Mar 31, 2016
Notes forming part of the financial statements for the year ended 31st March 2016
Corporate Information
Premier Ltd. is a BSE and NSE listed public company, incorporated under the Companies Act, 1913. It operates in two business segments: Engineering & Automotive. The Engineering segment consists of Manufacture of CNC Machines and large mechanical components for the wind energy and infrastructure sectors and professional and engineering services related thereto. The Automotive Segment consists of Manufacture of Light and Sport Utility Vehicles along with related spare parts as well as auto components for other OEM''s.
The registered office and plant of the company is located at Chinchwad, Pune while the Corporate office is located at Mumbai. The company has also its branch offices at Chennai and Delhi.
1. Significant Accounting Policies
(i) Basis of Preparation of Financial Statements and use of estimates
a. The financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis except for free hold land which are being carried at revalued amounts. The Company has prepared the financial statements to comply in all material aspects with the Accounting Standards specified under section133 of Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.
The accounting policies have been consistently applied by the Company. The Company has opted to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of Profit & Loss.
b. The preparation of financial statements, in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.
(ii) Revenue Recognition
a. Revenue from sale of goods is recognized when significant risk and rewards in respect of ownership of product is transferred to the customers, which is generally on dispatch of goods.
b. Domestic sales include excise duty and are net of sales returns, trade discounts and sales tax.
c. Export Sales are accounted on the basis of dates of Bill of Lading.
d. Revenue from services is recognized as and when services are rendered as per terms of contract.
e. Income from investments / other income is recognized on accrual basis.
(iii) Inventories are valued as under
a. Raw materials, Components, Stores & Spares, Loose Tools : At moving weighted average cost or net realizable value whichever is lower.
b. Finished Goods: At lower of cost or net realizable value inclusive of excise duty thereon
c. Work-in-Progress: At lower of estimated cost and net realizable value
d. Goods in Transit and under clearance: At lower of actual cost till date (inclusive of customs duty payable thereon) or net realizable value
e. Stock of Scrap: At estimated net realizable value.
(iv) Investments (Non Current)
Long term investments are valued at cost less provision for diminution in value, other than temporary, if any.
(v) Employee Benefits
a. Short Term Employee Benefits
All employee benefits falling due wholly within twelve months of rendering service are classified as short term benefits. The benefits like salaries, wages etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.
b. Employment Benefits
i. Defined Contribution Plan: Defined contribution plan consists of Government Provident Fund Scheme and Employee State Insurance scheme. Company''s contribution paid/payable during the year under these schemes are recognized as expense in the statement of Profit and Loss. There are no other obligations other than the contribution made by the company.
ii. Defined Benefit Plan: The employees'' gratuity schemes and long term compensated absences are the defined benefit plans. Company''s liabilities towards gratuity and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.
Actuarial gain and losses are recognized immediately in the statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by the reference to market yields at the Balance Sheet date on Government bonds.
(vi) Fixed Assets
a. Tangibles: Fixed assets (except free hold land) are stated at cost of acquisition or construction including installation cost, attributable interest and financial cost till such time assets are ready for its intended use and foreign exchange fluctuation on long term borrowings related to fixed assets, less accumulated depreciation, impairment losses and specific grants received if any. Free hold land is stated at revalued amount.
b. Intangibles: Product Development Expenditure and License / Technical know-how fees: Product Development expenditure of capital nature are added to Intangible assets. Expenditure on license and technical know-how fees and other related expenditure towards technological improvement of the products and/or components for captive use are treated as intangible assets. Expenditure of these natures are initially recognized as Intangible Assets under development and eventually transferred to Intangible assets block as appropriate on the commencement of the commercial production after the viability of the product is proven.
(vii) Depreciation and amortization
a. Depreciation on fixed assets except free hold land is provided on pro-rata basis on straight line method over the useful lives of the assets prescribed in the Schedule II of the Companies Act, 2013.
b. Depreciation on fixed assets sold or scrapped during the year is provided up to the month in which such fixed assets are sold or scrapped. Depreciation on additions to fixed assets is calculated on pro-rata basis from the month of addition.
c. Product Development expenditure and License/Technical know-how fees are amortized over a period of 5 years from the accounting year in which the commercial production of such improved product commences.
(viii) Impairment of Assets:
In accordance with Accounting Standard 28 (AS 28) on "Impairment of Assets", where there is an indication of impairment of the Company''s assets, the carrying amounts of the Company''s assets are reviewed at each balance sheet date to determine whether there is any impairment based on internal/external factors. An impairment loss, if any, is recognized in the Statement of Profit & Loss, wherever the carrying amount of an
asset exceeds its estimated recoverable amount. The recoverable amount of the assets is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.
(ix) Foreign Currency Transactions
a. Foreign Currency transactions are recorded on the basis of exchange rates prevailing on the date of their occurrence.
b. Foreign currency monetary assets and liabilities as on the Balance Sheet date are revalued in the accounts on the basis of exchange rates prevailing at the close of the year and exchange difference arising there-from is charged / credited to the Statement of Profit & Loss - except for the exchange difference arising on long term borrowings related to fixed assets, which are capitalized.
(x) Leases
Leases are classified as finance or operating leases depending upon the terms of the lease agreements. Assets held under finance leases are recognized as assets of the Company on the date of acquisition and depreciated over their estimated useful lives.
Initial direct costs under the finance lease are included as part of the amount recognized as asset under the finance lease.
Rentals payable under operating leases are treated as expenses as and when they are incurred.
(xi) Customs Duty
Customs duty is accounted for as and when paid/provided.
(xii) Borrowing Cost
As per Accounting Standard 16 (AS 16) on "Borrowing Costs" borrowing costs that are :
a. directly attributable to the acquisition, construction, production of a qualifying asset are capitalized as a part of cost of such asset till the time the asset is ready for its intended use and;
b. not directly attributable to qualifying assets are determined by applying a weighted average rate and are capitalized as a part of the cost of such qualifying asset till the time the asset is ready for its intended use. Remaining borrowing costs are recognized as an expense in the period in which they are incurred.
(xiii) Contingencies and Provisions
A provision is recognized when the Company has a present obligation as a result of past event. It is probable that an outflow of resources embodying economic benefit will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on the best estimate of the expenditure required to settle the obligation at the balance sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate.
A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.
(xiv) Taxation
Tax expense comprises of current tax and deferred tax charge or credit. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. The deferred tax charge or credit is recognized using prevailing enacted or substantively enacted tax rate. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets/liabilities are reviewed as at each balance sheet date based on developments during the period and available case law to re-assess realization/ liabilities.
Mar 31, 2015
(I) Basis of Preparation of Financial Statements and use of estimates
a. The financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis except for free hold land which are
being carried at revalued amounts. The Company has prepared the
financial statements to comply in all material aspects with the
Accounting Standards specified under section133 of Companies Act, 2013
read with Rule 7 of the Companies (Accounts) Rules, 2014.
The accounting policies have been consistently applied by the company.
The Company has opted to present earning before interest, tax,
depreciation and amortization (EBITDA) as a separate line item on the
face of the statement of Profit & Loss.
b. The preparation of financial statements, in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities at the date of
the financial statements and the results of operations during the
reporting period end. Although these estimates are based upon
management's best knowledge of current events and actions, actual
results could differ from these estimates.
(II) Revenue Recognition
a. Revenue from sale of goods is recognized when significant risk and
rewards in respect of ownership of product is transferred to the
customers, which is generally on dispatch of goods.
b. Domestic sales include excise duty and are net of sales returns,
trade discounts and sales tax.
c. Export Sales are accounted on the basis of dates of Bill of Lading.
d. Revenue from services is recognized as and when services are
rendered as per terms of contract.
e. Income from investments / other income is recognized on accrual
basis.
(iii) Inventories are valued as under
a. Raw materials, Components, Stores & Spares, Loose Tools : At moving
weighted average cost or net realizable value which ever is lower.
b. Finished Goods: At lower of cost or net realizable value inclusive
of excise duty thereon.
c. Work-in-Progress: At lower of estimated cost and net realizable
value.
d. Goods in Transit and under clearance: At lower of actual cost till
date (inclusive of customs duty payable thereon) or net realizable
value.
e. Stock of Scrap: At estimated net realizable value.
(iv) Investments (Non Current)
Long term investments are valued at cost less provision for diminution
in value, other than temporary, if any.
(v) Employee Benefits
a. Short Term Employee Benefits
All employee benefits falling due wholly within twelve months of
rendering service are classified as short term benefits. The benefits
like salaries, wages etc. and the expected cost of bonus, ex-gratia are
recognized in the period in which the employee renders the related
service.
b. Post Employment Benefits
I. Defined Contribution Plan: Defined contribution plan consists of
Government Provident Fund Scheme and Employee State Insurance scheme.
Company's contribution paid/payable during the year under these
schemes are recognized as expense in the statement of Profit and Loss.
There are no other obligations other than the contribution made by the
company.
II. Defined Benefit Plan: The employees' gratuity schemes and long
term compensated absences are the defined benefit plans. Company's
liabilities towards gratuity and leave encashment are determined using
the projected unit credit method which considers each period of service
as giving rise to an additional unit of benefit entitlement and
measures each unit separately to build up the final obligation.
Actuarial gain and losses are recognized immediately in the statement
of Profit and Loss as income or expense. Obligation is measured at the
present value of estimated future cash flow using a discount rate that
is determined by the reference to market yields at the Balance Sheet
date on Government bonds.
(vi) Fixed Assets
a. Tangibles: Fixed assets (except free hold land) are stated at cost
of acquisition or construction including installation cost,
attributable interest and financial cost till such time assets are
ready for its intended use and foreign exchange fluctuation on long
term borrowings related to fixed assets, less accumulated depreciation,
impairment losses and specific grants received if any. Free hold land
is stated at revalued amount.
b. Intangibles: Product Development Expenditure and License / Technical
know-how fees : Product Development expenditure of capital nature are
added to Intangible assets. Expenditure on license and technical
know-how fees and other related expenditure towards technological
improvement of the products and/or components for captive use are
treated as intangible assets. Expenditure of these nature are initially
recognized as Intangible Assets under development and eventually
transferred to Intangible assets block as appropriate on the
commencement of the commercial production after the viability of the
product is proven.
(vii) Depreciation and amortization
a. Depreciation on fixed assets except free hold land is provided on
pro-rata basis on straight line method over the useful lives of the
assets prescribed in the Schedule II of the Companies Act, 2013.
b. Depreciation on fixed assets sold or scrapped during the year is
provided up to the month in which such fixed assets are sold or
scrapped. Depreciation on additions to fixed assets is calculated on
pro-rata basis from the month of addition.
c. Product Development expenditure and License/Technical know-how fees
are amortized over a period of 5 years from the accounting year in
which the commercial production of such improved product commences.
(viii) Impairment of Assets
In accordance with Accounting Standard 28 (AS 28) on "Impairment of
Assets", where there is an indication of impairment of the
Company's assets, the carrying amounts of the Company's assets are
reviewed at each balance sheet date to determine whether there is any
impairment based on internal/external factors. An impairment loss, if
any, is recognized in the Statement of Profit & Loss, wherever the
carrying amount of an asset exceeds its estimated recoverable amount.
The recoverable amount of the assets is estimated at the higher of its
net selling price and its value in use. In assessing the value in use,
the estimated future cash flows are discounted to the present value at
the weighted average cost of capital. After impairment, depreciation is
provided on the revised carrying amount of the assets over its
remaining useful life. Previously recognized impairment loss is further
provided or reversed depending on changes in circumstances.
(ix) Foreign Currency Transactions
a. Foreign Currency transactions are recorded on the basis of exchange
rates prevailing on the date of their occurrence.
b. Foreign currency monetary assets and liabilities as on the Balance
Sheet date are revalued in the accounts on the basis of exchange rates
prevailing at the close of the year and exchange difference arising
there-from is charged / credited to the Statement of Profit & Loss -
except for the exchange difference arising on long term borrowings
related to fixed assets, which are capitalized
(x) Leases
Leases are classified as finance or operating leases depending upon the
terms of the lease agreements. Assets held under finance leases are
recognized as assets of the Company on the date of acquisition and
depreciated over their estimated useful lives. Initial direct costs
under the finance lease are included as part of the amount recognized
as asset under the finance lease. Rentals payable under operating
leases are treated as expenses as and when they are incurred.
(xi) Customs Duty
Customs duty is accounted for as and when paid/provided.
(xii) Borrowing Cost
As per Accounting Standard 16 on "Borrowing Costs" borrowing costs
that are : (a) directly attributable to the acquisition, construction,
production of a qualifying asset are capitalized as a part of cost of
such asset till the time the asset is ready for its intended use and;
(b) not directly attributable to qualifying assets are determined by
applying a weighted average rate and are capitalized as a part of the
cost of such qualifying asset till the time the asset is ready for its
intended use. Remaining borrowing costs are recognized as an expense in
the period in which they are incurred.
(xiii) Contingencies and Provisions
A provision is recognized when the Company has a present obligation as
a result of past event. It is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation in
respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on the best
estimate of the expenditure required to settle the obligation at the
balance sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimate. A contingent liability
is disclosed, unless the possibility of an outflow of resources
embodying the economic benefit is remote.
(xiv) Taxation
Tax expense comprises of current tax and deferred tax charge or credit.
Current tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Indian Income Tax Act. 1961. The
deferred tax charge or credit is recognized using prevailing enacted or
substantively enacted tax rate. Where there is unabsorbed depreciation
or carry forward losses, deferred tax assets are recognized only if
there is virtual certainty of realization of such assets. Other
deferred tax assets are recognized only to the extent there is
reasonable certainty of realization in future. Deferred tax
assets/liabilities are reviewed as at each balance sheet date based on
developments during the period and available case law to re-assess
realization/ liabilities.
Mar 31, 2014
(I) Basis of Accounting
The financial statements have been prepared and presented under the
historical cost convention (except for free hold land) and on accrual
basis of accounting in accordance with the accounting principles
generally accepted in India and in compliance with provisions of the
Companies Act, 1956 and comply with the mandatory Accounting Standards
(AS) specified in the Companies (Accounting Standard) Rules, 2006,
prescribed by the Central Government.
The accounting policies have been consistently applied by the company.
(II) Revenue Recognition
a. Revenue from sale of goods is recognized when significant risk and
rewards in respect of ownership of product is transferred to the
customers, which is generally on dispatch of goods.
b. Domestic sales include excise duty and are net of sales returns,
trade discounts and sales tax.
c. Export Sales are accounted on the basis of dates of Bill of Lading.
d. Revenue from services is recognized as and when services are
rendered as per terms of contract.
e. Income from investments / other income is recognized on accrual
basis.
(iii) Inventories are valued as under
a. Raw materials, Components, Stores & Spares, Loose Tools : At moving
weighted average cost or net realizable value which ever is lower.
b. Finished Goods: At lower of cost or net realizable value inclusive
of excise duty thereon.
c. Work-in-Progress: At lower of estimated cost and net realizable
value.
d. Goods in Transit and under clearance: At lower of actual cost till
date (inclusive of customs duty payable thereon) or net realizable
value.
e. Stock of Scrap: At estimated net realizable value.
(iv) Investments
Long term investments are valued at cost less provision for diminution
in value, other than temporary, if any.
(v) Employee Benefits
1. Short Term Employee Benefits
All employee benefits falling due wholly within twelve months of
rendering service are classified as short term benefits. The benefits
like salaries, wages etc. and the expected cost of bonus, ex-gratia are
recognized in the period in which the employee renders the related
service.
2. Post Employment Benefits
a. Defined Contribution Plan: Defined contribution plan consists of
Government Provident Fund Scheme and Employee State Insurance scheme.
Company"s contribution paid/payable during the year under these schemes
are recognized as expense in the statement of Profit and Loss. There
are no other obligations other than the contribution made by the
company.
b. Defined Benefit Plan: The employees" gratuity schemes and long term
compensated absences are the defined benefit plans. Company"s
liabilities towards gratuity and leave encashment are determined using
the projected unit credit method which considers each period of service
as giving rise to an additional unit of benefit entitlement and
measures each unit separately to build up the final obligation.
Actuarial gain and losses are recognized immediately in the statement
of Profit and Loss as income or expense. Obligation is measured at the
present value of estimated future cash flow using a discount rate that
is determined by the reference to market yields at the Balance Sheet
date on Government bonds.
(vi) Fixed Assets
a. Tangibles: Fixed assets (except free hold land) are stated at cost
of acquisition or construction including installation cost,
attributable interest and financial cost till such time assets are
ready for its intended use and foreign exchange fluctuation on long
term borrowings related to fixed assets, less accumulated depreciation,
impairment losses and specific grants received if any. Free hold land
is stated at revalued amount.
b. Intangibles: Product Development Expenditure and License /
Technical know-how fees : Product Development expenditure of capital
nature are added to Intangible assets. Expenditure on license and
technical know-how fees and other related expenditure towards
technological improvement of the products and/or components for captive
use are treated as intangible assets. Expenditure of these nature are
initially recognized as Intangible Assets under development and
eventually transferred to Intangible assets block as appropriate on the
commencement of the commercial production after the viability of the
product is proven.
(vii) Depreciation and amortization
a. Depreciation on fixed assets except free hold land is calculated on
straight line basis at the rates specified in accordance with the
Schedule XIV of the Companies Act, 1956.
b. Depreciation on fixed assets sold or scrapped during the year is
provided up to the month in which such fixed assets are sold or
scrapped. Depreciation on additions to fixed assets is calculated on
pro-rata basis from the month of addition.
c. Product Development expenditure and License/Technical know-how fees
are amortized over a period of 5 years from the accounting year in
which the commercial production of such improved product commences.
(viii) Impairment of Assets
In accordance with Accounting Standard 28 (AS 28) on "Impairment of
Assets", where there is an indication of impairment of the Company"s
assets, the carrying amounts of the Company"s assets are reviewed at
each balance sheet date to determine whether there is any impairment
based on internal/external factors. An impairment loss, if any, is
recognized in the Statement of Profit & Loss, wherever the carrying
amount of an asset exceeds its estimated recoverable amount. The
recoverable amount of the assets is estimated at the higher of its net
selling price and its value in use. In assessing the value in use, the
estimated future cash flows are discounted to the present value at the
weighted average cost of capital. After impairment, depreciation is
provided on the revised carrying amount of the assets over its
remaining useful life. Previously recognized impairment loss is further
provided or reversed depending on changes in circumstances.
(ix) Foreign Currency Transactions
a. Foreign Currency transactions are recorded on the basis of exchange
rates prevailing on the date of their occurrence.
b. Foreign currency monetary assets and liabilities as on the Balance
Sheet date are revalued in the accounts on the basis of exchange rates
prevailing at the close of the year and exchange difference arising
there-from is charged / credited to the Statement of Profit & Loss -
except for the exchange difference arising on long term borrowings
related to fixed assets, which are capitalized.
(x) Leases
Leases are classified as finance or operating leases depending upon the
terms of the lease agreements. Assets held under finance leases are
recognized as assets of the Company on the date of acquisition and
depreciated over their estimated useful lives. Initial direct costs
under the finance lease are included as part of the amount recognized
as asset under the finance lease. Rentals payable under operating
leases are treated as expenses as and when they are incurred.
(xi) Customs Duty
Customs duty is accounted for as and when paid/provided.
(xii) Borrowing Cost
As per Accounting Standard 16 on "Borrowing Costs" borrowing costs that
are : (a) directly attributable to the acquisition, construction,
production of a qualifying asset are capitalized as a part of cost of
such asset till the time the asset is ready for its intended use and;
(b) not directly attributable to qualifying assets are determined by
applying a weighted average rate and are capitalized as a part of the
cost of such qualifying asset till the time the asset is ready for its
intended use. Remaining borrowing costs are recognized as an expense in
the period in which they are incurred.
(xiii) Contingencies and Provisions
A provision is recognized when the Company has a present obligation as
a result of past event. It is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation in
respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on the best
estimate of the expenditure required to settle the obligation at the
balance sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimate. A contingent liability
is disclosed, unless the possibility of an outflow of resources
embodying the economic benefit is remote.
(xiv) Taxation
Tax expense comprises of current tax and deferred tax charge or credit.
Current tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Indian Income Tax Act. 1961. The
deferred tax charge or credit is recognized using prevailing enacted or
substantively enacted tax rate. Where there is unabsorbed depreciation
or carry forward losses, deferred tax assets are recognized only if
there is virtual certainty of realization of such assets. Other
deferred tax assets are recognized only to the extent there is
reasonable certainty of realization in future. Deferred tax
assets/liabilities are reviewed as at each balance sheet date based on
developments during the period and available case law to re-assess
realization/ liabilities.
(xv) Measurement of EBITDA
The Company has opted to present earning before interest, tax,
depreciation and amortization (EBITDA) as a separate line item on the
face of the statement of Profit & Loss.
(C) The Rights, Preferences, Restriction including restriction on the
distribution of dividend and repayments of capital
1. The Company is having only one class of shares, that is Equity
carrying nominal value of Rs.10 per share.
2. Every holder of equity share of the Company is entitled to one vote
per share held.
3. In the event of liquidation of the Company, the equity share holder
will be entitled to receive remaining assets of the Company after the
distribution / repayments of all creditors. The distribution to the
share holder will be in proportion of the number of shares held by each
share holder.
4. The Company declares and pays dividend on the equity shares in
Indian Rupees. Dividend proposed by the Board of Directors is subject
to approval of the share holders at the ensuing Annual General Meeting.
5. During the year ended 31st March,2014 an amount of Rs.3.00 per
equity share (30%) is proposed as dividend for the equity share holders
[(Previous year Rs.3.00 per equity share (30%) and also a one-time
special dividend of Rs. 4.00 per equity share (40%) has been proposed,
making a total dividend of Rs.7.00 per equity share(70%).]
(D) Shares held by holding/ultimate holding company and/or their
subsidiaries / associates The company is not a Subsidiary of any other
company.
(a) Term Loan of Rs. 15000 Lakhs (Previous year: Rs. 15000 Lakhs) from
SBI is secured by way of first charge on current assets on pari-passu
basis with other lenders and first pari-passu charge on fixed assets of
the company at Chinchwad along with J & K Bank and Corporation Bank.
Also SBI holds an exclusive 1st mortgage charge on the 41.44 acres of
Company"s land located at Kalyan/ Dombivli towards their loan.
The above loan of Rs.15000 Lakhs is for a tenure of eight and a half
years including a moratorium of 18 months. The repayment installments
are spread over 84 months commencing from 31/10/2014 and the last
installment falling due on 30/09/2021. The first two installments are
of Rs. 5 lakhs each, the next 4 installments are of Rs. 10 lakhs each,
next 10 installments are of Rs. 20 lakhs each, next 2 installments are
of Rs. 25 lakhs each, next 6 installments are of Rs. 150 lakhs each,
next 24 installments are of Rs. 200 lakhs each and the next 36
installments are of Rs. 250 lakhs each. Annual rate of Interest is
2.30% above SBI base rate.
(b) Term Loan of Rs.Nil (Previous year: Rs.737.50 Lakhs) from State
Bank of Hyderabad was secured by way of first pari-passu charge on
Company"s fixed assets at Chinchwad, Pune (both present and future) and
Second pari-passu charge on Company"s current assets located at the
plant at Chinchwad or in transit. This loan is fully pre-paid during FY
2013-14 along with interest at the rate of 5 % above SBH base rate.
(c) Term Loan of Rs.Nil (Previous year: Rs.4643 Lakhs) from Corporation
Bank, was secured by way of first pari-passu charge on Company"s
present and future fixed assets at Chinchwad, Pune and Second
pari-passu charge on Company"s current assets located at the plant at
Chinchwad or in transit. This loan is fully pre-paid during FY 2013-14
along with interest at the rate 3.25 % over Corporation Bank base rate.
(d) Corporate Loan Rs. 10000 Lakhs (Previous Year Rs. 10000 Lakhs) from
The Jammu & Kashmir Bank Ltd. is secured by way of first pari-passu
charge on plant and machinery and fixed assets of the company located
at Chinchwad, Pune and second pari-passu charge on current assets of
the company. This loan is for a total tenure of 36 months, repayable in
18 equal installments after a moratorium period of 18 months. There are
17 monthly installments each of Rs. 550 lakhs with the first
installment due on 30/09/2014. The last installment (18th installment)
is of Rs. 650 lakhs due on 29/02/2016. Annual rate of Interest is 2%
over J&K Bank Base rate
(e) Hire purchase Loan of Rs 497.20 Lakhs for a tenure of 4 years from
First leasing Company of India Limited is secured under the specific
Fixed Asset procured against the said Loans.
Rs. 497.20 Lakhs is repayable in 31 variable monthly installments till
October 2016. Annual rate of Interest is 2% above SBI base rate.
All the above facilities covered under a to e are also secured by the
personal guarantee of Mr. Maitreya V. Doshi, Chairman and Managing
Director of the company.
(f) Deposits accepted from public and share holders carry varying rate
of interest from 11.50% to 12.50% p.a. depending upon the
cumulative/non-cumulative option and the period of maturity such as 1
year, 2 year or 3 year.
(a) The Working Capital facilities (Cash Credit Rs. 6000 lakhs, non-
funded facilities Rs. 7500 lakhs, totaling to Rs. 13500 lakhs,
Previous Year Rs.16500 lakhs) are under a consortium banking
arrangement with State Bank of India - as the lead banker having a
share of Rs. 10000 lakhs (previous year Rs. 10500 lakhs) along with
State Bank of Hyderabad Rs. 2500 lakhs (previous year Rs.4500 lakhs)
and Corporation Bank Rs.1000 lakhs (previous year 1500 lakhs). These
facilities are secured by way of first pari-passu charge on Company"s
current assets located at the plant at Chinchwad or in transit and
second pari-passu charge on Company"s present and future fixed assets
at Chinchwad, Pune. Annual rate of Interest varies from 0.50% above
base rate to 5% above the Base Rates of these banks.
All the above facilities are also secured by the personal guarantee of
Mr. Maitreya V. Doshi, Chairman and Managing Director of the company.
(b) Short Term Loan of Rs. 2500 Lakhs (Previous Year Rs. Nil ) from
Corporation Bank is secured by way of first pari- passu charge on the
plant and machinery and fixed assets of the Company located at
Chinchwad, Pune and second pari-passu charge on current assets of the
company located at Chinchwad, Pune. This loan is repayable in 5
installments of Rs.500 lakhs each starting from August 14 and 5th
installment is falling due on December 14. Annual rate of Interest is
2.35% over Corporation Bank Base rate.
(c) Short Term Loan of Rs. 500 Lakhs availed during the year from Sicom
Investments & Finance Ltd. (Previous year Rs. Nil) is repayable within
one year and the security creation is pending.
(d) The Inter Corporate Deposits of Rs.3565 Lakhs (previous year Rs.
1430 Lakhs) are unsecured short term Loans repayable within 3 to 6
months with Interest rate varying 14.50% to 17.00% p.a. The above
includes Rs.1250 Lakhs (Previous year 215 lakhs) borrowed by the
Company for which the promoters have pledged their shares.
(a) Sale of Land
During the last year, the Company had sold and conveyed 150 acres (out
of 218 acres) of its land at Dombivli, to Horizon Projects Pvt. Ltd., a
part of Runwal Group for a total consideration of Rs.44000 Lakhs.
Consequent to the above, during the last year, the Company had received
Rs.22000 Lakhs as a part consideration. The balance consideration of
Rs.22000 Lakhs which is to be received on 31.12.2014 is subject to such
amount, if any, required to be deducted therefrom on account payments
to be made/financed by the purchaser and on account of adjustments, if
any, of exact official measurement of land being carried out. The said
deduction amount is not crystallized and quantifiable as on date. The
Company will account for such adjustments as and when crystallized.
Subject to this, the Company had accounted for the sale at a total
consideration of Rs.44000 Lakhs and recognized the profits accordingly
during the last year. This balance consideration of Rs.22000 Lakhs,
receivable on 31.12.2014, is adequately secured through a registered
mortgage in favour of the Company for 71 acres of land (out of 150
acres) conveyed to the developer and a post-dated cheque not exceeding
Rs.22000 Lakhs given by the developer.
During the current year the said land buyer, Horizon Projects Pvt. Ltd.
has paid an amount of Rs. 1840.10 Lakhs to the Government of
Maharashtra "under protest" towards "Unearned Income" on Sale of Land
on behalf of the Company. The said amount has been adjusted from the
Balance consideration amount of Rs. 22000 Lakhs due on 31.12.2014 and
is reflected under "Loans and Advances". The company"s Revision
Application Challenging the liability on account of Unearned Income is
pending for disposal before the Revenue Minister of The Government of
Maharashtra.
Profit on Sale of Land of Rs.4735.63 Lakhs during the last year was
arrived at after adjusting an amount of Rs.8076.38 Lakhs paid to the
Maharashtra Government $$under protest"" for issues pertaining to Urban
Land Ceiling (Regulations) Act, 1976 in respect of the Company"s land
at Dombivli. During the last year, the Company filed a writ petition
before the Hon"ble High Court, Bombay challenging the notification of
the Government under which the said payment has been made. The said
Writ Petition is pending for disposal.
(b) Compulsory acquisition of Company"s land at Dombivli by the Indian
Railways
The Company had received during the last year notices from the Deputy
Collector (Land Acquisition) and Competent Authority informing about
the compulsory acquisition of land admeasuring about 30 acres for the
Dedicated Freight Corridor Project of the Indian Railways.
During the current year, about 17 acres of the Company"s Land has been
acquired by Indian Railways for a Compensation of Rs. 6413.16 Lakhs and
the profit arising there from has been reflected under Other Income. An
amount of Rs. 468.12 Lakhs has been deducted by the Railways towards
"Unearned Income" while disbursing the Compensation amount and the same
has been reflected under "Loans and Advances". The company"s Revision
Application Challenging the liability on account of Unearned Income is
pending for disposal before the Revenue Minister of The Government of
Maharashtra.
The balance of the said land acquisition would be accounted in the
books upon receipt of the compensation amount and handing over of
possession of the land under acquisition.
After the acquisition process is completed, the Company would be left
with about 42 acres of land at Dombivli in its possession
(c) Revaluation of Land
The Company had revalued its land in July 2010 through an external
valuer at fair market value and the increase of Rs. 50100 Lakhs due to
revaluation has been added to the book value of land and to the
revaluation reserve.
During the last year, in view of sale of 150 acres of land at Dombivli,
revaluation reserve amounting to Rs.26013.09 Lakhs, on a pro-rata
basis, has been released to the statement of Profit & Loss since the
profits are realized and shown under $Other Income".
During the current year, in view of Compulsory Acquisition of 17 acres
of Company"s Land at Dombivli by the Indian Railways, revaluation
reserve amounting to Rs.2911.93 Lakhs, on a pro-rata basis, has been
released to the statement of Profit & Loss since the profits are
realized and shown under $Other Income".
On the grounds of prudence and as per the legal opinion obtained, the
surplus of Rs.1417.07 lakhs (Previous year Rs. 1889.44 lakhs) arose
upon re-conversion of stock-in trade into land in the financial year
2008-09 continues to be included in the General Reserve of the company
and will not be considered for distribution till it is realized.
(a) Company"s long term investment in PAL Credit and Capital Limited,
an RBI registered and listed NBFC promoted by the company, is Rs.362.22
Lakhs (after making provision for diminution in the value of investment
of Rs.289.48 Lakhs in the financial year 2007-08) represented by
58,99,169 equity shares of Re. 1/- (Previous year Rs. 10/-) each fully
paid. Considering the intrinsic business value of PAL Credit & Capital
Limited and its business synergies for the Company, as well as the
holding being in the nature of controlling interest with long term
strategies and business revival plan, no further diminution in value is
considered necessary. Further in order to continue with its revival
plan, the company has further advanced during the year an amount of
Rs.32.15 Lakhs (Previous year Rs. 52.43 Lakhs) making the total advance
paid up to the end of March"14 of Rs. 186.15 Lakhs(Previous year 154
Lakhs). The said advance is included under Loans and Advances (Refer
note. No. 13).
(b) The Company has in its possession the share certificates and the
blank transfer forms executed by Automobiles Peugeot in respect of
8,40,25,000 equity shares of Pal-Peugeot Ltd (under liquidation) gifted
by them in the year 1999.These shares could not be transferred in
company"s name as Pal-Peugeot Ltd was not functioning. The Company has
filed a petition before the Hon"ble Bombay High Court for permission to
transfer the said shares in the name of the Company and the petition is
pending for disposal by the Court. Meantime, the Company is holding
these shares as $holder in due course".
(a) Tax provision under Minimum Alternate Tax (MAT) as per provisions
of section 115 JB of the Income Tax Act, 1961 is Rs. NIL in the absence
of any taxable income for the current year (Previous year Rs.2840.57
lakhs).
(b) The benefit of credit against the payments made towards MAT for the
earlier years is available in accordance with the provisions of section
115JAA over a period of subsequent ten assessment years and the same
will be accounted for when they actually arise.
(c) Estimated Net Deferred tax asset of Rs.1649.67 Lakhs has been
recognized as at the year end (previous year  Net Deferred Tax
Liability of Rs.1399.70 Lakhs). The management is confident of virtual
certainty of realizing the same in view of the Long term capital gain
that will arise on the Compulsory Acquisition of Land by Railways, the
joint measurement of Land in respect of the same is completed and award
is expected in near future. The company also has a sound order book as
on date to be executed.
1. The Supreme Court of India vide its order dated 29.8.2012 allowed
the appeal of the excise department confirming excise duty demand of
Rs.4928.80 Lakhs on the Company regarding a dispute which was won by
the Company before the Customs Excise And Service Tax Appellate
Tribunal (CESTAT) pertaining to a 15 year old dispute on valuation of
Uno cars then manufactured by the Company.
The Review and Curative Petition filed by the Company were also
dismissed by the court. The Company has paid the said duty demand in
full to the department during the last year and the same has been shown
under $Non Recurring Items".
Despite above, the Company has been now been legally advised to file a
Writ Petition before the Hon"ble High Court, Bombay challenging the
computation errors by the department which were not taken up and heard
by the Supreme Court. Accordingly, the Company has filed a writ
petition and the same is pending disposal.
2. During the last year, as part of the Company"s product
rationalization strategy, a comprehensive review was carried out by
management in respect of its various business segments and various
Product Development Projects and expenses related thereto. As an
outcome of the review (a) to concentrate and focus on core competency
and (b) to rationalize the products of various business segments of the
Company, management has taken the following decisions:
(a) CNC Machines Business : During the last year, Entire product
portfolio of CNC Machines was reassessed. Certain machine products
were found to be not commercially viable in future. Therefore,
management has decided not to pursue such products developments anymore
and not to put further resources for their developments. Therefore, it
was felt prudent to write off such product development expenses of
Rs.2272 Lakhs related to such machines.
(b) Heavy Engineering Business : During the last year, Contracts from
various customers for heavy engineering business were reassessed for
the commercial viability consequent to the design changes made by
customers and possibility of repeat orders. Despite protracted
negotiations with the customers, certain contracts were found
commercially unviable by the management on such reassessment. Also,
some customers changed their product design, making related investments
till date redundant. Therefore, it was felt prudent to write off
product development expenses of Rs.1084 Lakhs related to such
contracts.
(c) Automobile Business : During the last year, despite the continued
product development in relation to Company"s Sigma Vans and Roadstar
pick up trucks and having adequate dealer network, the business could
not reach the projected volumes. Therefore, it was felt prudent to
write off such product development expenses of Rs.5777 Lakhs related to
these products.
The Company"s Peugeot TUD 5 Engine had to be localized involving
investment in vendor toolings. Further, the said engine had to be
upgraded for meeting Bharat stage II standard requirements. It was
further upgraded to Bharat Stage III with turbo charger. However, the
future sale of this engine is uncertain as it is not CRDi and also not
Bharat IV stage emission norms compliant. Considering the fact that the
Company has already started using Fiat CRDi Euro-IV engine, further
development on TUD 5 is not envisaged now. Therefore, it is prudent to
write off product development expenses of Rs.531 lakhs relating to TUD
5 Engine.
In case of company"s compact SUV RiO, there are two facelifts, changes
in interiors, initially using TUD 5 engine and now using FIAT CRDi
engine. Though the product continues to show the market acceptance,
certain product versions are discontinued and will no longer been
manufactured. Therefore, it was felt prudent to write off product
development expenses of Rs.2937 Lakhs related to such discontinued
versions.
In view of the above, all these product development expenses amounting
to Rs.12601 Lakhs have been written off in the Statement of Profit &
Loss and have been shown as $Non recurring item".
During the year, the Company continued its activity on developing,
upgrading and improving its Auto Products in order to achieve
technologically advanced and competitive products which will ultimately
result in acceptability for the Company"s products. This process is
expected to be continued and completed soon and is expected to result
in growth in revenue, profits and cash generation of the company in
future. A sum of Rs.2827.98 Lakhs has been incurred on this account
during the current year and the same has been reflected as $Intangible
Assets Under Development".
The Company would give appropriate effects in the accounts as and when
the said product development/ improvement is completed.
28. Contingent Liabilities Not Provided For in Respect of
(a) Disputed indeterminate claims made by the employees regarding
reinstatement, wages for the period of suspension etc. relating to the
past years pending before Industrial Tribunals/High Court.
(b) There are certain disputed excise demands of Rs. 64.05 Lakhs
(Previous year Rs. 64.05 Lakhs) and FEMA demands of Rs. 65.49 Lakhs
(Previous Year 65.49 Lakhs). The same are being contested by company in
appeals at various levels. The company foresees no liability in the
above case as the management believes that it has strong case in the
appeal.
(c) The Company had paid Rs. 4928 Lakhs Excise dues as per supreme
court order during the last year. The Company has received a letter
from the Excise department demanding Rs. 389.61 Lakhs as Interest on
the said excise duty paid by the Company. The Company has filed writ
petition before the Hon"ble Bombay High Court challenging the same. The
Company has been legally advised that it has a good case and the said
amount is considered as a contingent liability.
(d) The Company has paid an amount of Rs. 2308.22 Lakhs, to the
Government of Maharashtra "under protest" towards "Unearned Income" on
sale of land and compulsory acquisition of land. The Company"s appeal
in this regard is pending before the Government of Maharashtra. This
forms part of "Loans & Advances" and is considered as a contingent
liability.
(e) Additional compensation, if any, in relation to certain demands in
Consumer Forum cases, amount unascertained but considered to be
insignificant.
(f) Guarantees issued by bank amounting to Rs.694.81 Lakhs (Previous
year: Rs.1456.52 Lakhs).
(g) Encashment of bank guarantee Liability of Rs. Nil (Previous Year
Rs. 18 Lakhs pertaining to the guarantee already encashed by one of the
CNC Machine customer).
Mar 31, 2013
(i) Basis of Accounting
The financial statements have been prepared and presented under the
historical cost (except for free hold land) convention on accrual basis
of accounting in accordance with the accounting principles generally
accepted in India and in compliance with provisions of the Companies
Act, 1956 and comply with the mandatory Accounting Standards (AS)
specified in the Companies (Accounting Standard) Rules, 2006,
prescribed by the Central Government.
The accounting policies have been consistently applied by the company.
(ii) Revenue Recognition
a. Revenue from sale of goods is recognized when significant risk and
rewards in respect of ownership of product is transferred to the
customers, which is generally on dispatch of goods.
b. Domestic sales include excise duty and are net of sales returns,
trade discounts and sales tax.
c. Export Sales are accounted on the basis of dates of Bill of Lading.
d. Revenue from services is recognized as and when services are
rendered as per terms of contract.
e. Income from investments / other income is recognized on accrual
basis.
(iii) Inventories are valued as under
a. Raw materials, Components, Stores & Spares, Loose Tools : At moving
weighted average cost or net realizable value which ever is lower.
b. Finished Goods: At lower of cost or net realizable value inclusive
of excise duty thereon.
c. Work-in-Progress: At lower of estimated cost and net realizable
value.
d. Goods in Transit and under clearance: At lower of actual cost till
date (inclusive of customs duty payable thereon) or net realizable
value.
e. Stock of Scrap: At estimated net realizable value.
(iv) Investments
Long term investments are valued at cost less provision for diminution
in value, other than temporary, if any.
(v) Employee Benefits
1. Short Term Employee Benefits
All employee benefits falling due wholly within twelve months of
rendering service are classified as short term benefits. The benefits
like salaries, wages etc. and the expected cost of bonus, ex-gratia,
are recognized in the period in which the employee renders the related
service.
2. Post Employment Benefits
a. Defined Contribution Plan: Defined contribution plan consists of
Government Provident Fund Scheme and Employee State Insurance scheme.
Company''s contribution paid/payable during the year under these
schemes are recognized as expense in the statement of Profit and Loss.
There are no other obligations other than the contribution made by the
company.
b. Defined Benefit Plan: The employees'' gratuity schemes and long
term compensated absences are the defined benefit plans. Company''s
liabilities towards gratuity and leave encashment are determined using
the projected unit credit method which considers each period of service
as giving rise to an additional unit of benefit entitlement and
measures each unit separately to build up the final obligation.
Actuarial gain and losses are recognized immediately in the statement
of Profit and Loss as income or expense. Obligation is measured at the
present value of estimated future cash flow using a discount rate that
is determined by the reference to market yields at the Balance Sheet
date on Government bonds.
(vi) Fixed Assets
a. Tangibles: Fixed assets (except free hold land) are stated at cost
of acquisition or construction including installation cost,
attributable interest and financial cost till such time assets are
ready for its intended use, and foreign exchange fluctuation on long
term borrowings related to fixed assets, less accumulated depreciation,
impairment losses and specific grants received if any. Free hold land
is stated at revalued amount.
b. Intangibles: Product Development Expenditure and License /
Technical know-how fees :
Product Development expenditure of capital nature are added to
Intangible assets. Expenditure on license and technical know-how fees
and other related expenditure towards technological improvement of the
products and/ or components for captive use are treated as intangible
assets. Expenditure of these nature are initially recognized as
Intangible Assets under development and eventually transferred to
Intangible assets block as appropriate on the commencement of the
commercial production after the viability of the product is proven.
(vii) Depreciation and amortization
a. Depreciation on fixed assets except free hold land is calculated on
straight line basis at the rates specified in accordance with the
Schedule XIV of the Companies Act, 1956.
b. Depreciation on fixed assets sold or scrapped during the year is
provided up to the month in which such fixed assets are sold or
scrapped. Depreciation on additions to fixed assets is calculated on
pro-rata basis from the month of addition.
c. Product Development expenditure and License/Technical know-how fees
are amortized over a period of 5 years from the accounting year in
which the commercial production of such improved product commences.
(viii) Impairment of Assets
In accordance with Accounting Standard 28 (AS 28) on "Impairment of
Assets, where there is an indication of impairment of the Company''s
assets, the carrying amounts of the Company''s assets are reviewed at
each balance sheet date to determine whether there is any impairment
based on internal/external factors. An impairment loss, if any, is
recognized in the Statement of Profit & Loss, wherever the carrying
amount of an asset exceeds its estimated recoverable amount. The
recoverable amount of the assets is estimated at the higher of its net
selling price and its value in use. In assessing the value in use, the
estimated future cash flows are discounted to the present value at the
weighted average cost of capital. After impairment, depreciation is
provided on the revised carrying amount of the assets over its
remaining useful life. Previously recognized impairment loss is
further provided or reversed depending on changes in circumstances.
(ix) Foreign Currency Transactions
a. Foreign Currency transactions are recorded on the basis of exchange
rates prevailing on the date of their occurrence.
b. Foreign currency monetary assets and liabilities as on the Balance
Sheet date are revalued in the accounts on the basis of exchange rates
prevailing at the close of the year and exchange difference arising
there-from is charged / credited to the Statement of Profit & Loss
-except for the exchange difference arising on long term borrowings
related to fixed assets, which are capitalized.
(x) Leases
Leases are classified as finance or operating leases depending upon the
terms of the lease agreements. Assets held under finance leases are
recognized as assets of the Company on the date of acquisition and
depreciated over their estimated useful lives.
Initial direct costs under the finance lease are included as part of
the amount recognized as asset under the finance lease.
Rentals payable under operating leases are treated as expenses as and
when they are incurred.
(xi) Customs Duty
Customs duty is accounted for as and when paid/provided.
(xii) Borrowing Cost
As per Accounting Standard 16 on "Borrowing Costs" borrowing costs
that are :
(a) directly attributable to the acquisition, construction, production
of a qualifying asset are capitalized as a part of cost of such asset
till the time the asset is ready for its intended use and (b) not
directly attributable to qualifying assets are determined by applying a
weighted average rate and are capitalized as a part of the cost of such
qualifying asset till the time the asset is ready for its intended use.
Remaining borrowing costs are recognized as an expense in the period in
which they are incurred.
(xiii) Contingencies and Provisions
A provision is recognized when the Company has a present obligation as
a result of past event. It is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation in
respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on the best
estimate of the expenditure required to settle the obligation at the
balance sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimate.
A contingent liability is disclosed, unless the possibility of an
outflow of resources embodying the economic benefit is remote.
(xiv) Taxation
Tax expense comprises of current tax and deferred tax charge or credit.
Current tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Indian Income Tax Act. The deferred
tax charge or credit is recognized using prevailing enacted or
substantively enacted tax rate. Where there is unabsorbed depreciation
or carry forward losses, deferred tax assets are recognized only if
there is virtual certainty of realization of such assets. Other
deferred tax assets are recognized only to the extent there is
reasonable certainty of realization in future. Deferred tax
assets/liabilities are reviewed as at each balance sheet date based on
developments during the period and available case law to re-assess
realization/ liabilities.
(xv) Measurement of EBITDA
The Company has opted to present earning before interest, tax,
depreciation and amortization (EBITDA) as a separate line item on the
face of the statement of Profit & Loss.
Mar 31, 2012
(i) Basis of Accounting
The financial statements have been prepared and presented under the
historical cost (except for free hold land) convention on accrual basis
of accounting in accordance with the accounting principles generally
accepted in India and in compliance with provisions of the Companies
Act, 1956 and comply with the mandatory Accounting Standards (AS)
specified in the Companies (Accounting Standard) Rules, 2006,
prescribed by the Central Government.
The accounting policies have been consistently applied by the company.
(ii) Revenue Recognition
a. Revenue from sale of goods is recognized when significant risk and
rewards in respect of ownership of product is transferred to the
customers, which is generally on dispatch of goods.
b. Domestic sales include excise duty and are net of sales returns,
trade discounts and sales tax.
c. Export Sales are accounted on the basis of dates of Bill of Lading.
d. Revenue from services is recognized as and when services are
rendered as per terms of contract.
e. Income from investments / other income is recognized on accrual
basis.
(iii) Inventories are valued as under
a. Raw materials, Components, Stores & Spares, Loose Tools. At moving
weighted average cost or net realizable value which ever is lower.
b. Finished Goods: At lower of cost or net realizable value inclusive
of excise duty thereon.
c. Work-in-Progress: At lower of estimated cost and net realizable
value.
d. Goods in Transit and under clearance: At lower of actual cost till
date (inclusive of customs duty payable thereon) or net realizable
value.
e. Stock of Scrap: At estimated net realizable value.
(iv) Investments
Long term investments are valued at cost less provision for diminution
in value, other than temporary, if any.
(v) Employee Benefits
1. Short Term Employee Benefits
All employee benefits falling due wholly within twelve months of
rendering service are classified as short term benefits. The benefits
like salaries, wages etc. and the expected cost of bonus, ex-gratia,
are recognized in the period in which the employee renders the related
service.
2. Post Employment Benefits
a. Defined Contribution Plan: Defined contribution plan consists of
Government Provident Fund Scheme and Employee State Insurance scheme.
Company's contribution paid/payable during the year under these
schemes are charged to Profit and Loss Account. There are no other
obligations other than the contribution made by the company.
b. Defined Benefit Plan: The employees' gratuity schemes and long
term compensated absences are the defined benefit plans. Company's
liabilities towards gratuity and leave encashment are determined using
the projected unit credit method which considers each period of service
as giving rise to an additional unit of benefit entitlement and
measures each unit separately to build up the final obligation.
Actuarial gain and losses are recognized immediately in the statement
of Profit and Loss account as income or expense. Obligation is measured
at the present value of estimated future cash flow using a discount
rate that is determined by the reference to market yields at the
Balance Sheet date on Government bonds.
(vi) Fixed Assets
a. Tangibles: Fixed assets (except free hold land) are stated at cost
of acquisition or construction including installation cost,
attributable interest and financial cost till such time assets are
ready for its intended use, and foreign exchange fluctuation on long
term borrowings related to fixed assets, less accumulated depreciation,
impairment losses and specific grants received if any. Free hold land
is stated at revalued amount.
b. Intangibles: Product Development Expenditure and License /
Technical know-how fees :
Product Development expenditure of capital nature are added to fixed
assets. Expenditure on license and technical know-how fees and other
related expenditure towards technological improvement of the products
and/or components for captive use are treated as intangible assets.
Expenditure of these nature are initially recognized as tangible
assets under development and eventually transferred to fixed assets
block as appropriate on the commencement of the commercial production
after the viability of the product is proven.
(vii) Depreciation and amortization
a. Depreciation on fixed assets except free hold land is calculated on
straight line basis at the rates specified in accordance with the
Schedule XIV of the Companies Act, 1956.
b. Depreciation on fixed assets sold or scrapped during the year is
provided up to the month in which such fixed assets are sold or
scrapped. Depreciation on additions to fixed assets is calculated on
pro-rata basis from the month of addition.
c. Product Development expenditure and License/Technical know-how fees
are amortized over a period of 10 years from the accounting year in
which the commercial production of such improved product commences.
(viii) Impairment of Assets
In accordance with Accounting Standard 28 (AS 28) on "Impairment of
Assets, where there is an indication of impairment of the Company's
assets, the carrying amounts of the Company's assets are reviewed at
each balance sheet date to determine whether there is any impairment
based on internal/external factors. An impairment loss, if any, is
recognized in the Profit & Loss account, wherever the carrying amount
of an asset exceeds its estimated recoverable amount. The recoverable
amount of the assets is estimated at the higher of its net selling
price and its value in use. In assessing the value in use, the
estimated future cash flows are discounted to the present value at the
weighted average cost of capital. After impairment, depreciation is
provided on the revised carrying amount of the assets over its
remaining useful life. Previously recognized impairment loss is further
provided or reversed depending on changes in circumstances.
(ix) Foreign Currency Transactions
a. Foreign Currency transactions are recorded on the basis of exchange
rates prevailing on the date of their occurrence.
b. Foreign currency monetary assets and liabilities as on the Balance
Sheet date are revalued in the accounts on the basis of exchange rates
prevailing at the close of the year and exchange difference arising
there-from is charged / credited to the Profit & Loss Account except
for the exchange difference arising on long term borrowings related to
fixed assets, which are capitalized.
(x) Leases
Leases are classified as finance or operating leases depending upon the
terms of the lease agreements. Assets held under finance leases are
recognized as assets of the Company on the date of acquisition and
depreciated over their estimated useful lives.
Initial direct costs under the finance lease are included as part of
the amount recognized as asset under the finance lease.
Rentals payable under operating leases are treated as expenses as and
when they are incurred.
(xi) Customs Duty
Customs duty is accounted for as and when paid/provided.
(xii) Borrowing Cost
As per Accounting Standard 16 on "Borrowing Costs" borrowing costs
that are :
(a) directly attributable to the acquisition, construction, production
of a qualifying asset are capitalized as a part of cost of such asset
till the time the asset is ready for its intended use and (b) not
directly attributable to qualifying assets are determined by applying a
weighted average rate and are capitalized as a part of the cost of such
qualifying asset till the time the asset is ready for its intended use.
Remaining borrowing costs are recognized as an expense in the period in
which they are incurred.
(xiii) Contingencies and Provisions
A provision is recognized when the Company has a present obligation as
a result of past event. It is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation in
respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on the best
estimate of the expenditure required to settle the obligation at the
balance sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimate.
A contingent liability is disclosed, unless the possibility of an
outflow of resources embodying the economic benefit is remote.
(xiv) Taxation
Tax expense comprises of current tax and deferred tax charge or credit.
Current tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Indian Income Tax Act. The deferred
tax charge or credit is recognized using prevailing enacted or
substantively enacted tax rate. Where there is unabsorbed depreciation
or carry forward losses, deferred tax assets are recognized only if
there is virtual certainty of realization of such assets. Other
deferred tax assets are recognized only to the extent there is
reasonable certainty of realization in future. Deferred tax
assets/liabilities are reviewed as at each balance sheet date based on
developments during the period and available case law to re-assess
realization/ liabilities.
(xv) Measurement of EBITDA
The Company has opted to present earning before interest, tax,
depreciation and amortization (EBITDA) as a separate line item on the
face of the statement of Profit & Loss.
Mar 31, 2011
(i) Basis of Accounting:
The financial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting in accordance
with the accounting principles generally accepted in India and in
compliance with provisions of the Companies Act, 1956 and comply with
the mandatory Accounting Standards (AS) specified in the Companies
(Accounting Standard) Rules, 2006, prescribed by the Central
Government.
The accounting policies have been consistently applied by the company.
(ii) Revenue Recognition:
a. Revenue from sale of goods is recognized when significant risk and
rewards in respect of ownership of product is transferred to the
customers, which is generally on dispatch of goods.
b. Domestic sales include excise duty and are net of sales returns,
trade discounts and sales tax.
c. Export Sales are accounted on the basis of dates of Bill of Lading.
d. Revenue from services is recognized as and when services are
rendered as per terms of contract.
e. Income from investments / other income is recognized on accrual
basis.
(iii) Inventories are valued as under :
a. Raw materials, Components, Stores & Spares, Loose Tools & Finished
Components: At moving weighted average cost or net realizable value
which ever is lower.
b. Finished Goods: At lower of cost or net realizable value inclusive
of excise duty thereon.
c. Work-in-Progress: At lower of estimated cost and net realizable
value.
d. Goods in Transit and under clearance: At lower of actual cost till
date (inclusive of customs duty payable thereon) or net realizable
value.
e. Stock of Scrap: At estimated net realizable value.
(iv) Investments:
Long term investments are valued at cost less provision for diminution
in value, other than temporary, if any.
(v) Employee Benefits:
1. Short Term Employee Benefits:
All employee benefits falling due wholly within twelve months of
rendering service are classified as short term benefits. The benefits
like salaries, wages etc. and the expected cost of bonus, ex-gratia,
are recognized in the period in which the employee renders the related
service.
2. Post Employment Benefits
a. Defined Contribution Plan: Defined contribution plan consists of
Government Provident Fund Scheme and Employee State Insurance scheme.
Companys contribution paid/payable during the year under these schemes
are charged to Profit and Loss Account. There are no other obligations
other than the contribution made by the company.
b. Defined Benefit Plan: The employees gratuity schemes and long term
compensated absences are the defined benefit plans. Companys
liabilities towards gratuity and leave encashment are determined using
the projected unit credit method which considers each period of service
as giving rise to an additional unit of benefit entitlement and
measures each unit separately to build up the final obligation.
Actuarial gain and losses are recognized immediately in the statement
of Profit and Loss account as income or expense. Obligation is measured
at the present value of estimated future cash flow using a discount
rate that is determined by the reference to market yields at the
Balance Sheet date on Government bonds.
(vi) Fixed Assets:
1. Tangibles: Fixed assets (except free hold land) are stated at cost
of acquisition or construction including installation cost,
attributable interest and financial cost till such time assets are
ready for its intended use, less accumulated depreciation, impairment
losses and specific grants received if any. Free hold land is stated at
revalued amount.
2. Intangibles: Product Development Expenditure and Licence /
Technical know-how fees :
Product Development expenditure of capital nature are added to fixed
assets. Expenditure on licence and technical know-how fees and other
related expenditure towards technological improvement of the products
and/or components for captive use are treated as intangible assets.
Expenditure of these nature are initially recognized as capital work in
progress and eventually transferred to fixed assets block as
appropriate on the
commencement of the commercial production after the viability of the
product is proven.
(vii) Depreciation and amortization:
a. Depreciation on fixed assets except free hold land is calculated on
straight line basis at the rates specified in accordance with the
Schedule XIV of the Companies Act, 1956.
b. Depreciation on fixed assets sold or scrapped during the year is
provided up to the month in which such fixed assets are sold or
scrapped. Depreciation on additions to fixed assets is calculated on
pro-rata basis from the month of addition.
c Product Development expenditure and Licence/Technical know-how fees
are amortized over a period of 10 years from the accounting year in
which the commercial production of such improved product commences.
(viii) Impairment of Assets:
In accordance with Accounting Standard 28 (AS 28) on "Impairment of
Assets", where there is an indication of impairment of the Companys
assets, the carrying amounts of the Companys assets are reviewed at
each balance sheet date to determine whether there is any impairment
based on internal/external factors. An impairment loss, if any, is
recognized in the Profit & Loss account, wherever the carrying amount
of an asset exceeds its estimated recoverable amount. The recoverable
amount of the assets is estimated at the higher of its net selling
price and its value in use. In assessing the value in use, the
estimated future cash flows are discounted to the present value at the
weighted average cost of capital. After impairment, depreciation is
provided on the revised carrying amount of the assets over its
remaining useful life. Previously recognized impairment loss is further
provided or reversed depending on changes in circumstances.
(ix) Foreign Currency Transactions:
a. Foreign Currency transactions are recorded on the basis of exchange
rates prevailing on the date of their occurrence.
b. Foreign currency monetary assets and liabilities as on the Balance
Sheet date are revalued in the accounts on the basis of exchange rates
prevailing at the close of the year and exchange difference arising
there-from is charged / credited to the Profit & Loss Account.
c. Exchange fluctuation gain is accounted as "Other Income" and loss
is accounted as "Miscellaneous Expenses".
(x) Leases
Leases are classified as finance or operating leases depending upon the
terms of the lease agreements. Assets held under finance leases are
recognized as assets of the Company on the date of acquisition and
depreciated over their estimated useful lives.
Initial direct costs under the finance lease are included as part of
the amount recognized as asset under the finance lease.
Rentals payable under operating leases are treated as expenses as and
when they are incurred.
(xi) Customs Duty:
Customs duty is accounted as and when paid/provided.
(xii) Borrowing Cost:
As per Accounting Standard 16 on "Borrowing Costs" borrowing costs that
are : (a) directly attributable to the acquisition, construction,
production of a qualifying asset are capitalized as a part of cost of
such asset till the time the asset is ready for its intended use and
(b) not directly attributable to qualifying assets are determined by
applying a weighted average rate and are capitalized as a part of the
cost of such qualifying asset till the time the asset is ready for its
intended use. Remaining borrowing costs are recognized as an expense in
the period in which they are incurred.
(xiii) Contingencies and Provisions:
A provision is recognized when the Company has a present obligation as
a result of past event. It is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation in
respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on the best
estimate of the expenditure required to settle the obligation at the
balance sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimate.
A contingent liability is disclosed, unless the possibility of an
outflow of resources embodying the economic benefit is remote.
(xiv) Taxation:
Tax expense comprises of current tax and deferred tax charge or credit.
Current tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Indian Income Tax Act. The deferred
tax charge or credit is recognized using prevailing enacted or
substantively enacted tax rate. Where there is unabsorbed depreciation
or carry forward losses, deferred tax assets are recognized only if
there is virtual certainty of realization of such assets. Other
deferred tax assets are recognized only to the extent there is
reasonable certainty of realization in future. Deferred tax
assets/liabilities are reviewed as at each balance sheet date based on
developments during the period and available case law to re-assess
realization/ liabilities.
B. Notes to accounts
(1) Issued, Subscribed and Paid-up Capital includes :
a. 15,98,150 equity shares of Rs. 10 each allotted on conversion of
debentures into fully paid equity shares.
b. 6,00,000 equity shares of Rs. 10 each allotted on conversion of
term loans/ debentures into fully paid equity shares to financial
institutions.
c. 80,84,910 equity shares of Rs. 10 each allotted as fully paid bonus
shares by capitalization of reserves.
d. 43,04,727 equity shares of Rs. 10 each fully paid, allotted at a
premium of Rs. 29.43 per share on conversion of warrants issued on
preferential basis.
(2) In order to appropriately reflect the fair market value of
companys land in its books, in July 2010, the Company has revalued its
land located at Dombivali, outskirts of Mumbai and Chinchward, Pune.
This revaluation has resulted in an increase in gross and net block of
Freehold Land by Rs. 501 crores and creation of a revaluation reserve
of Rs. 501 crores during the year. The valuation of the land has been
done by the external approved valuer.
On the grounds of prudence and as per the legal opinion obtained, the
surplus of Rs. 6057.31 lakhs arose upon re-conversion of stock-in trade
into land in the financial year 2008-09 continues to be included in the
General Reserve of the company and will not be considered for
distribution till it is realized.
(3) Balances of Debtors & Creditors and advances/deposits received from
dealers/ customers are as per books of account. Letters have been sent
seeking confirmation of balances and replies in some cases are awaited.
Adjustments, if any, will be made on receipt of such confirmations.
Mar 31, 2010
(i) Basis of Accounting:
The financial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting in accordance
with the accounting principles generally accepted in India and in
compliance with provisions of the Companies Act, 1956 and comply with
the mandatory Accounting Standards (AS) specified in the Companies
(Accounting Standard) Rules, 2006, prescribed by the Central
Government.
(ii) Revenue Recognition:
a. Revenue from sales of goods is recognized when significant risk and
rewards in respect of ownership of product is transferred to the
customers, which is generally on dispatch of goods.
b. Domestic sales include excise duty and are net of sales returns,
trade discounts and sales tax.
c. Export Sales are accounted on the basis of dates of Bill of Lading.
d. Revenue from services is recognized as and when services are
rendered as per terms of contract.
e. Income from investments/other income is recognized on accrual
basis.
(iii) Inventories are valued as under :
a. Raw materials, Components, Stores & Spares, Loose Tools & Finished
Components: At moving weighted average cost or net realizable value
which ever is lower.
b. Finished Goods: At lower of cost or net realizable value inclusive
of excise duty thereon.
c. Work-in-Progress: At lower of estimated cost and net realizable
value.
d. Goods in Transit and under clearance: At lower of actual cost till
date (inclusive of customs duty payable thereon) or net realizable
value.
e. Stock of Scrap: At estimated net realizable value.
(iv) Investments:
Long term investments are valued at cost less provision for diminution
in value, other than temporary, if any.
(v) Employee Benefits:
1. Short Term Employee Benefits:
All employee benefits falling due wholly within twelve months of
rendering service are classified as short term benefits. The benefits
like salaries, wages etc. and the expected cost of bonus, ex-gratia,
are recognized in the period in which the employee renders the related
service.
2. Post Employment Benefits
a. Defined Contribution Plan: Defined contribution plan consists of
Government Provident Fund Scheme and Employee State Insurance scheme.
Company?s contribution paid/payable during the year under these schemes
are charged to Profit and Loss Account. There are no other obligations
other than the contribution made by the Company.
b. Defined Benefit Plan: The employees? gratuity fund schemes and long
term compensated absences are the defined benefit plans. Company?s
liabilities towards gratuity and leave encashment are determined using
the projected unit credit method which considers each period of service
as giving rise to an additional unit of benefit entitlement and
measures each unit separately to build up the final obligation.
Actuarial gain and losses are recognized immediately in the statement
of Profit and Loss account as income or expense. Obligation is measured
at the present value of estimated future cash flow using a discount
rate that is determined by the reference to market yields at the
Balance Sheet date on Government bonds.
c. Provision towards liability in respect of early retirement benefit
scheme as on 01-04-2007 is charged over a period of 3 years but not
later than accounting period commencing on or after 1st April, 2010 as
per AS 15 (Revised) Ã ÃEmployee Benefits.Ã
(vi) Fixed Assets:
a. Tan gi bles: Fixed assets (except free hold land) are stated at
cost of acquisition or construction including installation cost,
attributable interest and financial cost till such time assets are
ready for its intended use, less accumulated depreciation, impairment
losses and specific grants received if any. Free hold land is stated at
cost except land at Kalyan which is stated at book value on the date of
re-conversion.
b. Intangibles: Product Development Expenditure and Licence/Technical
know-how fees: Product Development expenditure of capital nature are
added to fixed assets. Expenditure on licence and technical know-how
fees and other related expenditure towards technological improvement of
the products and/or components for captive use are treated as
intangible assets. Expenditure of these nature are initially recognized
as capital work in progress and eventually transferred to fixed assets
block as appropriate on the commencement of the commercial production
after the viability of the product is proven.
(vii) Depreciation and amortization:
a. Depreciation on fixed assets except free hold land is calculated on
straight line basis at the rates specified in accordance with the
Schedule XIV of the Companies Act, 1956.
b. Depreciation on fixed assets sold or scrapped during the year is
provided up to the month in which such fixed assets are sold or
scrapped. Depreciation on additions to fixed assets is calculated on
pro-rata basis from the month of addition.
c. Product Development expenditure and Licence/Technical know-how fees
are amortized over a period of 10 years from the accounting year in
which the commercial production of such improved product commences.
(viii) Impairment of Assets:
In accordance with Accounting Standard 28 (AS 28) on ÃImpairment of
AssetsÃ, where there is an indication of impairment of the Company?s
assets, the carrying amounts of the Company?s assets are reviewed at
each balance sheet date to determine whether there is any impairment
based on internal/external factors. An impairment loss, if any, is
recognized in the Profit & Loss account, wherever the carrying amount
of an asset exceeds its estimated recoverable amount. The recoverable
amount of the assets is estimated at the higher of its net selling
price and its value in use. In assessing the value in use, the
estimated future cash flows are discounted to the present value at the
weighted average cost of capital. After impairment, depreciation is
provided on the revised carrying amount of the assets over its
remaining useful life. Previously recognized impairment loss is further
provided or reversed depending on changes in circumstances.
(ix) Foreign Currency Transactions:
a. Foreign Currency transactions are recorded on the basis of exchange
rates prevailing on the date of their occurrence.
b. Foreign currency monetary assets and liabilities as on the Balance
Sheet date are revalued in the accounts on the basis of exchange rates
prevailing at the close of the year and exchange difference arising
there-from is charged / credited to the Profit & Loss Account.
c. Exchange fluctuation gain is accounted as ÃOther Incomeà and loss
is accounted as ÃMiscellaneous ExpensesÃ.
(x) Leases
Leases are classified as finance or operating leases depending upon the
terms of the lease agreements. Assets held under finance leases are
recognized as assets of the Company on the date of acquisition and
depreciated over their estimated useful lives. Initial direct costs
under the finance lease are included as part of the amount recognized
as asset under the finance lease. Rentals payable under operating
leases are treated as expenses as and when they are incurred.
(xi) Customs Duty:
Customs duty is accounted as and when paid/provided.
(xii) Borrowing Cost:
As per Accounting Standard 16 on ÃBorrowing Costsà borrowing costs that
are : (a) directly attributable to the acquisition, construction,
production of a qualifying asset are capitalized as a part of cost of
such asset till the time the asset is ready for its intended use and
(b) not directly attributable to qualifying assets are determined by
applying a weighted average rate and are capitalized as a part of the
cost of such qualifying asset till the time the asset is ready for its
intended use. Remaining borrowing costs are recognized as an expense in
the period in which they are incurred.
(xiii) Contingencies and Provisions:
A provision is recognized when the Company has a present obligation as
a result of past event. It is probable that an outflow of resources
embodying economic benefit will be required to settle the obligationin
respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on the best
estimate of the expenditure required to settle the obligation at the
balance sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimate. A contingent liability
is disclosed, unless the possibility of an outflow of resources
embodying the economic benefit is remote.
(xiv) Taxation:
Tax expense comprises of current tax and deferred tax charge or credit.
Current tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Indian Income Tax Act. The deferred
tax charge or credit is recognized using prevailing enacted or
substantively enacted tax rate. Where there is unabsorbed depreciation
or carry forward losses, deferred tax assets are recognized only if
there is virtual certainty of realization of such assets. Other
deferred tax assets are recognized only to the extent there is
reasonable certainty of realization in future. Deferred tax
assets/liabilities are reviewed as at each balance sheet date based on
developments during the period and available case law to re-assess
realization/ liabilities.