paid up
The Company has one class of equity shares having a par value of Rs, 2 per share (previous year Rs, 2). Each shareholder is eligible for one vote per share held. The dividend proposed 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.
Further, certain investors (''Investors") have ''Anti dilution rights" i.e. right to further subscription and price protection, ensuring that, in the event of finalization of the terms of sale of additional shares, the Company shall (as per the procedure set out in the Articles) offer the additional shares on the finalized terms and conditions to the investors and in the event that the Company issues any additional equity shares at a price less than the Investor acquisition cost or have or permit an FPO, at such lower
price, then either the Company or promoters shall transfer such number of equity shares (as per the procedures set out in the Articles) at either no additional consideration or at the lowest possible consideration permitted under applicable law that shall be necessary to ensure that in a revised investor acquisition cost per Investor that shall be equal or lower than the price at which the additional shares are proposed to be issued. Such investors also have ''pre emptive rights" wherein any member of the promoter group shall, before selling, transferring or otherwise disposing of any of its shares to a bona fide independent third party purchaser, first give notice to the Investors and each investor shall have the right (but not the obligation) to serve on the transferor a pre-emption notice requiring the transferor to transfer to the purchaser (as per the procedures set out in the Articles), or to any person nominated by the purchaser, some or all of the sale shares at the sale price.
Each such investor shall also have the Tag-along right (subject to the other provisions of Articles and such rights as mentioned above) but not the obligation to require the transferor to cause the transferee in a transfer of equity shares to purchase from such investor, for the same consideration per equity share and upon the same terms and conditions as are to be paid and given to the transferor.
562,500 and 267,092 (of Rs, 10 each) equity shares allotted on preferential basis to the investors and Minda Corporation Limited Employees Stock Option Scheme Trust (MCL ESOS Trust) on 3 November 2011 and 1 November 2011 respectively were locked in for a period of one year from the date of allotment.
Mar 31, 2016
1.1 Basis of accounting
These financial statements have been prepared and presented on a going
concern basis, under the historical cost convention on an accrual basis
of accounting and comply with the Indian Generally Accepted Accounting
Principles (GAAP) and comply with the accounting standards, as
prescribed by the Section 133 of the Companies Act, 2013 (''Act'') read
with Rule 7 of the Companies (Accounts) Rules, 2014, other
pronouncements of the Institute of Chartered Accountants of India and
the relevant provisions of the Companies Act, 2013 and guidelines
issued by the Securities and Exchange Board of India to the extent
applicable, as adopted consistently by the Company. Accounting policies
have been consistently applied except where a newly issued accounting
standard is initially adopted or a revision to an existing accounting
standard requires a change in the accounting policy hitherto in use.
1.2 use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities, at the end of
the reporting period and the reported amounts of income and expenses
during the reporting period. Examples of estimates amongst others,
includes provisions of future obligations under employee benefit plans,
the useful lives of fixed assets, provision for warranties and sales
returns, customer claims, provision for price changes and impairment of
assets. Actual result could differ from these estimates. Estimates and
underlying assumptions are reviewed on an ongoing basis. Any revision
to accounting estimates is recognized prospectively in the current and
future periods.
1.3 Current-non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the
following criteria:
(i) It is expected to be realised in, or is intended for sale or
consumption in, the Company''s normal operating cycle;
(ii) It is held primarily for the purpose of being traded;
(iii) It is expected to be realised within 12 months after the
reporting date; or
(iv) It is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
(i) It is expected to be settled in the Company''s normal operating
cycle;
(ii) It is held primarily for the purpose of being traded;
(iii) It is due to be settled within 12 months after the reporting
date; or
(iv) The company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
liabilities.
All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents.
1.4 Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criterion must
also be met before revenue is recognized.
sale of goods
Sales include sale of manufactured goods, stock-in-trade, tools, moulds
and dies. Revenue from sale of goods is recognized on transfer of
significant risks and rewards of ownership to the customers. Sale of
goods is inclusive of excise duty and is net of sales tax, value added
tax, applicable discounts and allowances and sales returns.
Export benefits
Export incentive entitlements are recognized as income when the right
to receive credit as per the terms of the scheme is established in
respect of the exports made, and where there is no uncertainty
regarding the ultimate collection of the relevant export proceeds.
other operating income
Service income including job work income is recognized as per the terms
of contracts with customers when the related services are rendered.
Income from royalty, technical know-how arrangements is recognized on
an accrual basis in accordance with the terms of the relevant
agreement.
Dividend and interest income
Dividend income is recognized when the right to receive the income is
established. Income from interest on deposits, loans and interest
bearing securities is recognized on the time proportion method taking
into account the amount outstanding and the interest rate applicable.
1.5 Fixed assets
Fixed assets are carried at cost of acquisition or construction less
accumulated depreciation and impairment. Cost includes freight, duties,
taxes and expenses incidental to acquisition and installation of fixed
assets. In case of self-constructed fixed assets, appropriate overheads
including salaries and wages are allocated to the cost of the asset.
The cost of capital spares is capitalized along with the cost of the
related asset.
Advance paid towards the acquisition of fixed assets are shown under
long-term loans and advances and tangible fixed assets under
construction are disclosed as capital work-in-progress. Capital work
in progress includes cost of assets at site, direct and indirect
expenditure incidental to construction and interest on the funds
deployed for construction.
Moulds, dies and tools represent Company owned tools, dies and other
items used in the manufacture of components specific to a customer.
Cost includes engineering, testing and other direct expenses related to
such tools.
1.6 Borrowing cost
Borrowing costs directly attributable to acquisition, construction or
production of those fixed assets which necessarily take a substantial
period of time to get ready for their intended use are capitalized.
Capitalization of borrowing costs ceases when substantially all the
activities necessary to prepare the qualifying assets for their
intended uses are complete. Borrowing costs include exchange
differences arising from foreign currency borrowings to the extent that
they are regarded as an adjustment to interest costs. Other borrowing
costs are recognized as an expense in the statement of profit and loss
in the year in which they are incurred.
1.7 Intangible assets
Intangible assets (comprising computer software, patents and technical
know-how acquired for internal use) are recorded at the consideration
paid for acquisition of such assets and are carried at cost less
accumulated amortization and impairment, if any.
1.8 Depreciation and amortization
Depreciation on fixed assets is provided using the straight line method
as per the estimated useful lives of the fixed assets estimated by the
management.
Pursuant to Companies Act, 2013 (''the Act'') being effective from 1
April 2014, the Company has aligned the depreciation rates based on the
useful lives as specified in Part ''C'' of Schedule II to the Act, except
for the Plant and equipment specific to tools and dies which has been
depreciated over life of five years being the managements estimate of
the useful life is lower than the life arrived at on the basis of
Schedule II of the Act. Based on internal technical evaluation, the
management believes that the useful lives as considered for arriving at
depreciation rates, best represent the period over which management
expects to use these assets.
Depreciation on addition to fixed assets is provided on pro-rata basis
from the first day of month when the assets are put to use.
Depreciation on sale/deduction from fixed assets is provided for up to
the date of sale or deduction as the case may be.
Premium paid on leasehold land and site development is amortized over
the period of the lease. Leasehold improvements are amortized on the
straight-line basis over the lower of primary period of lease and the
estimated useful life of such assets.
Depreciation on leased assets is in line with the depreciation policy
of the Company and is depreciated over the useful life of such assets.
The intangible assets are amortized over a period of five years, which
in the management''s view represents the economic useful life.
Amortization expense is charged on a pro-rata basis for assets
purchased during the year. The appropriateness of the amortization
period and the amortization method is reviewed at each financial
year-end.
1.10 Impairment of assets
The carrying amounts of assets are reviewed at each reporting date in
accordance with Accounting Standard - 28 on '' Impairment of assets'' to
determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the asset is estimated. An
impairment loss is recognized whenever the carrying amount of an asset
or cash generating unit exceeds its recoverable amount. Impairment
losses are recognized in the statement of profit and loss. An
impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset''s carrying amount does not
exceed the carrying amount that would have been determined net of
depreciation or amortization, if no impairment loss had been
recognized.
1.11 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing at the date of the transaction. Exchange differences arising
on foreign currency transactions settled during the year are recognized
in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date, are translated at year end rates. The resultant
exchange differences are recognized in the statement of profit and
loss. Non-monetary assets are recorded at the rates prevailing on the
date of the transaction.
In the case of forward contracts:
a) The premium or discount on all such contracts arising at the
inception of each contract is amortized over the life of the contract.
b) The exchange difference is calculated as the difference between the
foreign currency amount of the contract translated at the exchange rate
at the reporting date, or the settlement date where the transaction is
settled during the reporting period, and the corresponding foreign
currency amount translated at the later of the date of inception of the
contract and the last reporting date. Such exchange differences are
recognized in the statement of profit and loss in the reporting period
in which the exchange rates change.
c) Any profit or loss arising on the cancellation or renewal of forward
contracts is recognized in the statement of profit and loss.
Investment in foreign entities is recorded at the exchange rate
prevailing on the date of making the investment.
1.12 Research and development
Revenue expenditure on research is expensed off under the respective
heads of account in the year in which it is incurred.
Capitalised development expenditure is stated at cost less accumulated
amortisation and impairment losses, if any. Fixed assets used for
research and development are depreciated in accordance with the
Company''s policy as stated above. Expenditure incurred at development
phase, where it is reasonably certain that outcome of development will
be commercially exploited to yield economic benefits to the Company, is
considered as an intangible asset and amortized over the estimated life
of the assets.
1.13 Government grant and subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that (i) the Company will comply all the
conditions attached with them; and (ii) the grant/subsidy will be
received.
When the grant or subsidy relates to revenue, it is recognized as
income on a systematic basis in the statement of profit and loss over
the periods necessary to match them with the related costs, which they
are intended to compensate. Where the grant relates to an asset, it is
recognized as deferred income and released to income in equal amounts
over the expected useful life of the related asset.
Where the Company receives non-monetary grants, the asset is accounted
for on the basis of its acquisition cost. In case a non- monetary asset
is given free of cost, it is recognized at a nominal value.
Government grants of the nature of promoters'' contribution are credited
to capital reserve and treated as a part of the shareholder''s funds.
1.14 Employee benefits
Short term employee benefits
All employee benefits payable / available within twelve months of
rendering the service are classified as short-term employee benefits.
Benefits such as salaries, wages and bonus etc., are recognized in the
statement of profit and loss in the period in which the employee
renders the related service.
Defined contribution plan
provident fund: Eligible employees receive benefits from the provident
fund, which is a defined contribution plan. Both the employees and the
Company make monthly contributions to the provident fund (with Regional
Provident Fund Commissioner) equal to specified percentage of the
covered employee''s basic salary. The Company has no further obligations
under the plan beyond its monthly contributions.
Defined benefit plan
Gratuity: The Company provides for gratuity, a defined benefit
retirement Plan (the "Gratuity Plan") covering eligible employees. The
Plan provides payment to vested employees at retirement, death or
termination of employment, of an amount based on the respective
employee''s salary and the tenure of employment with the Company.
Liabilities related to the Gratuity Plan are determined by actuarial
valuation as at the balance sheet date.
Other long term employee benefit
compensated absences: Un-availed leaves for the year are accumulated
and allowed to be carried over to the next year and within service
period of the employees in accordance with the service rules of the
Company. Provision for compensated absences is made by the Company
based on the amount payable as per the above service, based on
actuarial valuation as at the balance sheet date.
Actuarial valuation: The liability in respect of all defined benefit
plans and other long term employee benefit is accrued in the books of
account on the basis of actuarial valuation carried out by an
independent actuary primarily using the Projected Unit Credit Method,
which recognizes each year of service as giving rise to additional unit
of employee benefit entitlement and measure each unit separately to
build up the final obligation. The obligation is measured at the
present value of estimated future cash flows. The discount rates used
for determining the present value of obligation under defined benefit
plans, is based on the market yields on Government securities as at the
balance sheet date, having maturity periods approximating to the terms
of related obligations. Actuarial gains and losses are recognized
immediately in the statement of profit and loss. Gains or losses on the
curtailment or settlement of any defined benefit plan are recognized
when the curtailment or settlement occurs.
1.15 Accounting for warranty
Warranty costs are estimated by the management on the basis of
technical evaluation and past experience of costs. Provision is made
for the estimated liability in respect of warranty costs in the year of
recognition of revenue and is included in the statement of profit and
loss. The estimates used for accounting for warranty costs are reviewed
periodically and revisions are made, as and when required.
1.16 Leases
Where the company is lessee
Assets taken on lease by the Company in the capacity of a lessee, where
the Company has substantially all the risks and rewards of ownership
are classified as finance lease. Such leases are capitalized at the
inception of the lease at the lower of the fair value or the present
value of the minimum lease payments and a liability is created for an
equivalent amount. Each lease rental paid is allocated between the
liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor, are recognized as
operating leases. Lease rentals under operating leases are recognized
in the statement of profit and loss on a straight line basis.
Where the company is lessor
Leases in which the Company transfers substantially all the risks and
benefits of ownership of the asset are classified as finance leases.
Assets given under finance lease are recognized as a receivable at an
amount equal to the net investments in the lease. After initial
recognition, the Company apportions lease rentals between the principal
repayment and interest income so as to achieve a constant periodic rate
of return on the net investment outstanding in respect of the finance
lease. The interest income is recognized in the statement of profit and
loss. Initial direct costs such as legal costs, brokerage costs etc,
are recognized immediately in the statement of profit and loss.
Leases in which the Company does not transfer substantially all the
risks and benefits of ownership of the assets are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income on operating lease is recognized in the
statement of profit and loss on a straight line basis over the lease
term. Costs including depreciation are recognized as an expense in the
statement of profit and loss. Initial direct costs such as legal costs,
brokerage costs, etc, are recognized immediately in the statement of
profit and loss.
1.17 Investments
Investments that are readily realisable and intended to be held for not
more than a year from the date of acquisition are classified as current
investments. All other investments are classified as noncurrent
investments. However, that part of long term investments which is
expected to be realised within 12 months after the reporting date is
also presented under ''current assets'' as "current portion of long term
investments" in consonance with the current/ non-current classification
scheme of Schedule III.
Long term investments (including current portion thereof) are carried
at cost less any other-than-temporary diminution in value, determined
separately for each individual investment.
Current investments are carried at the lower of cost and fair value.
The comparison of cost and fair value is done separately in respect of
each category of investments i.e., equity shares, preference shares,
convertible debentures etc.
Any reduction in the carrying amount and any reversals of such
reductions are charged or credited to the statement of profit and loss.
1.18 income taxes
The current income tax charge is determined in accordance with the
relevant tax regulations applicable to the Company. Deferred tax
charge or credits are recognized for the future tax consequences
attributable to timing differences that result between the profit /
(loss) offered for income taxes and the profit/ (loss) as per the
financial statements. Deferred tax in respect of a timing difference
which originates during the tax holiday period but reverses after the
tax holiday period is recognized in the year in which the timing
difference originates. For this purpose the timing differences which
originate first are considered to reverse first. The deferred tax
charge or credit and the corresponding deferred tax liabilities or
assets are recognized using the tax rates that have been enacted or
substantively enacted by the Balance Sheet date. Deferred tax assets
are recognized only to the extent there is reasonable certainty that
the assets can be realised in future; however, when there is a brought
forward loss or unabsorbed depreciation under taxation laws, deferred
tax assets are recognized only if there is virtual certainty of
realisation of such assets. Deferred tax assets are reviewed as at each
Balance Sheet date and written down or written up to reflect the amount
that is reasonably/ virtually certain to be realised.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing evidence that the Company will
pay normal income tax during the specified period. In the year in which
the MAT credit becomes eligible to be recognized as an asset, in
accordance with the provisions contained in the Guidance Note on
Accounting for Credit Available under Minimum Alternative Tax, issued
by the ICAI, the said asset is created by way of a credit to the
statement of profit and loss and shown as "MAT Credit Entitlement". The
Company reviews the same at each Balance Sheet date and writes down the
carrying amount of MAT, if required.
1.19 Earnings per share
Basic earnings/ (loss) per share are calculated by dividing the net
profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
The weighted average numbers of equity shares outstanding during the
year are adjusted for events of bonus issue and share split. For the
purpose of calculating diluted earnings/ (loss) per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares. The
dilutive potential equity shares are deemed to be converted as of the
beginning of the period, unless they have been issued at a later date.
The number of shares and potentially dilutive equity shares are
adjusted retrospectively for all periods presented for any share splits
and bonus shares issues including for changes effected prior to the
approval of the financial statements by the Board of Directors.
1.20 provisions, contingent liabilities and contingent assets
A provision is created when there is a present obligation as a result
of a past event and it is more likely than not that there will be an
outflow of resources embodying economic benefits to settle such
obligation and the amount of such obligation can be reliably estimated.
Provisions are not discounted to its present value, and are determined
based on the management''s best estimate of the amount of obligation
required at the year end. These are reviewed at each Balance Sheet
date and adjusted to reflect current management estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events not
wholly within the control of the Company. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Provision for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognized
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
The Company does not recognise assets which are of contingent nature
until there is virtual certainty of realisability of such assets.
However, subsequently, if it becomes virtually certain that an inflow
of economic benefits will arise, asset and related income is recognized
in the financial statements of the period in which the change occurs.
1.21 cash and cash equivalents
Cash and cash equivalents comprise cash balances on hand, cash balance
with bank, and highly liquid investments with maturity period of three
months or less from the date of investment.
Mar 31, 2015
1.1 Basis of accounting
These financial statements have been prepared and presented on a going
concern basis, under the historical cost convention on an accrual basis
of accounting and comply with the Indian Generally Accepted Accounting
Principles (GAAP) and comply with the accounting standards, as
prescribed by the Section 133 of the Companies Act, 2013 (''Act'') read
with Rule 7 of the Companies (Accounts) Rules, 2014, other
pronouncements of the Institute of Chartered Accountants of India and
the relevant provisions of the Companies Act, 2013 and guidelines
issued by the Securities and Exchange Board of India to the extent
applicable, as adopted consistently by the Company. Accounting policies
have been consistently applied except where a newly issued accounting
standard is initially adopted or a revision to an existing accounting
standard requires a change in the accounting policy hitherto in use.
1.2 Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities, at the end of
the reporting period and the reported amounts of income and expenses
during the reporting period. Examples of estimates amongst others,
includes provisions of future obligations under employee benefit plans,
the useful lives of fixed assets, provision for warranties and sales
returns, customer claims, provision for price changes and impairment of
assets. Actual result could differ from these estimates. Estimates and
underlying assumptions are reviewed on an ongoing basis. Any revision
to accounting estimates is recognized prospectively in the current and
future periods.
1.3 Current-non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the
following criteria:
(i) It is expected to be realised in, or is intended for sale or
consumption in, the Company''s normal operating cycle;
(ii) It is held primarily for the purpose of being traded;
(iii) I t is expected to be realised within 12 months after the
reporting date; or
(iv) It is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
(i) It is expected to be settled in the Company''s normal operating
cycle;
(ii) It is held primarily for the purpose of being traded;
(iii) It is due to be settled within 12 months after the reporting
date; or
(iv) The company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
liabilities.
All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents.
1.4 Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criterion must
also be met before revenue is recognized.
Sale of goods
Sales include sale of manufactured goods, stock-in-trade, tools, moulds
and dies. Revenue from sale of goods is recognized on transfer of
significant risks and rewards of ownership to the customers. Sale of
goods is inclusive of excise duty and is net of sales tax, value added
tax, applicable discounts and allowances and sales returns.
Export benefits
Export incentive entitlements are recognized as income when the right to
receive credit as per the terms of the scheme is established in respect
of the exports made, and where there is no uncertainty regarding the
ultimate collection of the relevant export proceeds.
Other operating income
Service income including job work income is recognized as per the terms
of contracts with customers when the related services are rendered.
Income from royalty, technical know-how arrangements is recognized on
an accrual basis in accordance with the terms of the relevant
agreement.
Dividend and interest income
Dividend income is recognized when the right to receive the income is
established. Income from interest on deposits, loans and interest
bearing securities is recognized on the time proportion method taking
into account the amount outstanding and the interest rate applicable.
1.5 Fixed assets
Fixed assets are carried at cost of acquisition or construction less
accumulated depreciation and impairment. Cost includes freight, duties,
taxes and expenses incidental to acquisition and installation of fixed
assets. In case of self-constructed fixed assets, appropriate overheads
including salaries and wages are allocated to the cost of the asset.
The cost of capital spares is capitalized along with the cost of the
related asset.
Advance paid towards the acquisition of fixed assets are shown under
long-term loans and advances and tangible fixed assets under
construction are disclosed as capital work-in-progress. Capital work in
progress includes cost of assets at site, direct and indirect
expenditure incidental to construction and interest on the funds
deployed for construction.
Moulds, dies and tools represent Company owned tools, dies and other
items used in the manufacture of components specific to a customer.
Cost includes engineering, testing and other direct expenses related to
such tools.
1.6 Borrowing Cost
Borrowing costs directly attributable to acquisition, construction or
production of those fixed assets which necessarily take a substantial
period of time to get ready for their intended use are capitalized.
Capitalization of borrowing costs ceases when substantially all the
activities necessary to prepare the qualifying assets for their
intended uses are complete. Borrowing costs include exchange
differences arising from foreign currency borrowings to the extent that
they are regarded as an adjustment to interest costs. Other borrowing
costs are recognized as an expense in the statement of profit and loss
in the year in which they are incurred.
1.7 Intangible assets
Intangible assets (comprising computer software, patents and technical
know-how acquired for internal use) are recorded at the consideration
paid for acquisition of such assets and are carried at cost less
accumulated amortization and impairment, if any.
1.8 Depreciation and amortization
Depreciation on fixed assets is provided using the straight line method
as per the estimated useful lives of the fixed assets estimated by the
management.
Pursuant to Companies Act, 2013 (''the Act'') being effective from 1
April 2014, the Company has aligned the depreciation rates based on the
useful lives as specified in Part ''C'' of Schedule II to the Act, except
for the Plant and equipment specific to tools and dies which has been
depreciated over life of five years being the managements estimate of
the useful life is lower than the life arrived at on the basis of
Schedule II of the Act. Based on internal technical evaluation, the
management believes that the useful lives as considered for arriving at
depreciation rates, best represent the period over which management
expects to use these assets.
Depreciation on addition to fixed assets is provided on pro-rata basis
from the first day of month when the assets are put to use.
Depreciation on sale/deduction from fixed assets is provided for up to
the date of sale or deduction as the case may be.
Premium paid on leasehold land and site development is amortized over
the period of the lease. Leasehold improvements are amortized on the
straight-line basis over the lower of primary period of lease and the
estimated useful life of such assets.
Depreciation on leased assets is in line with the depreciation policy
of the Company and is depreciated over the useful life of such assets.
The intangible assets are amortized over a period of five years, which
in the management''s view represents the economic useful life.
Amortization expense is charged on a pro-rata basis for assets
purchased during the year. The appropriateness of the amortization
period and the amortization method is reviewed at each financial year-
end.
1.9 Inventories
Inventories are valued at lower of cost and net realizable value. The
basis of determination of cost for various categories of inventory is
as follows:
Raw materials, : Cost is determined on
components, stores weighted moving average
and spares and basis.
Stock-in-trade
Finished goods : Material cost plus
appropriate share of labour
and production overheads.
Cost of finished goods
includes excise duty.
Work in progress : Material cost plus
appropriate share of the
labour and production
overheads depending upon
the stage of completion,
wherever applicable.
Tools, moulds and : Material cost plus
dies appropriate share of the
labour and production
overheads, depending upon
the stage of completion
andincludes excise duty,
wherever applicable.
1.10 Impairment of assets
The carrying amounts of assets are reviewed at each reporting date in
accordance with Accounting Standard - 28 on ''Impairment of assets'' to
determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the asset is estimated.
An impairment loss is recognized whenever the carrying amount of an
asset or cash generating unit exceeds its recoverable amount.
Impairment losses are recognized in the statement of profit and loss.
An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset''s carrying amount does
not exceed the carrying amount that would have been determined net of
depreciation or amortization, if no impairment loss had been
recognized.
1.11 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing at the date of the transaction. Exchange differences
arising on foreign currency transactions settled during the year are
recognized in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date, are translated at year end rates. The resultant
exchange differences are recognized in the statement of profit and
loss. Non- monetary assets are recorded at the rates prevailing on the
date of the transaction.
In the case of forward contracts:
a) The premium or discount on all such contracts arising at the
inception of each contract is amortized over the life of the contract.
b) The exchange difference is calculated as the difference between the
foreign currency amount of the contract translated at the exchange rate
at the reporting date, or the settlement date where the transaction is
settled during the reporting period, and the corresponding foreign
currency amount translated at the later of the date of inception of the
contract and the last reporting date. Such exchange differences are
recognized in the statement of profit and loss in the reporting period
in which the exchange rates change.
c) Any profit or loss arising on the cancellation or renewal of forward
contracts is recognized in the statement of profit and loss.
Investment in foreign entities is recorded at the exchange rate
prevailing on the date of making the investment.
1.12 Research and development
Revenue expenditure on research is expensed off under the respective
heads of account in the year in which it is incurred.
Capitalised development expenditure is stated at cost less accumulated
amortisation and impairment losses, if any. Fixed assets used for
research and development are depreciated in accordance with the
Company''s policy as stated above. Expenditure incurred at development
phase, where it is reasonably certain that outcome of development will
be commercially exploited to yield economic benefits to the Company, is
considered as an intangible asset and amortized over the estimated life
of the assets.
1.13 Government grant and subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that (i) the Company will comply all the
conditions attached with them; and (ii) the grant/subsidy will be
received.
When the grant or subsidy relates to revenue, it is recognized as
income on a systematic basis in the statement of profit and loss over
the periods necessary to match them with the related costs, which they
are intended to compensate. Where the grant relates to an asset, it is
recognized as deferred income and released to income in equal amounts
over the expected useful life of the related asset.
Where the Company receives non-monetary grants, the asset is accounted
for on the basis of its acquisition cost. In case a non-monetary asset
is given free of cost, it is recognized at a nominal value.
Government grants of the nature of promoters'' contribution are credited
to capital reserve and treated as a part of the shareholder''s funds.
1.14 Employee benefits
Short term employee benefits
All employee benefits payable / available within twelve months of
rendering the service are classified as short-term employee benefits.
Benefits such as salaries, wages and bonus etc., are recognized in the
statement of profit and loss in the period in which the employee renders
the related service.
Defined contribution plan
Provident fund: Eligible employees receive benefits from the provident
fund, which is a defined contribution plan. Both the employees and the
Company make monthly contributions to the provident fund (with Regional
Provident Fund Commissioner)equal to specified percentage of the
covered employee''s basic salary. The Company has no further
obligations under the plan beyond its monthly contributions.
Defined benefit plan
Gratuity: The Company provides for gratuity, a defined benefit
retirement Plan (the "Gratuity Plan") covering eligible employees. The
Plan provides payment to vested employees at retirement, death or
termination of employment, of an amount based on the respective
employee''s salary and the tenure of employment with the Company.
Liabilities related to the Gratuity Plan are determined by actuarial
valuation as at the balance sheet date.
Other long term employee benefit
Compensated absences: Un-availed leaves for the year are accumulated
and allowed to be carried over to the next year and within service
period of the employees in accordance with the service rules of the
Company. Provision for compensated absences is made by the Company
based on the amount payable as per the above service, based on
actuarial valuation as at the balance sheet date.
Actuarial valuation: The liability in respect of all defined benefit
plans and other long term employee benefit is accrued in the books of
account on the basis of actuarial valuation carried out by an
independent actuary primarily using the Projected Unit Credit Method,
which recognizes each year of service as giving rise to additional unit
of employee benefit entitlement and measure each unit separately to
build up the final obligation. The obligation is measured at the
present value of estimated future cash flows. The discount rates used
for determining the present value of obligation under defined benefit
plans, is based on the market yields on Government securities as at the
balance sheet date, having maturity periods approximating to the terms
of related obligations. Actuarial gains and losses are recognized
immediately in the statement of profit and loss. Gains or losses on the
curtailment or settlement of any defined benefit plan are recognized
when the curtailment or settlement occurs.
1.15 Accounting for warranty
Warranty costs are estimated by the management on the basis of technical
evaluation and past experience of costs. Provision is made for the
estimated liability in respect of warranty costs in the year of
recognition of revenue and is included in the statement of profit and
loss. The estimates used for accounting for warranty costs are reviewed
periodically and revisions are made, as and when required.
1.16 Leases
Where the Company is lessee
Assets taken on lease by the Company in the capacity of a lessee, where
the Company has substantially all the risks and rewards of ownership
are classified as finance lease. Such leases are capitalized at the
inception of the lease at the lower of the fair value or the present
value of the minimum lease payments and a liability is created for an
equivalent amount. Each lease rental paid is allocated between the
liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor, are recognized as
operating leases. Lease rentals under operating leases are recognized
in the statement of profit and loss on a straight line basis.
Where the Company is lessor
Leases in which the Company transfers substantially all the risks and
benefits of ownership of the asset are classified as finance leases.
Assets given under finance lease are recognized as a receivable at an
amount equal to the net investments in the lease. After initial
recognition, the Company apportions lease rentals between the principal
repayment and interest income so as to achieve a constant periodic rate
of return on the net investment outstanding in respect of the finance
lease. The interest income is recognized in the statement of profit and
loss. Initial direct costs such as legal costs, brokerage costs etc,
are recognized immediately in the statement of profit and loss.
Leases in which the Company does not transfer substantially all the
risks and benefits of ownership of the assets are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income on operating lease is recognized in the
statement of profit and loss on a straight line basis over the lease
term. Costs including depreciation are recognized as an expense in the
statement of profit and loss. Initial direct costs such as legal costs,
brokerage costs, etc, are recognized immediately in the statement of
profit and loss.
1.17 Investments
Investments that are readily realisable and intended to be held for not
more than a year from the date of acquisition are classified as current
investments. All other investments are classified as noncurrent
investments. However, that part of long term investments which is
expected to be realised within 12 months after the reporting date is
also presented under ''current assets'' as "current portion of long term
investments" in consonance with the current/ non-current classification
scheme of Schedule III.
Long term investments (including current portion thereof) are carried
at cost less any other-than-temporary diminution in value, determined
separately for each individual investment.
Current investments are carried at the lower of cost and fair value.
The comparison of cost and fair value is done separately in respect of
each category of investments i.e., equity shares, preference shares,
convertible debentures etc.
Any reduction in the carrying amount and any reversals of such
reductions are charged or credited to the statement of profit and loss.
1.18 Income taxes
The current income tax charge is determined in accordance with the
relevant tax regulations applicable to the Company. Deferred tax charge
or credits are recognized for the future tax consequences attributable
to timing differences that result between the profit / (loss) offered
for income taxes and the profit/ (loss) as per the financial
statements. Deferred tax in respect of a timing difference which
originates during the tax holiday period but reverses after the tax
holiday period is recognized in the year in which the timing difference
originates. For this purpose the timing differences which originate
first are considered to reverse first. The deferred tax charge or
credit and the corresponding deferred tax liabilities or assets are
recognized using the tax rates that have been enacted or substantively
enacted by the Balance Sheet date. Deferred tax assets are recognized
only to the extent there is reasonable certainty that the assets can be
realised in future; however, when there is a brought forward loss or
unabsorbed depreciation under taxation laws, deferred tax assets are
recognized only if there is virtual certainty of realisation of such
assets. Deferred tax assets are reviewed as at each Balance Sheet date
and written down or written up to reflect the amount that is
reasonably/ virtually certain to be realised.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing evidence that the Company will
pay normal income tax during the specified period. In the year in which
the MAT credit becomes eligible to be recognized as an asset, in
accordance with the provisions contained in the Guidance Note on
Accounting for Credit Available under Minimum Alternative Tax, issued
by the ICAI, the said asset is created by way of a credit to the
statement of profit and loss and shown as "MAT Credit Entitlement".
The Company reviews the same at each Balance Sheet date and writes down
the carrying amount of MAT, if required.
1.19 Earnings per share
Basic earnings/ (loss) per share are calculated by dividing the net
profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
The weighted average numbers of equity shares outstanding during the
year are adjusted for events of bonus issue and share split. For the
purpose of calculating diluted earnings/ (loss) per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares. The
dilutive potential equity shares are deemed to be converted as of the
beginning of the period, unless they have been issued at a later date.
The number of shares and potentially dilative equity shares are
adjusted retrospectively for all period presented for any share splits
and bonus shares issues including for changes effected prior to the
approval of the financial statements by the Board of Directors.
1.20 Provisions, contingent liabilities and contingent assets
A provision is created when there is a present obligation as a result
of a past event and it is more likely than not that there will be an
outflow of resources embodying economic benefits to settle such
obligation and the amount of such obligation can be reliably estimated.
Provisions are not discounted to its present value, and are determined
based on the management''s best estimate of the amount of obligation
required at the year end. These are reviewed at each Balance Sheet date
and adjusted to reflect current management estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events not
wholly within the control of the Company. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Provision for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognized
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
The Company does not recognise assets which are of contingent nature
until there is virtual certainty of realisability of such assets.
However, subsequently, if it becomes virtually certain that an inflow
of economic benefits will arise, asset and related income is recognized
in the financial statements of the period in which the change occurs.
1.21 Cash and cash equivalents
Cash and cash equivalents comprise cash balances on hand, cash balance
with bank, and highly liquid investments with maturity period of three
months or less from the date of investment.
Mar 31, 2014
1.1 Basis of accounting
These financial statements have been prepared and presented on a going
concern basis, under the historical cost convention on an accrual basis
of accounting and comply with the Accounting Standards as specified in
the Companies (Accounting Standards) Rules, 2006, other pronouncements
of the Institute of Chartered Accountants of India and the relevant
provisions of the Companies Act, 1956 and guidelines issued by the
Securities and Exchange Board of India, to the extent applicable and as
adopted consistently by the Company.
1.2 Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities, at the end of
the reporting period and the reported amounts of income and expenses
during the reporting period. Examples of estimates amongst others,
includes provisions of future obligations under employee benefit plans,
the useful lives of fixed assets, provision for warranties and sales
returns, customer claims, provision for price changes and impairment of
assets. Actual result could differ from these estimates. Any revision
to accounting estimates is recognized prospectively in the current and
future periods.
1.3 Current-non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the
following criteria:
(i) It is expected to be realised in, or is intended for sale or
consumption in, the Company's normal operating cycle;
(ii) It is held primarily for the purpose of being traded;
(iii) It is expected to be realised within 12 months after the
reporting date; or
(iv) It is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
assets.
All other assets are classified as non-current Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
(i) It is expected to be settled in the Company's normal operating
cycle;
(ii) It is held primarily for the purpose of being traded;
(iii) It is due to be settled within 12 months after the reporting
date; or
(iv) The company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
liabilities.
All other liabilities are classified as non-current.
1.4 Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criterion must
also be met before revenue is recognized:
Sale of goods
Sales include sale of manufactured goods, stock-in- trade, tools,
moulds and dies. Revenue from sale of goods is recognized on transfer
of significant risks and rewards of ownership to the customers. Sale of
goods is inclusive of excise duty and is net of sales tax, value added
tax, applicable discounts and allowances and sales returns.
Export benefits
Export incentive entitlements are recognized as income when the right
to receive credit as per the terms of the scheme is established in
respect of the exports made, and where there is no uncertainty
regarding the ultimate collection of the relevant export proceeds.
Other operating income
Service income including job work income is recognized as per the terms
of contracts with customers when the related services are rendered.
Income from royalty, technical know-how arrangements is recognized on
an accrual basis in accordance with the terms of the relevant
agreement.
Dividend and interest income
Dividend income is recognized when the right to receive the income is
established. Income from interest on deposits, loans and interest
bearing securities is recognized on the time proportion method.
1.5 Fixed assets
Fixed assets are carried at cost of acquisition or construction less
accumulated depreciation and
impairment. Cost comprises the purchase price and any attributable cost
of bringing the asset to its working condition for its intended use.
Advance paid towards the acquisition of fixed assets are shown under
non-current asset and tangible fixed assets under construction are
disclosed as capital work- in-progress.
Moulds, dies and tools represent Company owned tools, dies and other
items used in the manufacture of components specific to a customer.
Cost includes engineering, testing and other direct expenses related to
such tools.
1.6 Borrowing Cost
Borrowing costs directly attributable to acquisition, construction or
production of those fixed assets which necessarily take a substantial
period of time to get ready for their intended use are capitalized.
Capitalization of borrowing costs ceases when substantially all the
activities necessary to prepare the qualifying assets for their
intended uses are complete. Borrowing costs include exchange
differences arising from foreign currency borrowings to the extent that
they are regarded as an adjustment to interest costs. Other borrowing
costs are recognized as an expense in the statement of profit and loss
in the year in which they are incurred.
1.7 Intangible assets
Intangible assets (comprising computer software, patents and technical
know-how acquired for internal use) are recorded at the consideration
paid for acquisition of such assets and are carried at cost less
accumulated amortization and impairment, if any.
1.8 Depreciation and amortization
Depreciation on fixed assets is provided using the straight line method
as per the estimated useful lives of the fixed assets estimated by the
management or at rates specified in Schedule XIV to the Companies Act,
1956 whichever is higher. In the opinion of the management, the rates
of the depreciation used represent the estimated useful life of the
fixed assets. The depreciation rates used by the Company are as
follows:
Depreciation on addition to fixed assets is provided on pro-rata basis
from the first day of month when the assets are put to use.
Depreciation on sale/deduction from fixed assets is provided for up to
the date of sale, deduction and discardment as the case may be.
Premium paid on leasehold land and site development is amortized over
the period of the lease. Leasehold improvements are amortized on the
straight-line basis over the lower of primary period of lease and the
estimated useful life of such assets.
Depreciation on leased assets is in line with the depreciation policy
of the Company and is depreciated over the useful life of such assets.
Individual assets costing of Rs.5,000 or less are fully depreciated in
the year of acquisition.
The intangible assets are amortized over a period of five years, which
in the management's view represents the economic useful life.
Amortization expense is charged on a pro-rata basis for assets
purchased during the year. The appropriateness of the amortization
period and the amortization method is reviewed at each financial
year-end.
1.9 Inventories
Inventories are valued at lower of cost and net realizable value. The
basis of determination of cost for various categories of inventory is
as follows:
Raw materials, components and stores and spares and Stock-in- trade
Cost is determined on weighted average basis.
Finished goods : Material cost plus appropriate share of labour and
production overheads. Cost of finished goods includes excise duty.
Work in progress : Material cost plus appropriate share of the labour
and production overheads depending upon the stage of completion,
wherever applicable.
Tools, moulds and : Material cost plus appropriate dies share of the
labour and production overheads, depending upon the stage of completion
and includes excise duty, wherever applicable.
1.10 Impairment of assets
The carrying amounts of assets are reviewed at each reporting date in
accordance with Accounting Standard - 28 on 'Impairment of assets' to
determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the asset is estimated. An
impairment loss is recognized
whenever the carrying amount of an asset or cash generating unit
exceeds its recoverable amount. Impairment losses are recognized in
the statement of profit and loss. An impairment loss is reversed if
there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the extent
that the asset's carrying amount does not exceed the carrying amount
that would have been determined net of depreciation or amortization, if
no impairment loss had been recognized.
1.11 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing at the date of the transaction. Exchange differences
arising on foreign currency transactions settled during the year are
recognized in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date, are translated at year end rates. The resultant
exchange differences are recognized in the statement of profit and
loss. Non- monetary assets are recorded at the rates prevailing on the
date of the transaction.
In the case of forward contracts:
a) The premium or discount on all such contracts arising at the
inception of each contract is amortized over the life of the contract.
b) The exchange difference is calculated as the difference between the
foreign currency amount of the contract translated at the exchange rate
at the reporting date, or the settlement date where the transaction is
settled during the reporting period, and the corresponding foreign
currency amount translated at the later of the date of inception of the
contract and the last reporting date. Such exchange differences are
recognized in the statement of profit and loss in the reporting period
in which the exchange rates change.
c) Any profit or loss arising on the cancellation or renewal of forward
contracts is recognized in the statement of profit and loss.
Investment in foreign entities is recorded at the exchange rate
prevailing on the date of making the investment.
1.12 Research and development
Revenue expenditure on research is expensed off under the respective
heads of account in the year in which it is incurred.
Capitalised development expenditure is stated at cost less accumulated
amortisation and impairment losses, if any. Fixed assets used for
research and development are depreciated in accordance with the
Company's policy as stated above. Expenditure incurred at development
phase, where it is reasonably certain that outcome of development will
be commercially exploited to yield economic benefits to the Company, is
considered as an intangible asset and amortized over the estimated life
of the assets.
1.13 Government grant and subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that (i) the Company will comply all the
conditions attached with them; and (ii) the grant/subsidy will be
received.
When the grant or subsidy relates to revenue, it is recognized as
income on a systematic basis in the statement of profit and loss over
the periods necessary to match them with the related costs, which they
are intended to compensate. Where the grant relates to an asset, it is
recognized as deferred income and released to income in equal amounts
over the expected useful life of the related asset.
Where the Company receives non-monetary grants, the asset is accounted
for on the basis of its acquisition cost. In case a non-monetary asset
is given free of cost, it is recognized at a nominal value.
Government grants of the nature of promoters' contribution are credited
to capital reserve and treated as a part of the shareholder's funds.
1.14 Employee benefits
Short term employee benefits
All employee benefits payable / available within twelve months of
rendering the service are classified as short- term employee benefits.
Benefits such as salaries, wages and bonus etc., are recognized in the
statement of profit and loss in the period in which the employee
renders the related service.
Defined contribution plan
Provident fund: Eligible employees receive benefits from the provident
fund, which is a defined contribution plan. Both the employees and the
Company make monthly contributions to the provident fund (with Regional
Provident Fund Commissioner) equal to specified percentage of the
covered employee's basic salary. The Company has no further
obligations under the plan beyond its monthly contributions.
Defined benefit plan
Gratuity: The Company provides for gratuity, a defined benefit
retirement Plan (the "Gratuity Plan") covering eligible employees. The
Plan provides payment to vested employees at retirement, death or
termination of employment, of an amount based on the respective
employee's salary and the tenure of employment with the Company.
Liabilities related to the Gratuity Plan are determined by actuarial
valuation as at the balance sheet date.
Other long term employee benefit
Compensated absences: Un-availed leaves for the year are accumulated
and allowed to be carried over to the next year and within service
period of the employees in accordance with the service rules of the
Company. Provision for compensated absences is made by the Company
based on the amount payable as per the above service, based on
actuarial valuation as at the balance sheet date.
Actuarial valuation: The liability in respect of all defined benefit
plans and other long term employee benefit is accrued in the books of
account on the basis of actuarial valuation carried out by an
independent actuary primarily using the Projected Unit Credit Method,
which recognizes each year of service as giving rise to additional unit
of employee benefit entitlement and measure each unit separately to
build up the final obligation. The obligation is measured at the
present value of estimated future cash flows. The discount rates used
for determining the present value of obligation under defined benefit
plans, is based on the market yields on Government securities as at the
balance sheet date, having maturity periods approximating to the terms
of related obligations. Actuarial gains and losses are recognized
immediately in the statement of profit and loss. Gains or losses on the
curtailment or settlement of any defined benefit plan are recognized
when the curtailment or settlement occurs.
1.15 Accounting for warranty
Warranty costs are estimated by the management on the basis of
technical evaluation and past experience of costs. Provision is made
for the estimated liability in respect of warranty costs in the year of
recognition of revenue and is included in the statement of profit and
loss. The estimates used for accounting for warranty costs are reviewed
periodically and revisions are made, as and when required.
1.16 Leases
Where the Company is lessee
Assets taken on lease by the Company in the capacity of a lessee, where
the Company has substantially all the risks and rewards of ownership
are classified as finance lease. Such leases are capitalized at the
inception of the lease at the lower of the fair value or the present
value of the minimum lease payments and a liability is created for an
equivalent amount. Each lease rental paid is allocated between the
liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor, are recognized as
operating leases. Lease rentals under operating leases are recognized
in the statement of profit and loss on a straight line basis.
Where the Company is lessor
Leases in which the Company transfers substantially all the risks and
benefits of ownership of the asset are classified as finance leases.
Assets given under finance lease are recognized as a receivable at an
amount equal to the net investments in the lease. After initial
recognition, the Company apportions lease rentals between the principal
repayment and interest income so as to achieve a constant periodic rate
of return on the net investment outstanding in respect of the finance
lease. The interest income is recognized in the statement of profit and
loss. Initial direct costs such as legal costs, brokerage costs etc,
are recognized immediately in the statement of profit and loss.
Leases in which the Company does not transfer substantially all the
risks and benefits of ownership of the assets are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income on operating lease is recognized in the
statement of profit and loss on a straight line basis over the lease
term. Costs including depreciation are recognized as an expense in the
statement of profit and loss. Initial direct costs such as legal costs,
brokerage costs, etc, are recognized immediately in the statement of
profit and loss.
1.17 Investments
Investments that are readily realisable and intended to be held for not
more than a year from the date of acquisition are classified as current
investments. All other investments are classified as noncurrent
investments. However, that part of long term investments which is
expected to be realised within 12 months after the reporting date is
also presented under 'current assets' as "current portion of long term
investments" in consonance with the current/ non-current classification
scheme of revised Schedule VI.
Long term investments (including current portion thereof) are carried
at cost less any other-than-temporary diminution in value, determined
separately for each individual investment.
Current investments are carried at the lower of cost and fair value.
The comparison of cost and fair value is done separately in respect of
each category of investments i.e., equity shares, preference shares,
convertible debentures etc.
Any reduction in the carrying amount and any reversals of such
reductions are charged or credited to the statement of profit and loss.
1.18 Income taxes
The current income tax charge is determined in accordance with the
relevant tax regulations applicable to the Company. Deferred tax charge
or credits are recognized for the future tax consequences attributable
to timing differences that result between the profit / (loss) offered
for income taxes and the profit / (loss) as per the financial
statements. Deferred tax in respect of a timing difference which
originates during the tax holiday period but reverses after the tax
holiday period is recognized in the year in which the timing difference
originates. For this purpose the timing differences which originate
first are considered to reverse first. The deferred tax charge or
credit and the corresponding deferred tax liabilities or assets are
recognized using the tax rates that have been enacted or substantively
enacted by the Balance Sheet date. Deferred tax assets are recognized
only to the extent there is reasonable certainty that the assets can be
realised in future; however, when there is a brought forward loss or
unabsorbed depreciation under taxation laws, deferred tax assets are
recognized only if there is virtual certainty of realisation of such
assets. Deferred tax assets are reviewed as at each Balance Sheet date
and written down or written up to reflect the amount that is
reasonably/ virtually certain to be realised.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing evidence that the Company will
pay normal income tax during the specified period. In the year in which
the MAT credit becomes eligible to be recognized as an asset, in
accordance with the provisions contained in the Guidance Note on
Accounting for Credit Available under Minimum Alternative Tax, issued
by the ICAI, the said asset is created by way of a credit to the
statement of profit and loss and shown as "MAT Credit Entitlement".
The Company reviews the same at each Balance Sheet date and writes down
the carrying amount of MAT, if required.
1.19 Earnings per share
Basic earnings/ (loss) per share are calculated by dividing the net
profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
The weighted average numbers of equity shares outstanding during the
year are adjusted for events of bonus issue and share split. For the
purpose of calculating diluted earnings/ (loss) per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares. The
dilutive potential equity shares are deemed to be converted as of the
beginning of the period, unless they have been issued at a later date.
1.20 Provisions, contingent liabilities and contingent assets
A provision is created when there is a present obligation as a result
of a past event and it is more likely than not that there will be an
outflow of resources embodying economic benefits to settle such
obligation and the amount of such obligation can be reliably estimated.
Provisions are not discounted to its present value, and are determined
based on the management's best estimate of the amount of obligation
required at the year end. These are reviewed at each Balance Sheet date
and adjusted to reflect current management estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events not
wholly within the control of the Company. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Provision for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognized
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
The Company does not recognise assets which are of contingent nature
until there is virtual certainty of realisability of such assets.
However, subsequently, if it becomes virtually certain that an inflow
of economic benefits will arise, asset and related income is recognized
in the financial statements of the period in which the change occurs.
1.21 Cash and cash equivalents
Cash and cash equivalents comprise cash balances on hand, cash balance
with bank, and highly liquid investments with maturity period of three
months or less from the date of investment.
2.1.4 Rights, preferences and restrictions attached to each class of
shares
a) Equity shares of Rs.10 each fully paid up
The Company has one class of equity shares having a par value of Rs.10
per share. Each shareholder is eligible for one vote per share held.
The dividend proposed 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.
Further, certain investors ("Investors") have "Anti dilution rights"
i.e.right to further subscription and price protection, ensuring that,
in the event of finalisation of the terms of sale of additional shares,
the Company shall (as per the procedure set out in the Articles) offer
the additional shares on the finalized terms and conditions to the
investors and in the event that the Company issues any additional
equity shares at a price less than the Investor acquisition cost or
have or permit an FPO, at such lower price, then either the Company or
promoters shall transfer such number of equity shares (as per the
procedures set out in the Articles) at either no additional
consideration or at the lowest possible consideration permitted under
applicable law that shall be necessary to ensure that in a revised
investor acquisition cost per Investor that shall be equal or lower
than the price at which the additional shares are proposed to be
issued. Such investors also have "pre emptive rights" wherein any
member of the promoter group shall, before
selling, transferring or otherwise disposing of any of its shares to a
bona fide independent third party purchaser, first give notice to the
Investors and each investor shall have the right (but not the
obligation) to serve on the transferor a pre-emption notice requiring
the transferor to transfer to the purchaser (as per the procedures set
out in the Articles), or to any person nominated by the purchaser, some
or all of the sale shares at the sale price.
Each such investor shall also have the Tag-along right (subject to the
other provisions of Articles and such rights as mentioned above) but
not the obligation to require the transferor to cause the transferee in
a transfer of equity shares to purchase from such investor, for the
same consideration per equity share and upon the same terms and
conditions as are to be paid and given to the transferor.
562,500 and 267,092 equity shares allotted on preferential basis to the
investors and Minda Corporation Limited Employees Stock Option Scheme
Trust (MCL ESOS Trust) on 3 November 2011 and 1 November 2011
respectively were locked in for a period of one year from the date of
allotment.
b) 0.001% cumulative redeemable preference shares of Rs.800 each fully
paid up
The Company has 240,000 cumulative redeemable preference shares of Rs.800
each. The shares carry right of fixed preferential dividend at a rate
of 0.001%. The holders of these share do not have the right to vote and
are compulsorily redeemable at par on or before the expiry of 20 years
from the date of allotment. The dividend on the shares shall be
cumulated and any unpaid dividend shall be added to the amount payable
as dividend in the following year and no dividend can be paid on equity
shares until the entire backlog of unpaid dividends on these shares is
cleared. In the event of liquidation, these share holders are entitled
to get their capital after satisfaction of dues for secured creditors,
but they get preference over equity share capital.
2.1.7 Issue of shares to Minda Corporation Limited Employees' Stock
Option Scheme
Pursuant to the Board of Director's approval in Board meeting held on
29 September 2011, the Company has constituted a trust under the name
''Minda Corporation Limited Employee Stock Option Scheme Trust'' (MCL
ESOS Trust), with the objective of acquiring and holding of shares,
warrants or other securities of the Company for the purpose of
implementing the Company's ESOP Scheme. The Company has contributed a
sum of Rs.1,00,000 towards initial trust fund and later on advanced a sum
or Rs.133,546,000 to fund the purchase of Company's equity shares by MCL
ESOS trust. During a prior year, the Company had issued and allotted
267,092 equity shares of the face value Rs.10 each at the premium of Rs.490
per equity share to the MCL ESOS Trust, as approved in the Extra
ordinary general meeting dated 24 October 2011. Further, the Company
had issued bonus shares in proportion of one equity share for one share
held on 29 March
2012, as decided in Extra ordinary general meeting held on 16 March
2012. In accordance with the guidance note on ""Guidance Note on
Accounting for Employee Share-based Payments"" issued by the ICAI, the
Company has reduced the amount of share capital consideration
(including share premium) received from MCL ESOS trust for presentation
purposes, with a corresponding reduction in advance to MCL ESOS trust.
* During the previous year, the Company had received dividend from
Minda Automotive solutions Limited, a 100% subsidiary company on which
Rs.3,160,280 was paid as dividend distribution tax by the subsidiary
company. Accordingly, the Company had taken a credit of this amount to
set off against the dividend distribution tax on the proposed dividend
for the previous year.
2.6.1 Movement in warranty cost provision
The Company warrants that its products will perform in all material
respects in accordance with the Company's standard specifications for
the warranty period. Accordingly based on specific warranties, claims
history, the Company provides for warranty claims. The activity in the
provision for warranty costs is as follows:
2.6.2 Employee Benefits
a) Defined contribution plans
The Company's employee provident fund and Employee's state insurance
schemes are defined contribution plans. The following amounts have
been recognised as expense for the year and shown under Employee
benefits expense in note 2.23.
b) Defined benefit plans Gratuity
In accordance with the Payment of Gratuity Act, 1972, the Company
provides for gratuity as a defined benefit plan. The gratuity plan
provides for a lump sum payment to the employees at the time of
separation from the service on completion of vested period of
employment i.e. five years. The liability of gratuity plan is provided
based on actuarial valuation as at the end of each financial year based
on which the Company contributes the ascertained liability to Life
Insurance Corporation of India by whom the plan assets are maintained.
Note:
The estimates of future salary increases considered in the actuarial
valuation take into account inflation, seniority, promotion and other
relevant factors such as supply and demand in the employment market.
The discount rate is estimated based on the prevailing market yields of
Indian Government securities as at the balance sheet date for the
estimated term of the obligation.
c) Other long term benefit - Compensated absence
The Company operates compensated absences plan, where in every employee
is entitled to the benefit as per the policy of the Company in this
regard. The salary for calculation of earned leave is last drawn
salary. The same is payable during the service, early retirement,
withdrawal of scheme, resignation by employee and upon death of
employee.
An actuarial valuation of Compensated absence has been carried out by
an independent actuary on the basis of the following assumptions.
The other long term benefit of compensated absence in respect of
employees of the Company as at 31 March 2014 amounts to Rs.25,459,713
(previous year Rs.24,356,090) and the expense recognised in the statement
of profit and loss during the year for the same amounts to Rs.10,373,824
(previous year Rs.12,350,367) [Gross payment of Rs.10,500,946 (previous
year 11,443,424)]
2.8.1 Details of dues to micro and small enterprises as defined under
the Micro, Small and Medium Enterprises Development Act, 2006
Mar 31, 2013
1.1 Basis of accounting
These financial statements have been prepared and presented on a going
concern basis, under the historical cost convention on an accrual basis
of accounting and comply with the Accounting Standards as specified in
the Companies (Accounting Standards) Rules, 2006, other pronouncements
of the Institute of Chartered Accountants of India and the relevant
provisions of the Companies Act, 1956 and guidelines issued by the
Securities and Exchange Board of India, to the extent applicable and as
adopted consistently by the Company.
1.2 Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities, at the end of
the reporting period and the reported amounts of income and expenses
during the reporting period. Examples of estimates amongst others,
includes provisions of future obligations under employee benefit plans,
the useful lives of fixed assets, provision for warranties and sales
returns, customer claims, provision for price changes and impairment of
assets. Actual result could differ from these estimates. Any revision
to accounting estimates is recognized prospectively in the current and
future periods.
1.3 Current-non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the
following criteria:
(i) It is expected to be realised in, or is intended for sale or
consumption in, the Company''s normal operating cycle;
(ii) It is held primarily for the purpose of being traded;
(iii) It is expected to be realised within 12 months after the
reporting date; or
(iv) It is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
(i) It is expected to be settled in the Company''s normal operating
cycle;
(ii) It is held primarily for the purpose of being traded;
(iii) It is due to be settled within 12 months after the reporting
date; or
(iv) The company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
liabilities.
All other liabilities are classified as non-current
1.4 Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criterion must
also be met before revenue is recognized:
Sale of goods
Sales include sale of manufactured goods, tools, moulds and dies.
Revenue from sale of goods is recognized on transfer of significant
risks and rewards of ownership to the customers. Sale of goods is
inclusive of excise duty and is net of sales tax, value added tax,
applicable discounts and allowances and sales returns.
Export benefits
Export incentive entitlements are recognized as income when the right
to receive credit as per the terms of the scheme is established in
respect of the exports made, and where there is no uncertainty
regarding the ultimate collection of the relevant export proceeds.
Other operating income
Service income including job work income is recognized as per the terms
of contracts with customers when the related services are rendered.
Income from royalty, technical know-how arrangements is recognized on
an accrual basis in accordance with the terms of the relevant
agreement.
Dividend and interest income
Dividend income is recognized when the right to receive the income is
established. Income from interest on deposits, loans and interest
bearing securities is recognized on the time proportion method.
1.5 Fixed assets
Fixed assets are carried at cost of acquisition or construction less
accumulated depreciation and impairment. Cost comprises the purchase
price and any attributable cost of bringing the asset to its working
condition for its intended use.
Advance paid towards the acquisition of fixed assets are shown under
non-current asset and tangible fixed assets under construction are
disclosed as capital work- in-progress.
Moulds, dies and tools represent Company owned tools, dies and other
items used in the manufacture of components specific to a customer.
Cost includes engineering, testing and other direct expenses related to
such tools.
1.6 Borrowing Cost
Borrowing costs directly attributable to acquisition, construction or
production of those fixed assets which necessarily take a substantial
period of time to get ready for their intended use are capitalized.
Capitalization of borrowing costs ceases when substantially all the
activities necessary to prepare the qualifying assets for their
intended uses are complete. Borrowing costs include exchange
differences arising from foreign currency borrowings to the extent that
they are regarded as an adjustment to interest costs. Other borrowing
costs are recognized as an expense in the statement of profit and loss
in the year in which they are incurred.
1.7 Intangible assets
Intangible assets (comprising computer software, patents and technical
know-how acquired for internal use) are recorded at the consideration
paid for acquisition of such assets and are carried at cost less
accumulated amortization and impairment, if any.
1.8 Depreciation and amortization
Depreciation on fixed assets is provided using the straight line method
as per the estimated useful lives of the fixed assets estimated by the
management or at rates specified in Schedule XIV to the Companies Act,
1956 whichever is higher. In the opinion of the management, the rates
of the depreciation used represent the estimated useful life of the
fixed assets. The depreciation rates used by the Company are as
follows:
Depreciation on addition to fixed assets is provided on pro-rata basis
from the first day of month when the assets are put to use.
Depreciation on sale/deduction from fixed assets is provided for up to
the date of sale, deduction and discardment as the case may be.
Premium paid on leasehold land and site development is amortized over
the period of the lease. Leasehold improvements are amortized on the
straight-line basis over the lower of primary period of lease and the
estimated useful life of such assets.
Depreciation on leased assets is in line with the depreciation policy
of the Company and is depreciated over the useful life of such assets.
Individual assets costing of Rs.5,000 or less are fully depreciated in
the year of acquisition.
The intangible assets are amortized over a period of five years, which
in the management''s view represents the economic useful life.
Amortization expense is charged on a pro-rata basis for assets
purchased during the year. The appropriateness of the amortization
period and the amortization method is reviewed at each financial
year-end.
1.9 Inventories
Inventories are valued at lower of cost and net realizable value. The
basis of determination of cost for various categories of inventory is
as follows:
Raw materials, : Cost is determined on weighted components and average
basis stores and spares
Finished goods : Material cost plus appropriate share of labour and
production overheads. Cost of finished goods includes excise duty.
Work in progress : Material cost plus appropriate share of the labour
and production overheads depending upon the stage of completion,
wherever applicable.
Tools, moulds and : Material cost plus appropriate dies share of the
labour and production overheads, depending upon the stage of completion
and includes excise duty, wherever applicable.
In the previous year, the Company implemented SAP w.e.f 1 April 2011,
which necessitated a change in its method of valuation of inventory
from first-in-first- out method to weighted average method. As per
Accounting Standard 2 "Valuation of Inventories", the cost of
inventories should be assigned by using the first- in, first-out (FIFO)
or weighted average cost formula. In view of the management, the
impact of this change was not practically ascertainable due to
considerable number of items involved.
1.10 Impairment of assets
The carrying amounts of assets are reviewed at each reporting date in
accordance with Accounting Standard - 28 on '' Impairment of assets'' to
determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the asset is estimated. An
impairment loss is recognized whenever the carrying amount of an asset
or cash generating unit exceeds its recoverable amount. Impairment
losses are recognized in the statement of profit and loss. An
impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset''s carrying amount does not
exceed the carrying amount that would have been determined net of
depreciation or amortization, if no impairment loss had been
recognized.
1.11 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing at the date of the transaction. Exchange differences
arising on foreign currency transactions settled during the year are
recognized in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date, are translated at year end rates. The resultant
exchange differences are recognized in the statement of profit and
loss. Non- monetary assets are recorded at the rates prevailing on the
date of the transaction.
In the case of forward contracts:
a) The premium or discount on all such contracts arising at the
inception of each contract is amortized over the life of the contract.
b) The exchange difference is calculated as the difference between the
foreign currency amount of the contract translated at the exchange rate
at the reporting date, or the settlement date where the transaction is
settled during the reporting period, and the corresponding foreign
currency amount translated at the later of the date of inception of the
contract and the last reporting date. Such exchange differences are
recognized in the statement of profit and loss in the reporting period
in which the exchange rates change.
c) Any profit or loss arising on the cancellation or renewal of forward
contracts is recognized in the statement of profit and loss.
Investment in foreign entities is recorded at the exchange rate
prevailing on the date of making the investment.
1.12 Research and development
Revenue expenditure on research is expensed off under the respective
heads of account in the year in which it is incurred.
Capitalised development expenditure is stated at cost less accumulated
amortisation and impairment losses, if any. Fixed assets used for
research and development are depreciated in accordance with the
Company''s policy as stated above. Expenditure incurred at development
phase, where it is reasonably certain that outcome of development will
be commercially exploited to yield economic benefits to the Company, is
considered as an intangible asset and amortized over the estimated life
of the assets.
1.13 Government grant and subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that (i) the Company will comply all the
conditions attached with them; and (ii) the grant/subsidy will be
received.
When the grant or subsidy relates to revenue, it is recognized as
income on a systematic basis in the statement of profit and loss over
the periods necessary to match them with the related costs, which they
are intended to compensate. Where the grant relates to an asset, it is
recognized as deferred income and released to income in equal amounts
over the expected useful life of the related asset.
Where the Company receives non-monetary grants, the asset is accounted
for on the basis of its acquisition cost. In case a non-monetary asset
is given free of cost, it is recognized at a nominal value.
Government grants of the nature of promoters'' contribution are credited
to capital reserve and treated as a part of the shareholder''s funds.
1.14 Employee benefits
Short term employee benefits
All employee benefits payable / available within twelve months of
rendering the service are classified as short- term employee benefits.
Benefits such as salaries, wages and bonus etc., are recognized in the
statement of profit and loss in the period in which the employee
renders the related service.
Defined contribution plan
Provident fund: Eligible employees receive benefits from the provident
fund, which is a defined contribution plan. Both the employees and the
Company make monthly contributions to the provident fund (with Regional
Provident Fund Commissioner) equal to specified percentage of the
covered employee''s basic salary. The Company has no further
obligations under the plan beyond its monthly contributions.
Defined benefit plan
Gratuity: The Company provides for gratuity, a defined benefit
retirement Plan (the "Gratuity Plan") covering eligible employees. The
Plan provides payment to vested employees at retirement, death or
termination of employment, of an amount based on the respective
employee''s salary and the tenure of employment with the Company.
Liabilities related to the Gratuity Plan are determined by actuarial
valuation as at the balance sheet date.
Other long term employee benefit
Compensated absences: Un-availed leaves for the year are accumulated
and allowed to be carried over to the next year and within service
period of the employees in accordance with the service rules of the
Company. Provision for compensated absences is made by the Company
based on the amount payable as per the above service, based on
actuarial valuation as at the balance sheet date.
Actuarial valuation: The liability in respect of all defined benefit
plans and other long term employee benefit is accrued in the books of
account on the basis of actuarial valuation carried out by an
independent actuary primarily using the Projected Unit Credit Method,
which recognizes each year of service as giving rise to additional unit
of employee benefit entitlement and measure each unit separately to
build up the final obligation. The obligation is measured at the
present value of estimated future cash flows. The discount rates used
for determining the present value of obligation under defined benefit
plans, is based on the market yields on Government securities as at the
balance sheet date, having maturity periods approximating to the terms
of related obligations. Actuarial gains and losses are recognized
immediately in the statement of profit and loss. Gains or losses on the
curtailment or settlement of any defined benefit plan are recognized
when the curtailment or settlement occurs.
1.15 Accounting for warranty
Warranty costs are estimated by the management on the basis of
technical evaluation and past experience of costs. Provision is made
for the estimated liability in respect of warranty costs in the year of
recognition of revenue and is included in the statement of profit and
loss. The estimates used for accounting for warranty costs are reviewed
periodically and revisions are made, as and when required.
1.16 Leases
Where the Company is lessee
Assets taken on lease by the Company in the capacity of a lessee, where
the Company has substantially all the risks and rewards of ownership
are classified as finance lease. Such leases are capitalized at the
inception of the lease at the lower of the fair value or the present
value of the minimum lease payments and a liability is created for an
equivalent amount. Each lease rental paid is allocated between the
liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor, are recognized as
operating leases. Lease rentals under operating leases are recognized
in the statement of profit and loss on a straight line basis.
Where the Company is lessor
Leases in which the Company transfers substantially all the risks and
benefits of ownership of the asset are classified as finance leases.
Assets given under finance
lease are recognized as a receivable at an amount equal to the net
investments in the lease. After initial recognition, the Company
apportions lease rentals between the principal repayment and interest
income so as to achieve a constant periodic rate of return on the net
investment outstanding in respect of the finance lease. The interest
income is recognized in the statement of profit and loss. Initial
direct costs such as legal costs, brokerage costs etc, are recognized
immediately in the statement of profit and loss.
Leases in which the Company does not transfer substantially all the
risks and benefits of ownership of the assets are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income on operating lease is recognized in the
statement of profit and loss on a straight line basis over the lease
term. Costs including depreciation are recognized as an expense in the
statement of profit and loss . Initial direct costs such as legal
costs, brokerage costs etc, are recognized immediately in the statement
of profit and loss.
1.17 Investments
Investments that are readily realisable and intended to be held for not
more than a year from the date of acquisition are classified as current
investments. All other investments are classified as non-current
investments. However, that part of long term investments which is
expected to be realised within 12 months after the reporting date is
also presented under ''current assets'' as "current portion of long term
investments" in consonance with the current/ non-current classification
scheme of revised Schedule VI.
Long term investments (including current portion thereof) are carried
at cost less any other-than-temporary diminution in value, determined
separately for each individual investment.
Current investments are carried at the lower of cost and fair value.
The comparison of cost and fair value is done separately in respect of
each category of investments i.e., equity shares, preference shares,
convertible debentures etc.
Any reduction in the carrying amount and any reversals of such
reductions are charged or credited to the statement of profit and loss.
1.18 Income taxes
The current income tax charge is determined in accordance with the
relevant tax regulations applicable to the Company. Deferred tax charge
or credits are recognized for the future tax consequences attributable
to timing differences that result between the profit / (loss) offered
for income taxes and the profit / (loss) as per the financial
statements. Deferred tax in respect of a timing difference which
originates during the tax holiday period but reverses after the tax
holiday period is recognized in the year in which the timing difference
originates. For this purpose the timing differences which originate
first are considered to reverse first. The deferred tax charge or
credit and the corresponding deferred tax liabilities or assets are
recognized using the tax rates that have been enacted or substantively
enacted by the Balance Sheet date. Deferred tax assets are recognized
only to the extent there is reasonable certainty that the assets can be
realised in future; however, when there is a brought forward loss or
unabsorbed depreciation under taxation laws, deferred tax assets are
recognized only if there is virtual certainty of realisation of such
assets. Deferred tax assets are reviewed as at each Balance Sheet date
and written down or written up to reflect the amount that is reasonably
/ virtually certain to be realised.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing evidence that the Company will
pay normal income tax during the specified period. In the year in which
the MAT credit becomes eligible to be recognized as an asset, in
accordance with the provisions contained in the Guidance Note on
Accounting for Credit Available under Minimum Alternative Tax, issued
by the ICAI, the said asset is created by way of a credit to the
statement of profit and loss and shown as "MAT Credit Entitlement".
The Company reviews the same at each Balance Sheet date and writes down
the carrying amount of MAT, if required.
1.19 Earnings per share
Basic earnings/ (loss) per share are calculated by dividing the net
profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
The weighted average numbers of equity shares outstanding during the
year are adjusted for events of bonus issue and share split. For the
purpose of calculating diluted earnings/ (loss) per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares. The
dilutive potential equity shares are deemed to be converted as of the
beginning of the period, unless they have been issued at a later date.
1.20 Provisions, contingent liabilities and contingent assets
A provision is created when there is a present obligation as a result
of a past event and it is more likely than not that there will be an
outflow of resources embodying economic benefits to settle such
obligation and the amount of such obligation can be reliably estimated.
Provisions are not discounted to its present value, and are determined
based on the management''s best estimate of the amount of obligation
required at the year end. These are reviewed at each Balance Sheet date
and adjusted to reflect current management estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events not
wholly within the control of the Company. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Provision for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognized
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
The Company does not recognise assets which are of contingent nature
until there is virtual certainty of realisability of such assets.
However, subsequently, if it becomes virtually certain that an inflow
of economic benefits will arise, asset and related income is recognized
in the financial statements of the period in which the change occurs.
1.21 Cash and cash equivalents
Cash and cash equivalents comprise cash balances on hand, cash balance
with bank, and highly liquid investments with maturity period of three
months or less from the date of investment.
Mar 31, 2012
1.1 Basis of accounting
These financial statements have been prepared and presented under the
historical cost convention on an accrual basis of accounting and comply
with the Accounting Standards as specified in the Companies (Accounting
Standards) Rules, 2006, other pronouncements of the Institute of
Chartered Accountants of India, the relevant provisions of the
Companies Act, 1956 and guidelines issued by the Securities and
Exchange Board of India, to the extent applicable and as adopted
consistently by the Company.
In preparation and presentation of these financial statements, the
Company has adopted the Revised Schedule VI to the Companies Act, 1956.
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
disclosure made in the financial statements. All assets and liabilities
have been classified as current or non-current as per the Company's
normal operating cycle which has been estimated not to exceed one year
in all cases and other criteria set out in the Revised Schedule VI of
the Companies Act, 1956. Previous year's figures have been regrouped /
reclassified to conform to the classification of assets and liabilities
as at 31 March 2012.
1.2 Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities, at the end of
the reporting period and the reported amounts of income and expenses
during the reporting period. Examples of estimates amongst others,
includes provisions of future obligations under employee benefit plans,
the useful lives of fixed assets, provision for warranties and sales
returns, customer claims, provision for price changes and impairment of
assets. Actual result could differ from these estimates. Any revision
to accounting estimates is recognized prospectively in the current and
future periods.
1.3 Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criterion must
also be met before revenue is recognized:
Sale of goods and services
Sales include sale of manufactured goods, tools, moulds and dies.
Revenue from sale of goods is recognized on transfer of significant
risks and rewards of ownership to the customers. Sale of goods is
inclusive of excise duty and is net of sales tax, value added tax,
applicable discounts and allowances and sales returns.
Export benefits
Export incentive entitlements are recognized as income when the right
to receive credit as per the terms of the scheme is established in
respect of the exports made, and where there is no uncertainty
regarding the ultimate collection of the relevant export proceeds.
Other operating income
Service income including job work income is recognized as per the terms
of contracts with customers when the related services are rendered.
Income from royalty, technical know-how arrangements is recognized on
an accrual basis in accordance with the terms of the relevant
agreement.
Dividend and interest income
Dividend income is recognized when the right to receive the income is
established. Income from interest on deposits, loans and interest
bearing securities is recognized on the time proportion method.
1.4 Fixed assets
Fixed assets are carried at cost of acquisition or construction less
accumulated depreciation. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use.
Advance paid towards the acquisition of fixed assets are shown under
non current asset and the cost of assets not ready to put to use before
the year end, are disclosed under capital work in progress.
Moulds, dies and tools represent Company owned tools, dies and other
items used in the manufacture of components specific to a customer.
Cost includes engineering, testing and other direct expenses related to
the research and development of such tools.
Borrowing costs directly attributable to acquisition, construction or
production of those fixed assets which necessarily take a substantial
period of time to get ready for their intended use are capitalized.
Capitalization of borrowing costs ceases when substantially all the
activities necessary to prepare the qualifying assets for their
intended uses are complete. Borrowing costs include exchange
differences arising from foreign currency borrowings to the extent that
they are regarded as an adjustment to interest costs. Other borrowing
costs are recognized as an expense in the statement of profit and loss
in the year in which they are incurred.
Intangible assets are recorded at the consideration paid for
acquisition of such assets and are carried at cost less accumulated
amortization and impairment, if any.
1.5 Depreciation and amortization
Depreciation is provided on fixed assets on the straight- line method.
The rates of depreciation prescribed in Schedule XIV to the Companies
Act, 1956 are considered as the minimum rates and in the opinion of the
management, are reflective of the estimated useful lives of the fixed
assets. If the management's estimate of the useful life of a fixed
asset at the time of acquisition of the asset or of the remaining
useful life on a subsequent review is shorter than that envisaged in
the aforesaid schedule, depreciation is provided at a higher rate based
on the management's estimate of the useful life/ remaining useful life.
Pursuant to this policy, depreciation has been provided at the
following rates which are higher or equal to the corresponding rates
prescribed in schedule XIV:
Depreciation on addition to fixed assets is provided on pro-rata basis
from the first day of month when the assets are put to use.
Depreciation on sale/deduction from fixed assets is provided for up to
the date of sale, deduction and discardment as the case may be.
Premium paid on leasehold land and site development is amortized over
the period of the lease. Leasehold improvements are amortized on the
straight-line basis over the primary period of lease.
Depreciation on leased assets is in line with the depreciation policy
of the Company and is depreciated over the useful life of respected
assets.
Individual assets costing of Rs.5,000/- or less are fully depreciated in
the year of acquisition.
Intangible assets comprise of computer software and technical knowhow
acquired for internal use and are stated at cost less accumulated
amortization and accumulated impairment loss, if any.
The intangible assets are amortized over a period of five years, which
in the management's view represents the economic useful life.
Amortization expense is charged on a pro-rata basis for assets
purchased during the year. The appropriateness of the amortization
period and the amortization method is reviewed at each financial
year-end.
1.6 Inventories
Inventories are valued at lower of cost and net realizable value. The
basis of determination of cost for various categories of inventory is
as follows:
Raw materials, components and stores and spares
Cost is determined on weighted average basis.
Finished goods
Material cost plus appropriate share of labour and production
overheads. Cost of finished goods includes excise duty.
Work in progress
Material cost plus appropriate share of the labour and production
overheads depending upon the stage of completion, wherever applicable.
Tools, moulds and dies
Material cost plus appropriate share of the labour and production
overheads, depending upon the stage of completion and includes excise
duty, wherever applicable.
In the current year, the Company implemented SAP wef 1 April 2011,
which necessitated a change in its method of valuation of inventory
from first-in-first-out method to weighted average method. As per
Accounting Standard 2 "Valuation of Inventories", the cost of
inventories should be assigned by using the first-in, first- out (FIFO)
or weighted average cost formula. In view of the management, the impact
of this change is not practically ascertainable due to considerable
number of items involved.
1.7 Impairment of assets
The carrying amounts of assets are reviewed at each reporting date in
accordance with Accounting Standard - 28 on 'Impairment of assets' to
determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the asset is estimated. An
impairment loss is recognized whenever the carrying amount of an asset
or cash generating unit exceeds its recoverable amount. Impairment
losses are recognized in the statement of profit and loss. An
impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset's carrying amount does not
exceed the carrying amount that would have been determined net of
depreciation or amortization, if no impairment loss had been
recognized.
1.8 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing at the date of the transaction. Exchange differences
arising on foreign currency transactions settled during the year are
recognized in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date, not covered by forward exchange contracts, are
translated at year end rates. The resultant exchange differences are
recognized in the statement of profit and loss. Non- monetary assets
are recorded at the rates prevailing on the date of the transaction.
In the case of forward contracts:
a) The premium or discount on all such contracts arising at the
inception of each contract is amortized over the life of the contract.
b) The exchange difference is calculated as the difference between the
foreign currency amount of the contract translated at the exchange rate
at the reporting date, or the settlement date where the transaction is
settled during the reporting period, and the corresponding foreign
currency amount translated at the later of the date of inception of the
contract and the last reporting date. Such exchange differences are
recognized in the statement of profit and loss in the reporting period
in which the exchange rates change.
c) Any profit or loss arising on the cancellation or renewal of forward
contracts is recognized in the statement of profit and loss.
Investment in foreign entities is recorded at the exchange rate
prevailing on the date of making the investment.
1.9 Research and development
Revenue expenditure on research is expensed off under the respective
heads of account in the year in which it is incurred.
Capitalised development expenditure is stated at cost less accumulated
amortisation and impairment losses, if any. Fixed assets used for
research and development are depreciated in accordance with the
Company's policy as stated above. Expenditure incurred at development
phase, where it is reasonably certain that outcome of development will
be commercially exploited to yield economic benefits to the Company, is
considered as an intangible asset and amortized over the estimated life
of the assets.
1.10 Government grant and subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that (i) the Company will comply all the
conditions attached with them; and (ii) the grant/subsidy will be
received.
When the grant or subsidy relates to revenue, it is recognized as
income on a systematic basis in the statement of profit and loss over
the periods necessary to match them with the related costs, which they
are intended to compensate. Where the grant relates to an asset, it is
recognized as deferred income and released to income in equal amounts
over the expected useful life of the related asset.
Where the Company receives non-monetary grants, the asset is accounted
for on the basis of its acquisition cost. In case a non-monetary asset
is given free of cost, it is recognized at a nominal value.
Government grants of the nature of promoters' contribution are credited
to capital reserve and treated as a part of the shareholder's funds.
1.11 Employee benefits
Short term employee benefits
All employee benefits payable/available within twelve months of
rendering the service are classified as short- term employee benefits.
Benefits such as salaries, wages and bonus etc., are recognized in the
statement of profit and loss in the period in which the employee
renders the related service.
Defined contribution plan
Provident fund: Eligible employees receive benefits from the provident
fund, which is a defined contribution plan. Both the employees and the
Company make monthly contributions to the provident fund (with Regional
Provident Fund Commissioner) equal to specified percentage of the
covered employee's basic salary. The Company has no further
obligations under the plan beyond its monthly contributions.
Defined benefit plan
Gratuity: The Company provides for gratuity, a defined benefit
retirement Plan (the "Gratuity Plan") covering eligible employees. The
Plan provides payment to vested employees at retirement, death or
termination of employment, of an amount based on the respective
employee's salary and the tenure of employment with the Company.
Liabilities related to the Gratuity Plan are determined by actuarial
valuation as at the balance sheet date.
Other long term employee benefit
Compensated absence: Un-availed leaves for the year are accumulated and
allowed to be carried over to the next year and within service period
of the employees in accordance with the service rules of the Company.
Provision for compensated absence is made by the Company based on the
amount payable as per the above service, based on actuarial valuation
as at the balance sheet date.
Actuarial valuation: The liability in respect of all defined benefit
plans and other long term employee benefit is accrued in the books of
accounts on the basis of actuarial valuation carried out by an
independent actuary primarily using the Projected Unit Credit Method,
which recognizes each year of service as giving rise to additional unit
of employee benefit entitlement and measure each unit separately to
build up the final obligation. The obligation is measured at the
present value of estimated future cash flows. The discount rates used
for determining the present value of obligation under defined benefit
plans, is based on the market yields on Government securities as at the
balance sheet date, having maturity periods approximating to the terms
of related obligations. Actuarial gains and losses are recognized
immediately in the statement of profit and loss. Gains or losses on the
curtailment or settlement of any defined benefit plan are recognized
when the curtailment or settlement occurs.
1.12 Accounting for warranty
Warranty costs are estimated by the management on the basis of
technical evaluation and past experience of costs. Provision is made
for the estimated liability in respect of warranty costs in the year of
recognition of revenue and is included in the statement of profit and
loss. The estimates used for accounting for warranty costs are reviewed
periodically and revisions are made, as and when required.
1.13 Leases
Where the Company is lessee
Assets taken on lease by the Company in the capacity of a lessee, where
the Company has substantially all the risks and rewards of ownership
are classified as finance lease. Such leases are capitalized at the
inception of the lease at the lower of the fair value or the present
value of the minimum lease payments and a liability is created for an
equivalent amount. Each lease rental paid is allocated between the
liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor, are recognized as
operating leases. Lease rentals under operating leases are recognized
in the statement of profit and loss on a straight line basis.
Where the Company is lessor
Leases in which the Company transfers substantially all the risks and
benefits of ownership of the asset are classified as finance leases.
Assets given under finance lease are recognized as a receivable at an
amount equal to the net investments in the lease. After initial
recognition, the Company apportions lease rentals between the principal
repayment and interest income so as to achieve a constant periodic rate
of return on the net investment outstanding in respect of the finance
lease. The interest income is recognized in the statement of profit and
loss. Initial direct costs such as legal costs, brokerage costs etc,
are recognized immediately in the statement of profit and loss.
Leases in which the Company does not transfer substantially all the
risks and benefits of ownership of the assets are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income on operating lease is recognized in the
statement of profit and loss on a straight line basis over the lease
term. Costs including depreciation are recognized as an expense in the
statement of profit and loss . Initial direct costs such as legal
costs, brokerage costs etc, are recognized immediately in the statement
of profit and loss.
1.14 Investments
Investments are classified into long-term investments and current
investments based on intent of the management at the time of making the
investment. Investment intended to be held for more than one year from
the date such investments are made are classified as long-term
investments. All long-term investments are classified as non-current
investments in the balance sheet restate (as per revised schedule VI).
Current investments are valued at lower of cost and market value,
computed category-wise e.g. quoted shares, unquoted shares, government
securities and non-government securities/bonds. The diminution in
current investments is charged to statement of profit and loss and
appreciation, if any, is recognized at the same time of sale. Long-term
investments, including investments in subsidiaries, are valued at cost
unless there is diminution, other than temporary, in their value.
Diminution is considered other than temporary based on criteria that
include the extent to which cost exceeds the market value decline and
the financial health of and specific prospects of the issuer.
1.15 Income taxes
The current income tax charge is determined in accordance with the
relevant tax regulations applicable to the Company. Deferred tax charge
or credits are recognized for the future tax consequences attributable
to timing differences that result between the profit / (loss) offered
for income taxes and the profit / (loss) as per the financial
statements. Deferred tax in respect of a timing difference which
originates during the tax holiday period but reverses after the tax
holiday period is recognized in the year in which the timing difference
originates. For this purpose the timing differences which originate
first are considered to reverse first. The deferred tax charge or
credit and the corresponding deferred tax liabilities or assets are
recognized using the tax rates that have been enacted or substantively
enacted by the Balance Sheet date. Deferred tax assets are recognized
only to the extent there is reasonable certainty that the assets can be
realised in future; however, when there is a brought forward loss or
unabsorbed depreciation under taxation laws, deferred tax assets are
recognized only if there is virtual certainty of realisation of such
assets. Deferred tax assets are reviewed as at each Balance Sheet date
and written down or written up to reflect the amount that is reasonably
/ virtually certain to be realised.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing evidence that the Company will
pay normal income tax during the specified period. In the year in which
the MAT credit becomes eligible to be recognized as an asset, in
accordance with the provisions contained in the Guidance Note on
Accounting for Credit Available under Minimum Alternative Tax, issued
by the ICAI, the said asset is created by way of a credit to the
statement of profit and loss and shown as "MAT Credit Entitlement". The
Company reviews the same at each
Balance Sheet date and writes down the carrying amount of MAT, if
required.
1.16 Earnings per share
Basic earnings/ (loss) per share are calculated by dividing the net
profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
The weighted average numbers of equity shares outstanding during the
year are adjusted for events of bonus issue and share split. For the
purpose of calculating diluted earnings/ (loss) per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares. The
dilutive potential equity shares are deemed to be converted as of the
beginning of the period, unless they have been issued at a later date.
1.17 Provisions, contingent liabilities and contingent assets
A provision is created when there is a present obligation as a result
of a past event and it is more likely than not that there will be an
outflow of resources embodying economic benefits to settle such
obligation and the amount of such obligation can be reliably estimated.
Provisions are not discounted to its present value, and are determined
based on the management's best estimate of the amount of obligation
required at the year end. These are reviewed at each Balance Sheet date
and adjusted to reflect current management estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events not
wholly within the control of the Company. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Provision for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognized
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
The Company does not recognise assets which are of contingent nature
until there is virtual certainty of realisability of such assets.
However, subsequently, if it becomes virtually certain that an inflow
of economic benefits will arise, asset and related income is recognized
in the financial statements of the period in which the change occurs.
1.18 Cash and cash equivalents
Cash and cash equivalents comprise cash balances on hand, cash balance
with bank, and highly liquid investments with maturity period of three
months or less from the date of investment.
Mar 31, 2011
I) Basis of Accounting
The financial statements have been prepared under the historical cost
convention in accordance with generally accepted accounting principles
in India and comply with the mandatory accounting standards issued by
the Institute of Chartered Accountants of India and the disclosure
requirement of the provisions of the Companies Act, 1956, as adopted
consistently by the Company. The Company follows the mercantile system
of accounting and recognizes items of income and expenditure on accrual
basis.
ii) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimatesand
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
for the years presented. Although these estimates are based on
management's best knowledge of current events and actions, actual
results may ultimately differ from these estimates, which are
recognized in the period in which the results are known/materialized.
iii) Revenue Recognition
a) Sales
Sales include sale of manufactured goods, tools, moulds and dies, and
jobwork sales. Revenue from sale of goods are recognised as goods are
dispatched to the customers from the factory. Revenue from sale of
goods to overseas customers is recognized on goods being shipped on
board. However in case of DDP (Delivery Duty Paid) shipments, sales are
recognized on the basis of delivery at destination. Sales are recorded
at invoice value, net of sales tax/Vat, trade discount and sales
returns, but including excise duty.
b) Export Benefits
Export benefits under the Duty Entitlement Pass Book (DEBP) scheme and
Served from India Schemes (SFIS) are recognized in the year the goods /
services are exported.
c) Other Operating Income
Interest, Royalty, Technical Know-how, Service income or any other
Incomes are accounted for to the extent realized or as the ultimate
collection thereof uncertain at the time of raising the claim or when
the Company's right to receive the same is established.
iv) Fixed Assets
Fixed assets are stated at cost of acquisition inclusive of duties,
taxes, incidental expenses, erection commissioning expenses,
preoperative expenses etc. (net of Cenvat benefit availed of excise
duty, cess, countervailing duty on imported capital goods and VAT set
off availed, wherever applicable) up to the date.
Moulds, Dies and Tools represent company owned tools, dies and other
items used in the manufacture of components specific to a customer.
Cost includes engineering, testing and other direct expenses related to
the design and development of such tools.
v) Depreciation
Depreciation on all fixed assets is provided on the straight-line
method over the estimated useful life of the assets or at rates
specified in Schedule XIV to the Companies Act, 1956 whichever is
higher. The depreciation rates used by the Company are as follows:
Premium paid on leasehold land and site development is amortized over
the period of the lease.
Depreciation on addition to fixed assets is provided on pro-rata basis
from the date the assets are put to use. Depreciation on sale/deduction
from fixed assets is provided for up to the date of sale, deduction and
discernment as the case may be.
The intangible assets (Computer Software and Technical Know How
acquired for internal use) are capitalized in accordance with the
relevant Accounting Standard. The cost of such assets is amortized on
straight-line method over a period of five years, the estimated
economic life of the asset.
All assets costing Rs.5,000 or below are depreciated in full by way of a
one-time depreciation charge.
vi) Excise Duty
Excise duty payable on finished goods is accounted for upon manufacture
and transfer of finished goods to the stores. Payment of excise duty is
deferred till clearance of goods from the factory premises.
vii) Inventories
Inventories are valued at lower of cost and net realisable value. The
basis for determination of cost of various categories of inventory is
as follows:
Raw Materials,
Components
and Stores and Spares : First in first out (FIFO) Basis
Finished Goods
-Bought out : First in first out (FIFO) Basis
-Manufactured : Material cost on First in first out
(FIFO)basis plus an appropriate share of production overheads, wherever
applicable. Cost includes excise duty.
-Work-in-Progress : Material cost on First in first out (FIFO) basis
plus an appropriate share of production overheads depending upon stage
of completion, wherever applicable.
-Tools, Moulds and Dies: Material cost on First in first out (FIFO)
basis plus an appropriate share of production overheads depending upon
stage of completion, wherever applicable.
viii) Impairment of Assets
Whenever events indicate that assets may be impaired, the assets are
subject to a test of recoverability based on estimates of future cash
flows arising from continuing use of such assets and from its ultimate
disposal. A provision for impairment loss is recognised where it is
probable that the carrying value of an asset exceeds the amount to be
recovered through use or sale of the asset.
ix) Foreign Currency Transactions
Investment in foreign entities is recorded at the exchange rate
prevailing on the date of making the investment.
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction.
Foreign currency loans covered by forward exchange contracts that are
translated at the rate prevailing on the date of transaction as
increased or decreased by the proportionate difference between the
forward rate and exchange rate on the date of transaction, such
difference having been recognised over the life of the contract.
In the case of liabilities incurred for the acquisition of fixed
assets, the loss or gain on conversion (at the rate prevailing at the
year end or at the forward rate where forward cover has been taken) is
included in the carrying amount of related fixed assets.
Current Assets and liabilities (other than those relating to fixed
assets and investments) are reinstated at the rates prevailing at the
year end or at the forward rate where forward cover has been taken. The
difference between exchange rate at the year end and at the date of the
transaction is recognized as income or expense under the respective
heads of account in Profit and Loss Account.
x) Customs Duty
Customs duty on imported materials and machinery lying in bonded
warehouses and in transit is accounted for on clearance of the goods.
xi) Borrowing costs
Borrowing costs that are attributable to the acquisition, construction
or production of a qualifying asset is capitalized as part of the cost
of that asset. Other borrowing costs are recognized as an expense in
the period in which they are incurred.
xii) Research and Development
Revenue expenses incurred on research and development is charged off to
the Profit and Loss Account in the year in which these expenses are
incurred. Capital expenditure incurred on research and development is
included in fixed assets and depreciated at applicable rates.
xiii) Retirement Benefits
Company's contribution to Provident Fund is charged to the Profit
and Loss Account.
Leave encashment benefits payable to employees are accounted
for on the basis of an actuarial valuation at the end of each
financial year. Leaves are permitted to be encashed during the
tenure of employment.
The company has created an Employee Group Gratuity Fund. The fund has
taken Gratuity-cum-Life insurance policy from the Life Insurance
Corporation of India (LIC). The premium paid/payable to LIC determined
on the basis of an actuarial valuation made at the end of each
financial year is charged to Profit and Loss Account.
xiv) Warranty Claims
provision is made for future warranty costs based on management's
estimates of such future costs.
xv) Leases
Lease rentals are expensed with reference to lease terms.
xvi) Investments
Long term investments are stated at cost, less provision for diminution
in value of investments, which is considered to be permanent based on
perception of the management of the Company. Current investments are
stated at lower of cost or fair market value. Cost includes original
cost of acquisition, including brokerage and stamp duty.
xvii) Income Taxes
Income taxes consist of current taxes and changes in deferred tax
liabilities and assets.
Income taxes are accounted for on the basis of estimated taxes payable
and adjusted for timing differences between the taxable income and
accounting income as reported in the financial statements. Timing
differences between the taxable income and the accounting income as at
March 31, 2011 that reverse in one or more subsequent years are
recognised if they result in taxable amounts. Deferred tax assets or
liabilities are established at the enacted tax rates. Changes in the
enacted rates are recognised in the period of enactment.
Deferred tax assets are recognized only if there is a reasonable
certainty that they will be realized and are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
xviii ) Earnings per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For calculating diluted earnings per share, the net profit or loss for
the year attributable to equity shareholders and the weighted average
number of options outstanding during the year are adjusted for the
effects of all dilutive potential equity shares.
xix) Provisions, Contingent liabilities and Contingent Assets
A provision is made based on reliable estimate when it is probable that
an outflow or resources embodying economic benefits will be required to
settle an obligation. Contingent liabilities, if material, are
disclosed by way of notes to accounts. Contingent assets are not
recognized or disclosed in the financial statements.
Mar 31, 2009
I) Basis of Accounting
The financial statements have been prepared under the historical cost
convention in accordance with generally accepted accounting principles
in India, the accounting standards issued by the Institute of Chartered
Accountants of India and the provisions of the Companies Act, 1956, as
adopted consistently by the Company.
The Company follows the mercantile system of accounting and recognizes
items of income and expenditure on accrual basis.
ii) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses for the years presented. Actual results could differ from
those estimates.
iii) Revenue Recognition
Revenue from sale of good are recognized as goods are dispatched to the
customers from the factory. Revenue from sale of goods to overseas
customers is recognized on goods being shipped on board. However in
case of DDP (Delivery Duty Paid) shipments, sales are recognized on the
basis of delivery at destination. Sales are recorded at invoice value,
net of sales tax/Vat, trade discount and sales returns, but including
excise duty.
iv) Fixed Assets
Fixed assets are stated at cost of acquisition inclusive of duties,
taxes, incidental expenses, erection/commissioning expenses,
preoperative expenses etc (net of Cenvat benefit availed of excise
duty, cess, countervailing duty on imported capital goods and vat set
off availed, wherever applicable) up to the date, the assets are put to
use.
Moulds, Dies and Tools represent Company owned tools, dies and other
items used in the manufacture of components specific to a customer.
Cost includes engineering, testing and other direct expenses related to
the design and development of such tools.
Premium paid on leasehold land and site development is amortised over
the period of the lease.
Depreciation on addition to fixed assets is provided on pro-rata basis
from the date the assets are put to use. Depreciation on sale/
deduction from fixed assets is provided for up to the date of sale,
deduction and discernment as the case may be.
All assets costing Rs.5,000 or below are depreciated in full by way of
a one-time depreciation charge.
vi) Excise Duty
Excise duty payable on finished goods is accounted for upon manufacture
and transfer of finished goods to the stores. Payment of excise duty is
deferred till clearance of goods from the factory premises.
vii) Inventories
Inventories are valued at lower of cost and net realisable value. The
basis for determination of cost of various categories of inventory is
as follows:
Raw Materials, Components and Stores and Spares : FIFO Basis
Finished Goods
Bought out : FIFO Basis
Manufactured
: Material cost on FIFO basis plus an appropriate share of
production overheads wherever applicable. Cost includes excise duty.
Work in Progress
: Material cost on FIFO basis plus an appropriate share of
production overheads wherever applicable.
Tools, Moulds and Dies
: Material cost on FIFO basis plus an appropriate share of
production overheads wherever applicable.
viii) Impairment of Assets
Whenever events indicate that assets may be impaired, the assets are
subject to a test of recoverability based on estimates of future cash
flows arising from continuing use of such assets and from its ultimate
disposal. A provision for impairment loss is recognized where it is
probable that the carrying value of an asset exceeds the amount to be
recovered through use or sale of the asset.
ix) Foreign Currency Transactions
Investment in foreign entities is recorded at the exchange rate
prevailing on the date of making the investment.
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction.
Foreign currency loans covered by forward exchange contracts that are
translated at the rate prevailing on the date of transaction as
increased or decreased by the proportionate difference between the
forward rate and exchange rate on the date of transaction, such
difference having been recognized over the life of the contract.
In the case of liabilities incurred for the acquisition of fixed
assets, the loss or gain on conversion (at the rate prevailing at the
year end or at the forward rate where forward cover has been taken) is
included in the carrying amount of the related fixed assets.
Current Assets and liabilities (other than those relating to fixed
assets and investments) are reinstated at the rates prevailing at the
year end or at the forward rate where forward cover has been taken. The
difference between exchange rate at the year end and at the date of the
transaction is recognized as income or expense under the respective
heads of account in Profit and Loss Account.
x) Customs Duty
Customs duty on imported materials and machinery lying in bonded
warehouses and in transit is accounted for on clearance of the goods.
xi) Borrowing costs
Borrowing costs that are attributable to the acquisition, construction
or production of a qualifying asset is capitalized as part of the cost
of that asset. Other borrowing costs are recognized as an expense in
the period in which they are incurred.
xii) Research and Development
Revenue expenses incurred on research and development is charged off to
the Profit and Loss Account in the year in which these expenses are
incurred. Capital expenditure incurred on research and development is
included in fixed assets and depreciated at applicable rates.
xiii) Retirement Benefits
Company's contribution to Provident Fund is charged to the Profit and
Loss Account.
Leave encashment benefits payable to employees are accounted for on the
basis of an actuarial valuation at the end of each financial year.
Leaves are permitted to be encashed during the tenure of employment.
The company has created an Employee Group Gratuity Fund. The fund has
taken Gratuity-cum-Life insurance policy from the Life Insurance
Corporation of India (LIC). The premium paid/payable to LIC determined
on the basis of an actuarial valuation made at the end of each
financial year is charged to Profit and Loss Account.
xiv) Warranty Claims
A provision is made for future warranty costs based on management's
estimates of such future costs.
xv) Leases
Lease rentals are expensed with reference to lease terms.
xvi) Investments
Long term investments are stated at cost, less provision for diminution
in value of investments, which is considered to be permanent based on
perception of the management of the Company. Current investments are
stated at lower of cost or fair market value. Cost includes original
cost of acquisition, including brokerage and stamp duty.
xvii) Income Taxes
Income taxes consist of current taxes and changes in deferred tax
liabilities and assets.
Income taxes are accounted for on the basis of estimated taxes payable
and adjusted for timing differences between the taxable income and
accounting income as reported in the financial statements. Timing
differences between the taxable income and the accounting income as at
March 31, 2009 that reverse in one or more subsequent years are
recognised if they result in taxable amounts. Deferred tax assets or
liabilities are established at the enacted tax rates. Changes in the
enacted rates are recognised in the period of enactment.
Deferred tax assets are recognised only if there is a reasonable
certainty that they will be realised and are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
xviii) Earnings per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For calculating diluted earnings per share, the net profit or loss for
the year attributable to equity shareholders and the weighted average
number of options outstanding during the year are adjusted for the
effects of all dilutive potential equity shares.
xix) Export Benefits
Export benefits under the duty exemption pass book scheme are
recognised in the year the goods are exported.