Mar 31, 2018
Significant Accounting Policy - Notes to the financial statements
1 Corporate information
Munjal Auto Industries Limited (''the Company'') is a public limited company domiciled and incorporated in India having its registered office at 187, Gl DC Estate, Waghodia, District: Vadodara- 391760. The shares of the Company are listed on two stock exchanges in India i.e. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Company is engaged in manufacturing and selling of Auto components.
2 Application of new Indian Accounting Standards
All the Indian Accounting Standards issued and notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) till the financial statements are authorized have been considered in preparing these financial statements.
Recent accounting pronouncements
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration
On March 28,2018, Ministry of Corporate Affairs ("MCA") 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. This amendment has no effect on the financial statements of the Company.
Ind AS 115- Revenue from Contract with Customers
On March 28,2018, Ministry of Corporate Affairs ("MCA") has notified the Ind AS 115, Revenuefrom Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers. The effect on the Financial statements on adoption of Ind AS 115 is being evaluated by the Company.
3 Basis of preparation and presentation i. Statement of compliance
In accordance with the notification dated February 16,2015, issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (referred to as "Ind AS") notified under section 133 of the CompaniesAct, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 as amended with effect from April 1,2017.
The Financial Statements have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended). These are the Company''s first Ind AS Financial Statements. The date of transition to Ind AS is April 1, 2016. The mandatory exceptions and optional exemptions availed by the Company on First-time adoption have been detailed in Note No. 4 (xv).
Previous period figures in the Financial Statements have been restated in compliance to Ind AS.
Up to the year ended March 31,2017, the Company had prepared the Financial Statements under the historical cost convention on accrual basis in accordance with the Generally Accepted Accounting Principles applicable in India, applying the applicable Accounting Standards as prescribed under the provisions of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 (''Previous GAAP). In accordance with Ind AS 101-"First Time adoption of Indian Accounting Standards" (Ind AS 101), theCompany has presented a reconciliation of Shareholders''equity under Previous GAAP and Ind AS as at March 31,2017, and April 1,2016 and of the Profit after tax as per Previous GAAP and Total Comprehensive Income under Ind AS for the year ended March 31,2017.
ii. Accounting convention
The Financial Statements have been prepared on the historical cost convention on accrual basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchangefor goods and services. The Standalone Financial Statements are presented in Rupees in Lacs and all values are rounded off to the nearest two decimal except otherwise stated.
iii. Operating Cycle
Based on the nature of products/ activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
4 Significant Accounting Policies
i. Property, plant and equipment
Property, plant and equipment (including furniture, fixtures, vehicles, etc.) held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses. Freehold land is not depreciated.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes items directly attributable to the construction or acquisition of the item of property, plant and equipment, and for qualifying assets, borrowing costs capitalised in accordance with the Company''s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as-other property assets commences when the assets are ready for their intended use.
Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Depreciation is charged on a pro-rata basis at thestraight line method overestimated economic useful lives of its property, plant and equipment generally in accordance with that provided in the Schedule II to theAct. Estimated useful lives of these assets are as under:
Description |
Years |
Building |
30-60 |
Plant & Machinery |
15 |
Furniture and Fixtures |
10 |
Vehicles |
8 |
Office Equipment |
5 |
Computers |
3 |
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
ii. Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at costless accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over a period of 3 to 10 years. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Intangible assets is derecognised on disposal or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised in the Statement of Profit and Loss when the asset is derecognised.
iii. Impairmentof tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fairvalue less costs of disposal and value in use.
When it is not possible to estimate the recoverable amount of an individual asset, theCompany estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss. When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the Statement of Profit and Loss.
iv. Inventories
Inventories other than scrap are stated at the lower of cost and net realisable value. Costs of inventories are determined on a moving weighted average. Finished goods and work-in-progress (along with Stock in transit) include appropriate proportion of overheads. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
Scrap is valued at estimated net realisable value.
Inventory of stores and spare parts is valued at weighted average cost or net realisable value, whichever is lower. Provisions are made for obsolete and non-moving inventories. v. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for rebates and other similar allowances.
(a) Sale of goods
Revenue from the sale of goods is recognised when the goods are dispatched and titles have passed, at which time all the following conditions aresatisfied:
- theCompany has transferred to the buyer the significant risks and rewards of ownership of the goods;
- the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the transaction will flow to the Company; and
- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
(b) Dividend and interest income
Dividend income from investments is recognised when the right to receive payment has been established.
Interest income from financial assets is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on, time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
vi. Leases
Leases areclassified as finance leases whenever the termsof the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Rental expense from operating leases is generally recognised on a straight line basis over the term of relevant lease. Where the rentals are structured solely to increase inline with expected general inflation to compensate for the lessor''s expected inflationary cost increase, such increases are recognised in theyear in which such benefits accrue. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
vii. Foreign currency transactions
The functional currency of the Company is Indian Rupees which represents the currency of the primary economic environment in which it operates.
In preparing the financial statements of the Company, transactions in currencies other than the company''s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in the Statement of Profit and Loss in the period in which they arise. viii. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred. ix. Employee benefits
(a) Short-term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, performance incentives and compensated absences which are expected to occur in next twelve months. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognized as an expense as the related service is rendered by employees.
(b) Post-employment benefits
(1) Defined contribution plan
Payments to defined contribution plans are recognised as an expense when employees have rendered service entitling them to the contributions. The eligible employees of the Company are entitled to receive benefits in respect of providentfund, for which both the employees and the Company make monthly contributions at a specified percentage of the covered employees'' salary.
(2) Defined benefit plan
Defined retirement benefit plans comprising of gratuity are recognized based on the present value of defined benefit obligation which is computed using theprojected unit credit method, with actuarial valuations being carried out atthe end of each annual reporting period. These are accounted either as current employee cost or included in cost of assets as permitted. Net interest on the net defined liability is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset and is recognised to the Statement of Profit and Loss except those included in cost of assets as permitted.Remeasurement of defined retirement benefit plans comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest as defined above), are recognised in other comprehensive income except those included in cost of assets as permitted in the period in which they occur and are not subsequently reclassified to the Statement of Profit and Loss. The retirement benefit obligation recognised in the Financial Statements represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of reductions in future contributions to the plans.
(c) Other long term employee benefits
The obligation for long term employee benefits such as long term compensated absences is measured at present value of estimated future cash flows expected to be made by the company and is recognised in a similar manner as in the case of defined benefit plans vide (b)(2) supra.
Long term employee benefit costs comprising current service cost, interest cost implicit in long term employee benefit cost and gains or losses on curtailments and settlements, re-measurement including actuarial gains and losses are recognised in the Statement of Profit and Loss as employee benefit expenses.
x. Income taxes
Income tax expense represents the sum of the current tax and deferred tax.
(a) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the end of the reporting period.
(b) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to theextent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in theform of availability of set off against future income tax liability.
Accordingly, MAT is recognised as deferred tax asset in the balance sheet when the asset can be measured reliably and it is probable thatthefutureeconomic benefit associated with asset will be realised.
(c) Current and deferred tax for the year
Current and deferred tax expense is recognised in the Statement of Profit and Loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
xi. Provisions, contingent liabilities and contingent assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amountof the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
Contingent assets are disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
Contingent liabilities are disclosed in the Financial Statements byway of notes to accounts, unless possibility of an outflow of resources embodying economic benefit is remote.
Productwarranty expenses
The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidences based on actions on product failures. The timing of outflows will vary as and when warranty claim will arise, being typically up to five years.
xii. Financial instruments
Afinancial instrument is any con tract that gives rise to afinancial asset of oneentity and afinancial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured atfair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities atfair value through the Statement of Profit and Loss) are added to ordeducted from thefairvalueof the financial assets orfinancial liabilities, as appropriate, on initial recognition. Transaction costsdirectly attributable to the acquisition of financial assets orfinancial liabilities atfair value through the Statement of Profit and Loss are recognised immediately in the Statement of Profit and Loss.
xiii. Financial assets
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
(a) Financial assets at amortised cost
Financial assets having contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding and that are held within a business model whose objective is to hold such assets in order to collect such contractual cash flows are classified in this category. Subsequently, these are measured at amortized cost using the effective interest method less any impairment losses.
(b) Equity investments atfair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income (FVTOCI) if these financial assets are held within a business 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 on the principal amount outstanding. These include financial assets that are equity instruments and are irrevocably designated as such upon initial recognition. Subsequently, these are measured at fair value and changes therein are recognized directly in other comprehensive income, net of applicable income taxes.
Dividends from these equity investments are recognized in the Statement of Prof it and Loss when the right to receive payment has been established.
When the equity investment is derecognized, the cumulative gain or loss in equity is transferred to retained earnings.
(c) Financial assets atfair value through profit or loss
Financial assets are measured atfair value through Profit or Loss (FVTPL) unless it is measured at amortised cost or atfair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets atfair value through Profitor Loss are immediately recognised in the Statement of Profit and Loss.
(d) Impairmentof financial assets
The Company assesses at each balance sheet date whether afinancial asset or a group of financial assets is impaired. IndAS 109 requires expected credit losses to be measured through a loss allowance. The Company recognises lifetime expected losses for trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to 12 month expected credit losses or at an amount equal to lifetime expected losses, if the credit risk on the financial asset has increased significantly since initial recognition.
(e) Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers thefinancial asset and substantially all the risks and rewards of ownership of the asset to another party. On derecognition of afinancial asset in its entirety (except for equity instruments designated as FVTOCI), the difference between the asset''s carrying amount and the sum of the consideration received and receivable is recognised in the Statement of Profit and Loss.
xiv. Financial liabilities and equity instruments
Debt and equity instruments issued by Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
(a) Financial liabilities
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ''Finance costs''.
(b) Equity instruments
An equity instrument is any contract that evidences residual interests in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
(c) Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. The difference between thecarrying amount of thefinancial liability derecognised and the consideration paid and payable is recognised in the Statement of Profit and Loss.
xv. First-time adoption - mandatory exceptions and optional exemptions
(a) Overall principle
The Company has prepared the opening Balance Sheet as per I nd AS as of April 1,2016 (''the transition date'') by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by I nd AS, by reclassifying certain itemsfrom Previous GAAP to Ind AS as required under the Ind AS, and applying Ind AS in the measurementof recognised assets and liabilities. However, this principle is subject to certain mandatory exceptions and certain optional exemptions availed by the Company as detailed below.
(b) Derecognition of financial assets and financial liabilities
The Company has applied thederecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after 1 ^ April, 2016 (the transition date).
(c) Impairmentof financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transitbn date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
(d) Deemed cost for property, plant and equipment and intangible assets
The Company has elected to continue with the carrying value of all of its plant and equipment and intangible assets as recognised as of April 01,2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
xvi. Statement of cash flows
Cash flows are reported using the indirect method, whereby profit after tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing orfinancing cash flows. The cash flows are segregated into operating, investing and financing activities.
5 Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company accounting policies, which are described in note 3, the management of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparentfrom other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
(i) Critical judgments in applying accounting policies
The following are the areas of estimation uncertainty and critical judgements that the management has made in the process of applying the Company''s accounting policies and that have the most significant effect on the amounts recognised in the financial statements:-
(a) Evaluation of indicatorsforimpairmentof property, plantand equipment
The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline asset''s value, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the asset etc.) which could result in significant change in recoverable amount of the Property, Plantand Equipment.
(ii) Assumptions and key sources of estimation uncertainty
(a) Assets and obligations relating to employee benefits
The employment benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost/ (income) include the discount rate, inflation and mortality assumptions. Any changes in these assumptions will impact upon the carrying amount of employment benefit obligations.
(b) Useful lives of depreciable assets
Management reviews the useful lives of depreciable assets at each reporting. As at March 31,2018 management assessed that the useful lives represent the expected utility of the assets to theCompany Further, there is no significantchangein the useful lives as compared to previous year.
(c) Estimation of provision for warranty
Management estimates the related provision forfuture warranty claims based on certain percentages of revenue. The provision is based on historical information on the nature, frequency and average cost of warranty claims. Management, also estimates regarding possible future outflow on servicing the customers for any corrective action in respect of product failure which is generally expected to be settled within a period of 1 to 5 years.The assumptions made in relation to the current period are consistent with those in the prior year. Factors that could impact the estimated claim information include the success of the Company''s productivity and quality initiatives.
(d) Provision for slow moving and obsolete items in inventory valuation
Inventories are measured at the lower of cost and net realizable value. Write-down of inventories are calculated based on an analysis of foreseeable changes in demand, technology or market conditions to determine obsolete or excess inventories.
Mar 31, 2017
1. Significant Accounting Policies Company Overview
Munjal Auto Industries Limited is a manufacturing Company engaged in manufacture of Exhaust systems, Wheels, Rims, Fuel tanks and other components for Auto Industries.
1.1 Basis of Preparation of Financial Statement
These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis and comply with mandatory accounting standards which are applicable under the provisions of the Companies Act, 2013. 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, or as otherwise disclosed.
1.2 Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
1.3 Revenue Recognition
Revenue is primarily derived from Sales of auto components.
a) Sales are accounted inclusive of excise duty but net of Sales tax / Value added tax.
b) Sales are recognized when substantial risk and rewards of ownership are transferred to customers.
Interest income is recognized on time proportion basis.
Dividend Income is recognized when the right to receive dividend is established
1.4 Provisions and Contingent liabilities
A provision is recognized if, as a result of a past event, the Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where 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.
1.5 Employees Benefits
a. Gratuity
Liabilities with regard to the Gratuity Plan are determined by actuarial valuation at each balance sheet date using the projected unit credit method. Actuarial gains / losses are charged to revenue in the year in which they arise. The Company contributes to a scheme administered by the Life Insurance Corporation of India to discharge the liabilities to the employees by policy taken for this purpose with LIC of India in the name of âMunjal Auto Industries Limited Employees'' Gratuity Trustâ.
b. Other long term employee benefits :
Other long-term employee benefit viz., leave benefit is recognized as an expense in the Statement of Profit and Loss as and when it accrues. The Company determines the liability using the Projected Unit Credit Method with actuarial valuation carried out as at the balance sheet date. Actuarial gains and losses in respect of such benefit are charged to the Statement of Profit and Loss.
c. Superannuation
The Company makes contribution to a scheme administered by the Life Insurance Corporation of India b discharge superannuation liabilities to the employees. The Company has no obligations to the Plan beyond its monthly contributions.
d. Provident Fund
Both the employees and the Company make monthly contributions to the provident fund equal to a specified percentage of the covered employees'' salary. Contributions of the Company are recognized as expense in profit and loss account as and when these are incurred.
1.6 Fixed assets, Intangible Assets and Capital Work in Progress
Fixed assets are stated at cost, less accumulated depreciation and impairment, if any Capital work-in-progress comprises of the cost of fixed assets that are not yet ready for their intended use at the reporting date. Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.
Cost of leasehold land has been amortized over lease period.
1.7 Depreciation and Amortization
Depreciation has been provided as per straight-line method in the manner and at the rates specified in Schedule II of the Companies Act, 2013 except that in case of expenditure on software. In the opinion of management useful life of fixed assets broadly correspondence to life as specified in schedule II of the Companies Act, 2013 and the depreciation provided accordingly. Cost of software is amortized over 3 to 10 years considering its useful life.
1.8 Foreign Currency Transactions
Transactions in Foreign Currency are recorded at the rate of exchange prevailing on the date of the transaction. Monetary items denominated in foreign currencies outstanding at the year-end are restated in Indian Rupees at the rates prevailing on the date of the balance sheet.
Any gain or loss on account of exchange difference either on a settlement of the obligation or on a translation is recognized in the statement of Profit & Loss.
1.9 Income Taxes
Income tax is accrued in the same period that the related revenue and expenses arise. A provision is made for income tax annually, based on the tax liability computed, after considering tax allowances and exemptions. Provisions are recorded when it is estimated that a liability due to disallowances or other matters is probable. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability, is recognized as an asset in the Balance Sheet if there is convincing evidence that the Company will pay normal tax after the tax holiday period and the resultant asset can be measured reliably The Company offsets, on a year on year basis, the current tax assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis.
The differences that result between the profit considered for income taxes and the profit as per the financial statements are identified, and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount of timing difference. The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on enacted or substantively enacted regulations. Deferred tax assets in situation where unabsorbed depreciation and carry forward business loss exists, are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets, other than in situation of unabsorbed depreciation and carry forward business loss, are recognized only if there is reasonable certainty that they will be realized. Deferred tax assets are reviewed for the appropriateness of their respective carrying values at each reporting date.
Deferred tax in respect of Haridwar Unit availing deduction under section 80IC of Income Tax Act, 1931 in respect of timing differences which reverse during tax holiday period, are not recognized to the extent the income is subject to deduction.
1.10 Earnings per Share
Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period.
1.11 Borrowing Costs
Borrowing Costs attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of the assets till the asset is ready for use. Interest on other borrowing is charged to Profit & Loss Account.
1.12 Investments
Current Investments are stated at cost or fair value whichever is lower, determined on individual investment basis.
1.13 Inventories
Inventories other than scrap are valued at cost or net realizable value whichever is lower. Cost induces cost of purchases and other cost incurred in bringing the inventory to their present location and condition. Cost is ascertained on weighted average method. Net releasable value is estimated selling price in ordinary course of business, less estimated cost necessary to make the sale.
Scrap is valued at estimated net realizable value.
Cost of Work in Process and Finished Goods include cost of materials and other inputs plus appropriate share of labor and overheads. Excise duty is included in the value of finished goods inventory.
1.14 Impairment of Assets
The Carrying amounts of fixed assets are reviewed at each balance sheet date to ascertain whether there is any indication of impairment in their value caused by any internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount, recoverable amount being the greater of the assets'' net selling price and value in use.
1.15 Operating Leases
Lease charges paid for operating leases are charged to profit and loss account on a straight-line basis over the lease term. Initial direct expenses at the time of inception of lease are charged to Profit & Loss Account.
1.16 Warranty Claims
Provision is made for estimated liability on account of warranty claims, the cost of replacement of goods sold as per the terms of warranty, based on historical information and corrective actions to reduce the claims.
1.17 Provisions and Contingencies
Provisions are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but disclosed in the note.
1.18 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature and items of income or expenses associated with investing or financing cash flows. The cash fows from operating, investing and financing activities of the Company are segregated.
Mar 31, 2015
1 Basis of Preparation of Financial Statement
These financial statements are prepared in accordance with Indian
Generally Accepted Accounting Prnciples (GAAP) under the historical
cost convention on the accrual basis and comply with mandatory
accounting standards which are applicable under the provisions of the
Companies Act, 2013. 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, or as otherwise disclosed.
2 Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Accounting
estimates could change from period to period. Actual results could
differ from those estimates. Appropriate changes in estimates are made
as the Management becomes aware of changes in circumstances surrounding
the estimates. Changes in estimates are reflected in the financial
statements in the period in which changes are made and, if material,
their effects are disclosed in the notes to the financial statements.
3 Revenue Recognition
Revenue is primarily derived from Sales of auto components.
a) Sales are accounted inclusive of excise duty but net of Sales tax /
Value added tax.
b) Sales are accounted on the date of removal of goods from the
factory.
Interest income is recognized on time proportion basis.
Dividend Income is recognized when the right to receive dividend is
established
4 Provisions and Contingent liabilities
A provision is recognized if, as a result of a past event, the Company
has a present legal obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation
at the reporting date. Where no reliable estimate can be made, a
disclosure is made as contingent liability. A disclosure for a
contingent liability is also made when there is a possible obligation
or a present obligation that may, but probably will not, require an
outflow of resources. Where 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.
5 Employees Benefits
a. Gratuity
Liabilities with regard to the Gratuity Plan are determined by
actuarial valuation at each Balance Sheet date using the projected unit
credit method. Actuarial gains/losses arecharged to revenue in the year
inwhich they arise. TheCompany contributes to a scheme administered by
the Life Insurance Corporation of India to discharge the liabilities to
the employees by policy taken for this purpose with LIC of India in the
name of "Munjal Auto Industries Limited Employees'' Gratuity Trust".
b. Other long term employee benefits :
Other long-term employee benefit viz., leave encashment is recognized
as an expense in the Statement of Profit and Loss as and when it
accrues. The Company determines the liability using the Projected Unit
Credit Method with actuarial valuation carried out as at the balance
sheet date. Actuarial gains and losses in respect of such benefit are
charged to the Statement of Profit and Loss.
c. Superannuation
The Company makes contribution to a scheme administered by the Life
Insurance Corporation of India to discharge superannuation liabilities
to the employees. The Company has no obligations to the Plan beyond its
monthly contributions.
d. Provident Fund
Both the employees and the Company make monthly contributions to the
provident fund equal to a specified percentage of the covered
employees'' salary. Contributions of the company are recognized as
expense in profit and loss account as and when these are incurred.
6 Fixed assets, Intangible Assets and Capital Work in Progress
Fixed assets are stated at cost, less accumulated depreciation and
impairment, if any. Capital work-in-progress comprises of the cost of
fixed assets that are not yet ready for their intended use at the
reporting date. Intangible assets are recorded at the consideration
paid for acquisition of such assets and are carried at costless
accumulated amortization and impairment.
Cost of leasehold land has not been amortised over lease period due to
the long tenure of the lease and smallness of amount.
7 Depreciation and Amortization
Depreciation has been provided as per straight-line method in the
manner and at the rates specified in Schedule II of the Companies Act,
2013 except that in case of expenditure on software. Cost of software
is amortised over 3 to 10 years considering its useful life.
8 Foreign Currency Transactions
Transactions in Foreign Currency are recorded at the rate of exchange
prevailing on the date of the transaction. Monetary items denominated
in foreign currencies outstanding at the year-end are restated in
Indian Rupees at the rates prevailing on the date of the balance sheet.
Any gain or loss on account of exchange difference either on a
settlement of the obligation or on a translation is recognized in the
statement of Profit & Loss.
9 Income Taxes
Income tax is accrued in the same period that the related revenue and
expenses arise. A provision is made for income tax annually, based on
the tax liability computed, after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowances or other matters is probable. Minimum
alternate tax (MAT) paid in accordance with the tax laws, which gives
rise to future economic benefits in the form of tax credit against
future income tax liability, is recognized as an asset in the Balance
Sheet if there is convincing evidence that the Company will pay normal
tax after the tax holiday period and the resultant asset can be
measured reliably. The Company offsets, on a year on year basis, the
current tax assets and liabilities, where it has a legally enforceable
right and where it intends to settle such assets and liabilities on a
net basis.
The differences that result between the profit considered for income
taxes and the profit as per the financial statements are identified,
and thereafter a deferred tax asset or deferred tax liability is
recorded for timing differences, namely the differences that originate
in one accounting period and reverse in another, based on the tax
effect of the aggregate amount of timing difference. The tax effect is
calculated on the accumulated timing differences at the end of an
accounting period based on enacted or substantively enacted
regulations. Deferred tax assets in situation where unabsorbed
depreciation and carry forward business loss exists, are recognized
only if there is virtual certainty supported by convincing evidence
that sufficient future taxable income will be available against which
such deferred tax asset can be realized. Deferred tax assets, other
than in situation of unabsorbed depreciation and carry forward business
loss, are recognized only if there is reasonable certainty that they
will be realized. Deferred tax assets are reviewed for the
appropriateness of their respective carrying values at each reporting
date.
Deferred tax in respect of Haridwar Unit availing deduction under
section 80IC of Income Tax Act, 1961 in respect of timing differences
which reverse during tax holiday period, are not recognized to the
extent the income is subject to deduction.
10 Earnings per Share
Basic earnings per share is computed by dividing the net profit after
tax by the weighted average number of equity shares outstanding during
the period.
11 Borrowing Costs
Borrowing Costs attributable to the acquisition, construction or
production of qualifying assets are capitalized as part of the cost of
the assets till the asset is ready for use. Interest on other borrowing
is charged to Profit & Loss Account.
12 Investments
Current Investments are stated at cost or fair value whichever is
lower, determined on individual investment basis.
13 Inventories
Inventories other than scrap are valued at cost or net realisable value
whichever is lower Cost of purchases is ascertained on weighted average
method.
Scrap is valued at estimated net realisable value.
Cost of Work in Process and Finished Goods include cost of materials
and other inputs plus appropriate share of labour and overheads.
Excise duty is included in the value of finished goods inventory.
14 Impairment of Assets
The Carrying amounts of fixed assets are reviewed at each balance sheet
date to ascertain whether there is any indication of impairment in
their value caused by any internal / external factors. An impairment
loss is recognized wherever the carrying amount of an asset exceeds its
recoverable amount, recoverable amount being the greater of the assets''
net selling price and value in use.
15 Operating Leases
Lease charges paid for operating leases are charged to profit and loss
account on a straight-line basis over the lease term. Initial direct
expenses at the time of inception of lease are charged to Profit & Loss
Account.
16 Warranty Claims
Provision is made for estimated liability on account of warranty
claims, the cost of replacement of goods sold as per the terms of
warranty, based on historical information and corrective actions to
reduce the claims.
17 Provisions and Contingencies
Provisions are recognized when there is a present obligation as a
result of past events and it is probable that there will be an outflow
of resources. Contingent liabilities are not recognized but disclosed
in the note.
18 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature and items of income or expenses associated with investing or
financing cash flows. The cash flows from operating, investing and
financing activities of the Company are segregated.
Mar 31, 2014
1.1 Basis of Preparation of Financial Statement
These financial statements are prepared in accordance with Indian
GenerallyAccepted Accounting Principles (GAAP) under the historical
cost convention on the accrual basis and comply with mandatory
accounting standards as prescribed by the Companies (Accounting
Standards) Rules, 2006, the provisions of the Companies Act, 1956 and
guidelines issued by the Securities and Exchange Board of India (SEBI).
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, or as otherwise disclosed.
1.2 Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires Management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Accounting
estimates could change from period to period. Actual results could
differ from those estimates. Appropriate changes in estimates are made
as the Management becomes aware of changes in circumstances surrounding
the estimates. Changes in estimates are reflected in the financial
statements in the period in which changes are made and, if material,
their effects are disclosed in the notes to the financial statements.
1.3 Revenue Recognition
Revenue is primarily derived from Sales of auto components.
a) Sales are accounted inclusive of excise duty but net of Sales
Tax/Value Added Tax.
b) Sales are accounted on the date of removal of goods from the
factory.
Interest income is recognized on time proportion basis.
Dividend Income is recognized when the right to receive dividend is
established.
1.4 Provisions and Contingent liabilities
A provision is recognized if, as a result of a past event, the Company
has a present legal obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation
at the reporting date. Where no reliable estimate can be made, a
disclosure is made as contingent liability. A disclosure for a
contingent liability is also made when there is a possible obligation
or a present obligation that may, but probably will not, require an
outflow of resources. Where 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.
1.5 Employees Benefits
a. Gratuity
Liabilities with regard to the Gratuity Plan are determined by
actuarial valuation at each Balance Sheet date using the projected unit
credit method. Actuarial gains / losses are charged to revenue in the
year in which they arise. The Company contributes to a scheme
administered by the Life Insurance Corporation of India to discharge
the liabilities to the employees by policy taken for this purpose with
LIC of India in the name of ÂMunjal Auto Industries Limited
Employees Gratuity TrustÂ.
b. Other long term employee benefits:
Other long-term employee benefit viz., leave encashment is recognized
as an expense in the Statement of Profit and Loss as and when it
accrues. The Company determines the liability using the Projected Unit
Credit Method with actuarial valuation carried out as at the balance
sheet date. Actuarial gains and losses in respect of such benefit are
charged to the Statement of Profit and Loss.
c. Superannuation
The Company makes contribution to a scheme administered by the Life
Insurance Corporation of India to discharge superannuation liabilities
to the employees. The Company has no obligations to the Plan beyond its
monthly contributions.
d. Provident Fund
Both the employees and the Company make monthly contributions to the
provident fund equal to a specified percentage of the covered
employees salary. Contributions of the Company are recognized as
expense in profit and loss account as and when these are incurred.
1.6 Fixed assets, Intangible Assets and Capital Work in Progress
Fixed assets are stated at cost, less accumulated depreciation and
impairment, if any. Capital work-in-progress comprises of the cost of
fixed assets that are not yet ready for their intended use at the
reporting date. Intangible assets are recorded at the consideration
paid for acquisition of such assets and are carried at cost less
accumulated amortization and impairment.
Cost of leasehold land has not been amortised over lease period due to
the long tenure of the lease and smallness of amount.
1.7 Depreciation and Amortization
Depreciation has been provided as per straight-line method in the
manner and at the rates specified in Schedule XIV of the Companies Act,
1956; except that in case of expenditure of software and vehicles,
depreciation is charged at a higher rate of 25 percent considering
their useful life as estimated by the Management of the Company.
1.8 Foreign Currency Transactions
Transactions in Foreign Currency are recorded at the rate of exchange
prevailing on the date of the transaction. Monetary items denominated
in foreign currencies outstanding at the year-end are restated in
Indian Rupees at the rates prevailing on the date of the balance sheet.
Any gain or loss on account of exchange difference either on a
settlement of the obligation or on a translation is recognized in the
statement of Profit & Loss.
1.9 Income Taxes
Income taxis accrued in the same period that the related revenue and
expenses arise. A provision is made for income tax annually, based on
the tax liability computed, after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowances or other matters is probable. Minimum
Alternate Tax (MAT) paid in accordance with the tax laws, which gives
rise to future economic benefits in the form of tax credit against
future income tax liability, is recognized as an asset in the Balance
Sheet if there is convincing evidence that the Company will pay normal
tax after the tax holiday period and the resultant asset can be
measured reliably. The Company offsets, on a year on year basis, the
current tax assets and liabilities, where it has a legally enforceable
right and where it intends to settle such assets and liabilities on a
net basis.
The differences that result between the profit considered for income
taxes and the profit as per the financial statements are identified,
and thereafter a deferred tax asset or deferred tax liability is
recorded for timing differences, namely the differences that originate
in one accounting period and reverse in another, based on the tax
effect of the aggregate amount of timing difference. The tax effect is
calculated on the accumulated timing differences at the end of an
accounting period based on enacted or substantively enacted
regulations. Deferred tax assets in situation where unabsorbed
depreciation and carry forward business loss exists, are recognized
only if there is virtual certainty supported by convincing evidence
that sufficient future taxable income will be available against which
such deferred tax asset can be realized. Deferred tax assets, other
than in situation of unabsorbed depreciation and carryforward business
loss, are recognized only if there is reasonable certainty that they
will be realized. Deferred tax assets are reviewed for the
appropriateness of their respective carrying values at each reporting
date.
Deferred tax in respect of Haridwar Unit availing deduction under
section 80IC of Income Tax Act, 1961 in respect of timing differences
which reverse during tax holiday period, are not recognized to the
extent the income is subject to deduction.
1.10 Earnings per Share
Basic earnings per share is computed by dividing the net profit after
tax by the weighted average number of equity shares outstanding during
the period.
1.11 Borrowing Costs
Borrowing Costs attributable to the acquisition, construction or
production of qualifying assets are capitalized as part of the cost of
the assets till the asset is ready for use. Interest on other borrowing
is charged to Profit & Loss Account.
1.12 Investments
Current Investments are stated at cost or fair value whichever is
lower, determined on individual investment basis.
1.13 Inventories
Inventories other than scrap are valued at cost or net realisable value
whichever is lower. Cost of purchases is ascertained on weighted
average method.
Scrap is valued at estimated net realisable value.
Cost of Work in Process and Finished Goods include cost of materials
and other inputs plus appropriate share of labour and overheads.
Excise duty is included in the value of finished goods inventory.
1.14 Impairment of Assets
The Carrying amounts of fixed assets are reviewed at each balance sheet
date to ascertain whether there is any indication of impairment in
their value caused by any internal/external factors. An impairment loss
is recognized wherever the carrying amount of an asset exceeds its
recoverable amount, recoverable amount being the greater of the
assets net selling price and value in use.
1.15 Operating Leases
Lease charges paid for operating leases are charged to profit and loss
account on a straight-line basis over the lease term. Initial direct
expenses at the time of inception of lease are charged to Profit & Loss
Account.
1.16 Warranty Claims
Provision is made for estimated liability on account of warranty
claims, the cost of replacement of goods sold as per the terms of
warranty, based on historical information and corrective actions to
reduce the claims.
1.17 Provisions and Contingencies
Provisions are recognized when there is a present obligation as a
result of past events and it is probable that there will be an outflow
of resources. Contingent liabilities are not recognized but disclosed
in the note.
1.18 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non- cash
nature and items of income or expenses associated with investing or
financing cash flows. The cash flows from operating, investing and
financing activities of the Company are segregated.
Mar 31, 2013
1.1 Basis of Preparation of Financial Statement
These financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles (GAAP) under the historical
cost convention on the accrual basis and comply with mandatory
accounting standards as prescribed by the Companies (Accounting
Standards) Rules, 2006, the provisions of the Companies Act, 1956 and
guidelines issued by the Securities and Exchange Board of India (SEBI).
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, or as otherwise disclosed.
1.2 Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Accounting
estimates could change from period to period. Actual results could
differ from those estimates. Appropriate changes in estimates are made
as the Management becomes aware of changes in circumstances surrounding
the estimates. Changes in estimates are reflected in the financial
statements in the period in which changes are made and, if material,
their effects are disclosed in the notes to the financial statements.
1.3 Revenue Recognition
Revenue is primarily derived from Sales of auto components.
a) Sales are accounted inclusive of excise duty but net of Sales tax /
Value added tax.
b) Sales are accounted on the date of removal of goods from the
factory. Interest income is recognized on time proportion basis.
Dividend Income is recognized when the right to receive dividend is
established
1.4 Provisions and Contingent liabilities
A provision is recognized if, as a result of a past event, the Company
has a present legal obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation
at the reporting date. Where no reliable estimate can be made, a
disclosure is made as contingent liability. A disclosure for a
contingent liability is also made when there is a possible obligation
or a present obligation that may, but probably will not, require an
outflow of resources. Where 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.
1.5 Employees Benefits
a. Gratuity
Liabilities with regard to the Gratuity Plan are determined by
actuarial valuation at each Balance Sheet date using the projected unit
credit method. Actuarial gains / losses are charged to revenue in the
year in which they arise. The Company contributes to a scheme
administered by the Life Insurance Corporation of India to discharge
the liabilities to the employees by policy taken for this purpose with
LIC of India in the name of "Munjal Auto Industries Limited Employees''
Gratuity Trust".
b. Other long term employee benefits :
Other long-term employee benefit viz., leave encashment is recognized
as an expense in the Statement of Profit and Loss as and when it
accrues. The Company determines the liability using the Projected Unit
Credit Method with actuarial valuation carried out as at the balance
sheet date. Actuarial gains and losses in respect of such benefit are
charged to the Statement of Profit and Loss.
c. Superannuation
The Company makes contribution to a scheme administered by the Life
Insurance Corporation of India to discharge superannuation liabilities
to the employees. The Company has no obligations to the Plan beyond its
monthly contributions.
d. Provident Fund
Both the employees and the Company make monthly contributions to the
provident fund equal to a specified percentage of the covered
employees'' salary. Contributions of the company are recognized as
expense in profit and loss account as and when these are incurred.
1.6 Fixed assets, Intangible Assets and Capital Work in Progress
Fixed assets are stated at cost, less accumulated depreciation and
impairment, if any. Capital work-in-progress comprises of the cost of
fixed assets that are not yet ready for their intended use at the
reporting date. Intangible assets are recorded at the consideration
paid for acquisition of such assets and are carried at cost less
accumulated amortization and impairment.
Cost of leasehold land has not been amortised over lease period due to
the long tenure of the lease and smallness of amount.
1.7 Depreciation and Amortization
Depreciation has been provided as per straight-line method in the
manner and at the rates specified in Schedule XIV of the Companies Act,
1956; except that in case of expenditure of software and vehicles,
depreciation is charged at a higher rate of 25 percent considering
their useful life as estimated by the Management of the Company.
1.8 Foreign Currency Transactions
Transactions in Foreign Currency are recorded at the rate of exchange
prevailing on the date of the transaction. Monetary items denominated
in foreign currencies outstanding at the year-end are restated in
Indian Rupees at the rates prevailing on the date of the balance sheet.
Any gain or loss on account of exchange difference either on a
settlement of the obligation or on a translation is recognized in the
statement of Profit & Loss.
1.9 Income Taxes
Income tax is accrued in the same period that the related revenue and
expenses arise. A provision is made for income tax annually, based on
the tax liability computed, after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowances or other matters is probable. Minimum
Alternate Tax (MAT) paid in accordance with the tax laws, which gives
rise to future economic benefits in the form of tax credit against
future income tax liability, is recognized as an asset in the Balance
Sheet if there is convincing evidence that the Company will pay normal
tax after the tax holiday period and the resultant asset can be
measured reliably. The Company offsets, on a year on year basis, the
current tax assets and liabilities, where it has a legally enforceable
right and where it intends to settle such assets and liabilities on a
net basis.
The differences that result between the profit considered for income
taxes and the profit as per the financial statements are identified,
and thereafter a deferred tax asset or deferred tax liability is
recorded for timing differences, namely the differences that originate
in one accounting period and reverse in another, based on the tax
effect of the aggregate amount of timing difference. The tax effect is
calculated on the accumulated timing differences at the end of an
accounting period based on enacted or substantively enacted
regulations. Deferred tax assets in situation where unabsorbed
depreciation and carry forward business loss exists, are recognized
only if there is virtual certainty supported by convincing evidence
that sufficient future taxable income will be available against which
such deferred tax asset can be realized. Deferred tax assets, other
than in situation of unabsorbed depreciation and carry forward business
loss, are recognized only if there is reasonable certainty that they
will be realized. Deferred tax assets are reviewed for the
appropriateness of their respective carrying values at each reporting
date.
Deferred tax in respect of Haridwar Unit availing deduction under
section 80IC of Income Tax Act, 1961 in respect of timing differences
which reverse during tax holiday period, are not recognized to the
extent the income is subject to deduction.
1.10 Earnings per Share
Basic earnings per share is computed by dividing the net profit after
tax by the weighted average number of equity shares outstanding during
the period.
1.11 Borrowing Costs
Borrowing Costs attributable to the acquisition, construction or
production of qualifying assets are capitalized as part of the cost of
the assets till the asset is ready for use. Interest on other borrowing
is charged to Profit & Loss Account.
1.12 Investments
Current Investments are stated at cost or fair value whichever is
lower, determined on individual investment basis.
1.13 Inventories
Inventories other than scrap are valued at cost or net realisable value
whichever is lower. Cost of purchases is ascertained on weighted
average method.
Scrap is valued at estimated net realisable value.
Cost of Work in Process and Finished Goods include cost of materials
and other inputs plus appropriate share of labour and overheads.
Excise duty is included in the value of finished goods inventory.
1.14 Impairment of Assets
The Carrying amounts of fixed assets are reviewed at each balance sheet
date to ascertain whether there is any indication of impairment in
their value caused by any internal / external factors. An impairment
loss is recognized wherever the carrying amount of an asset exceeds its
recoverable amount, recoverable amount being the greater of the assets''
net selling price and value in use.
1.15 Operating Leases
Lease charges paid for operating leases are charged to profit and loss
account on a straight-line basis over the lease term. Initial direct
expenses at the time of inception of lease are charged to Profit & Loss
Account.
1.16 Warranty Claims
In earlier years, provision for warranty claims was made on the basis
of claims received during the year under consideration. In light of
increasing volume, as also requirement of relative Accounting Standard,
estimated liability on account of warranty claims in respect of sales
made during the year is provided on the basis of historical information
and corrective actions to reduce the claims.
1.17 Provisions and Contingencies
Provisions are recognized when there is a present obligation as a
result of past events and it is probable that there will be an outflow
of resources. Contingent liabilities are not recognized but disclosed
in the note.
1.18 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non- cash
nature and items of income or expenses associated with investing or
financing cash flows. The cash flows from operating, investing and
financing activities of the Company are segregated.
Mar 31, 2012
1.1 Basis of Preparation of Financial Statement
These financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles (GAAP) under the historical
cost convention on the accrual basis. GAAP comprises mandatory
accounting standards as prescribed by the Companies (Accounting
Standards) Rules, 2006, the provisions of the Companies Act, 1956 and
guidelines issued by the Securities and Exchange Board of India (SEBI).
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 the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period i.e. income
taxes, post-sales customer support and the useful lives of fixed assets
and intangible assets. Accounting estimates could change from period to
period. Actual results could differ from those estimates. Appropriate
changes in estimates are made as the Management becomes aware of
changes in circumstances surrounding the estimates. Changes in
estimates are reflected in the financial statements in the period in
which changes are made and if material, their effects are disclosed in
the notes to the financial statements.
1.3 Revenue Recognition
Revenue is primarily derived from sales of auto components.
a) Sales are accounted inclusive of excise duty but net of CST/VAT.
b) Sales are accounted on the date of removal of goods from the
factory.
Interest income is recognized on time proportion basis.
Dividend Income is recognized when the right to receive dividend is
established.
The Company presents revenues net of value-added taxes in its statement
of profit and loss.
1.4 Provisions and Contingent liabilities
A provision is recognized if, as a result of a past event, the Company
has a present legal obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation
at the reporting date. Where no reliable estimate can be made, a
disclosure is made as contingent liability. A disclosure for a
contingent liability is also made when there is a possible obligation
or a present obligation that may, but probably will not, require an
outflow of resources. Where 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.
1.5 Retirement Benefits to Employees
a. Gratuity
In accordance with the Payment of Gratuity Act, 1972, liabilities with
regard to the gratuity plan are determined by actuarial valuation at
each balance sheet date using the projected unit credit method. The
Company contributes to a scheme administered by the Life Insurance
Corporation of India to discharge the liabilities to the employees by
policy taken for this purpose with LIC of India in the name of
"Munjal Auto Industries Limited Employees' Gratuity Trust'.
b. Superannuation
The Company makes contribution to a scheme administered by the Life
Insurance Corporation of India to discharge superannuation liabilities
to the employees. The Company has no obligations to the plan beyond its
monthly contributions.
c. Provident Fund
Both the employee and the Company make monthly contributions to the
provident fund equal to a specified percentage of the covered
employees' salary. Contributions of the company are recognized as
expense in profit and loss account as and when these are incurred.
1.6 Fixed assets, Intangible Assets and Capital Work in Progress
Fixed assets are stated at cost, less accumulated depreciation and
impairment, if any. Capital work-in-progress comprises of the cost of
fixed assets that are not yet ready for their intended use at the
reporting date. Intangible assets are recorded at the consideration
paid for acquisition of such assets and are carried at cost less
accumulated amortization and impairment.
Cost of leasehold land has not been amortised over lease period due to
the long tenure of the lease and smallness of amount.
1.7 Depreciation and Amortization
Depreciation has been provided as per straight-line method in the
manner and at the rates specified in Schedule XIV of the Companies Act,
1956; except that in case of expenditure of software and vehicles,
depreciation is charged at a higher rate of 25 percent considering
their useful life of 4 years as estimated by the management of the
Company.
1.8 Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of the transaction. Monetary items denominated
in foreign currencies outstanding at the year-end are restated in
Indian Rupees at the rates prevailing on the date of the balance sheet.
Any gain or loss on account of exchange difference either on a
settlement of the obligation or on a translation is recognized in the
Profit & Loss Account.
Premium arising at the inception of forward exchange contract to hedge
an underlying liability of the Company is amortised as expense over the
life of the contract.
1.9 Income Taxes
Income taxes are accrued in the same period that the related revenue
and expenses arise. A provision is made for income tax annually, based
on the tax liability computed, after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowances or other matters is probable. Minimum
alternate tax (MAT) paid in accordance with the tax laws, which gives
rise to future economic benefits in the form of tax credit against
future income tax liability, is recognized as an asset in the Balance
Sheet if there is convincing evidence that the Company will pay normal
tax after the tax holiday period and the resultant asset can be
measured reliably. The Company offsets, on a year on year basis, the
current tax assets and liabilities, where it has a legally enforceable
right and where it intends to settle such assets and liabilities on a
net basis.
The differences that result between the profit considered for income
taxes and the profit as per the financial statements are identified,
and thereafter a deferred tax asset or deferred tax liability is
recorded for timing differences, namely the differences that originate
in one accounting period and reverse in another, based on the tax
effect of the aggregate amount of timing difference. The tax effect is
calculated on the accumulated timing differences at the end of an
accounting period based on enacted or substantively enacted
regulations. Deferred tax assets in situation where unabsorbed
depreciation and carry forward business loss exists are recognized only
if there is virtual certainty supported by convincing evidence that
sufficient future taxable income will be available against which such
deferred tax asset can be realized. Deferred tax assets other than in
situation of unabsorbed depreciation and carry forward business loss,
are recognized only if there is reasonable certainty that they will be
realized. Deferred tax assets are reviewed for the appropriateness of
their respective carrying values at each reporting date.
Deferred tax in respect of Hardwire Unit availing deduction under
section 80IC of Income Tax Act, 1961 is recognized in respect of timing
differences which will be reversed after tax holiday period.
1.10 Earnings per Share
Basic earnings per share is computed by dividing the net profit after
tax by the weighted average number of equity shares outstanding during
the period.
1.11 Borrowing Costs
Borrowing Costs attributable to the acquisition, construction or
production of qualifying assets are capitalized as part of the cost of
the assets till the asset is ready for use. Interest on other borrowing
is charged to Statement of Profit & Loss.
1.12 Investments
Current Investments are stated at cost or fair value whichever is lower
determined on individual investment basis.
1.13 Inventories
Inventories other than scrap are valued at cost or net realizable value
whichever is lower. Cost of purchases is ascertained on first in first
out (FIFO) method.
Scrap is valued at estimated net realizable value.
Cost of Work in Process and Finished Goods include cost of materials
and other inputs plus appropriate share of labour and overheads.
Excise duty is included in the value of finished goods inventory.
Provision for obsolescence is made wherever necessary.
1.14 Impairment of Assets
The Carrying amounts of assets are reviewed at each balance sheet date
to ascertain whether there is any indication of impairment in their
value caused by any internal / external factors. An impairment loss is
recognized wherever the carrying amount of an asset exceeds its
recoverable amount. Recoverable amount being the greater of the assets
net selling price and value in use.
1.15 Operating Leases
Lease charges paid for operating leases are charged to profit and loss
account on a straight-line basis over the lease term. Initial direct
expenses at the time of inception of lease are charged to Statement of
Profit & Loss.
1.16 Provision & Contingencies
Provisions recognized when there is a present obligation as a result of
past events and it is probable that there will be an outflow of
resources. Contingent liabilities are not recognized but disclosed in
the note.
1.17 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non- cash
nature and items of income or expenses associated with investing or
financing cash flows. The cash flows from operating, investing and
financing activities of the Company are segregated.
Mar 31, 2011
The financial statements are prepared under the historical cost
convention in accordance with applicable accounting standards and the
relevant provisions of the Companies Act, 1956. The accounting policies
have been consistently applied by the Company and are consistent with
those used in the previous year. Significant accounting policies
followed by the company are as stated below:
1) System of Accounting
The Company has adopted accrual basis of accounting.
2) Fixed Assets
a) All fixed assets are stated at cost less accumulated depreciation.
Cost is inclusive of freight, duties (net of Cenvat credit) and other
incidental expenses in accordance with the applicable Accounting
Standards.
b) Cost of leasehold land has not been amortized over lease period due
to the long tenure of the lease and smallness of amount.
c) Depreciation has been provided as per straight-line method in the
manner and at the rates specified in Schedule XIV of the Companies Act,
1956; except that in case of expenditure on software, and vehicles
depreciation is charged at a higher rate of 25 percent considering
their useful life of 4 years as estimated by the management of the
Company.
3) Investments
Current Investments are stated at cost or fair value whichever is lower
determined on individual investment basis.
4) Inventory
a) Inventories other than scrap are valued at cost or net realisable
value whichever is lower. Cost of purchases is ascertained on first in
first out (FIFO) method.
b) Scrap is valued at estimated net realisable value.
c) Cost of Work in Process and Finished Goods include cost of materials
and other inputs plus appropriate share of labour and overheads. Excise
duty is included in the value of finished goods inventory.
Provision for obsolescence is made wherever necessary.
5) Revenue Recognition; Sale of Goods
a) Sales are accounted inclusive of excise duty but net of sales tax.
b) Sales are accounted on the date of removal of goods from the
factory. Interest income is recognized on time proportion basis.
Dividend Income is recognized when the right to receive dividend is
established.
6) Employees Benefits
Provision is made for short term and long term benefits to employees in
accordance with Accounting Standard Ã15 (further details are given in
note no 16) Actuarial gain / loss is recognized in profit & loss
account.
7) Borrowing Costs
Borrowing Costs attributable to the acquisition, construction or
production of qualifying assets are capitalized as part of the cost of
the assets till the asset is ready for use. Interest on other borrowing
is charged to Profit & Loss Account.
8) Taxation
Provision for current tax is ascertained on the basis of assessable
profits computed in accordance with the provisions of the Income Tax
Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the differences between the taxable
incomes and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods at the rates and
accordance with laws that have been enacted or substantively enacted as
of Balance Sheet date. Deferred tax assets arising from timing
differences are recognized to the extent there is reasonable certainty
that the assets can be realized in future. Deferred tax assets are
reviewed at each Balance Sheet date for realisability.
Deferred tax in respect of Haridwar Unit availing deduction under
section 80IC of Income Tax Act, 1961 is recognized in respect of timing
differences which will reverse after tax holiday period.
9) Foreign Currency Transactions
Transactions in Foreign Currency are recorded at the rate of exchange
prevailing on the date of the transaction. Monetary items denominated
in foreign currencies outstanding at the year-end are restated in
Indian Rupees at the rates prevailing on the date of the Balance Sheet.
Any gain or loss on account of exchange difference either on a
settlement of the obligation or on a translation is recognized in the
Profit & Loss Account.
Premium arising at the inception of forward exchange contract to hedge
an underlying liability of the Company is amortised as expense over the
life of the contract
10) Impairment of Assets
The Carrying amounts of assets are reviewed at each balance sheet date
to ascertain whether there is any indication of impairment in their
value caused by any internal / external factors. An impairment loss is
recognized wherever the carrying amount of an asset exceeds its
recoverable amount. Recoverable amount being the greater of the assets'
net selling price and value in use.
11) Operating Leases
Lease charges paid for operating leases are charged to profit and loss
account on a straight-line basis over the lease term. Initial direct
expenses at the time of inception of lease are charged to Profit & Loss
Account.
12) Provision & Contingencies
Provision involving substantial degree of estimation in measurement are
recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but disclosed in the note.
Mar 31, 2010
The financial statements are prepared under the historical cost
convention in accordance with applicable accounting standards and the
relevant provisions of the Companies Act, 1956. The accounting policies
have been consistently applied by the company and are consistent with
those used in the previous year. Significant accounting policies
followed by the company are as stated below:
1) System of Accounting
The company has adopted accrual basis of accounting.
2) Fixed Assets
a) All fixed assets are stated at cost less accumulated depreciation.
Cost is inclusive of freight, duties (net of Cenvat credit) and other
incidental expenses in accordance with the applicable Accounting
Standards.
b) Cost of leasehold land has not been amortized over lease period due
to the long tenure of the lease and smallness of amount.
c) Depreciation has been provided on straight-line method in the manner
and at the rates as prescribed in Schedule XIV of the Companies Act,
1956; except that in case of expenditures on Information Technology
related software, including their license fees and implementation
costs, and vehicles the rate of depreciation is charged at a higher
rate of 25 percent considering their useful life of 4 years as
estimated by the management of the company.
3) Investments
Current Investments are stated at cost or fair value determined on
individual investment basis, whichever is lower.
4) Inventory
a) Raw Materials, stores and spares, packing materials, components,
work in process and finished goods are valued at cost or net realisable
value whichever is lower. Cost of purchases is ascertained on first in
first out (FIFO) method.
b) Cost of Work in Process and Finished Goods include cost of materials
and other inputs plus appropriate share of labour, overheads. Excise
duty is included in the value of finished goods inventory.
c) Scrap is valued at estimated net realisable value. Provision for
obsolescence is made wherever necessary.
5) Revenue Recognition; Sale of Goods
a) Sales are accounted inclusive of excise duty but net of sales tax.
b) Sales are accounted on the date of removal of goods from the
factory. Interest income is recognized on time proportion basis.
Dividend Income is recognized when the right to receive dividend is
established.
6) Employees Benefits
Provision is made for short term and long term benefits to employees in
accordance with Accounting Standard -15 (further details are given in
note no 16) Actuarial gain / loss is recognized in profit & loss
account.
7) Borrowing Costs
Borrowing Costs directly attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of the cost
of the assets till the asset is ready for use. Interest on other
borrowing is charged to Profit & Loss Account.
8) Taxation
Provision for current tax is ascertained on the basis of assessable
profits computed in accordance with the provisions of the Income Tax
Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the differences between the taxable
incomes and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods at the rates and
accordance with laws that have been enacted or substantively enacted as
of Balance Sheet date. Deferred tax assets arising from timing
differences are recognized to the extent there is reasonable certainty
that the assets can be realized in future. Deferred tax assets are
reviewed at each balance sheet date for its realisability.
Deferred tax in respect of Haridwar Unit availing deduction under
section 80IC of Income Tax Act is recognized in respect of timing
differences which will reverse after tax holiday period.
9) Foreign Currency Transactions
Transactions in Foreign Currency are recorded at the rate of exchange
prevailing on the date of the transaction. Monetary items denominated
in foreign currencies at the year-end are restated in Indian Rupees at
their prevailing conversion rates.
Any gain or loss on account of exchange difference either on a
settlement of the obligation or on a translation is recognized in the
Profit & Loss Account.
Premium arising at the inception of forward exchange contract to hedge
an underlying liability of the Company is amortised as expense over the
life of the contract
10)Impairment of Assets
The Carrying amounts of assets are reviewed at each balance sheet date
to ascertain whether there is any indication of impairment in their
value caused by any internal / external factors. An impairment loss is
recognized wherever the carrying amount of an asset exceeds its
recoverable amount. Recoverable amount being the greater of the assets
net selling price and value in use.
11)Operating Leases
Lease charges paid for operating leases are charged to profit and loss
account on a straight-line basis over the lease term. Initial direct
expenses at the time of inception of lease are charged to Profit & Loss
Account.
12)Provision & Contingencies
Provision involving substantial degree of estimation in measurement are
recognized when there is a permanent obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but disclosed in the note.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article