Accounting Policies of Rane Holdings Ltd. Company
Mar 31, 2022
1. Corporate Information
Rane Holdings Limited ("RHLâ or "the Company'''') is the holding company whose main activity is investing in Rane group Companies that are engaged primarily in the manufacturing/marketing of components and providing technological services for the transportation industry, mainly the automotive sector. The rane Group''s investment profile includes subsidiaries and Joint venture/associate entities. The Company''s income stream comprises of (i) dividend from the investments made in the group companies, (ii) trade mark fee for use of "RANEâ trade mark and (iii) service fee from group companies for providing service in the areas of management, information technology, business development and infrastructure. The Company is a public limited Company incorporated in India with its registered office in Chennai, Tamilnadu, India. The Company is listed on the Bombay Stock Exchange Limited, Mumbai and National Stock Exchange of India Limited, Mumbai.
2. Significant accounting policies1. Statement of compliance and basis of preparation
These standalone financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the ''Act'') and other relevant provisions of the Act. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard requires a change in the accounting policy hitherto in use.
The standalone financial statements have been prepared on the historical cost basis except for the following items:
|
items |
Measurement basis |
|
Certain financial assets and liabilities |
Fair value |
|
Net defined benefit |
Present value of defined |
|
(asset) / liability |
benefit obligations less fair value of plan assets |
|
Certain investments |
Fair value |
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1. The Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
3. Use of estimates and Judgements
The preparation of the standalone financial statements in conformity with accounting principles generally accepted in India requires the management to make judgements, estimates and assumptions as considered in the reported amount of assets and liabilities as of the Balance Sheet date, reported amount of revenues and expenses for the year and disclosure of contingent liabilities as of the Balance Sheet date. These estimates, judgement and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about the assumptions and estimates may result in outcomes requiring a material adjustment to the carrying amount of assets or liabilities in future periods.
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.
Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the standalone financial statements is included in the following notes;
- Note 7 - Impairment testing for investments
3.2 Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are as follows;
3.2.1 Fair value measurements and valuation process
In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. Further details are given in note 41.
3.2.2 Impairment of investments
The Company tests whether any of its investments have suffered any impairment on an annual basis. The recoverable value of the investment is determined based on fair value less cost to sell which require the use of assumptions. Refer note 7.
tax expense is calculated using applicable tax rate and laws that have been enacted or substantively enacted. Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws and the amount and timing of future taxable income. In arriving at taxable profit and all tax bases of assets and liabilities, the Company determines the taxability based on tax enactments, relevant judicial pronouncements and tax expert opinions, and makes appropriate provisions which includes an estimation of the likely expected outcome of any open tax assessments / litigations. Deferred income tax assets are recognized to the extent that it is probable that future taxable income will be available. Further details are given in note 11,33 and 35.
the cost of defined benefit plans are determined using actuarial valuations. the actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases and mortality rates. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. Further details are given in note 36.
3.3 Estimation of uncertainties relating to the global health pandemic from cOVID-19
CoviD-19 pandemic has rapidly spread throughout the world, including india. Governments have taken significant measures to curb the spread of the virus including imposing mandatory lockdowns and restrictions on activities. Consequently, the Company''s offices had to be closed down / operate under restrictions for a period of time during last year. these measures have an impact on matters relating to supply chain and customer demand of the subsidiaries and joint venture/associate entities, personnel available for work, being able to access offices etc.
the Company has considered the possible effects that may result from the continued effect of the pandemic on the carrying amounts of assets (net of impairment losses), capital and financial resources, profitability, liquidity position, internal financial controls etc. in
developing the assumptions relating to the possible future uncertainties, the Company, as at the date of approval of these financial statements has used internal and external sources of information and based on current estimates expects that the carrying amount of these assets will be recovered. the impact of CoviD-19 on the Company''s financial statements may differ from that estimated as at the date of approval of these financial statements dependent on circumstances that evolve in the future. the Company will continue to closely monitor any material changes to future economic conditions.
A number of the Company''s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. the Company has an established control framework with respect to the measurement of fair values.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
⢠Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
⢠Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
⢠Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
when measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. if the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
the Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
5. Financial instrumentsi. Initial recognition
trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset (except trade receivables and contract
asset) or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FvTpL), transaction costs that are directly attributable to its acquisition or issue. trade receivables and contract assets are measured at transaction price as per Ind As 115.
ii. Classification and subsequent measurement
Financial assets
on initial recognition, a financial asset is classified as measured at
- amortised cost;
- Fair value through OCI - debt investment;
- Fair value through OCI - equity investment; or
- Fair value through profit and loss
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
on initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''s fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest.
For the purposes of this assessment, ''principal'' is defined as the fair value of the financial asset on initial recognition. ''Interest'' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:
- contingent events that would change the amount or timing of cash flows;
- terms that may adjust the contractual coupon rate, including variable interest rate features;
- prepayment and extension features; and
- terms that limit the Company''s claim to cash flows from specified assets (e.g. non-recourse features).
Financial assets: Subsequent measurement and gains and losses
|
Financial assets at FVTPL |
These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss |
|
Financial assets at amortised cost |
These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. |
|
Debt investments FvoCi |
at These assets are subsequently measured at fair value. interest income under the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. other net gains and losses are recognised in oCi. on derecognition, gains and losses accumulated in oCi are reclassified to profit or loss. |
|
Equity investments FvoCi |
at these assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. other net gains and losses are recognised in oCi and are not reclassified to profit or loss. |
Financial liabilities: Classification, subsequent
measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FvTpL. A financial liability is classified as at FvTpL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FvTpL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. any gain or loss on derecognition is also recognised in profit or loss.
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
the Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. in this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
6. Property, plant and equipment
items of property, plant and equipment are carried at cost, which includes capitalised borrowing costs, less accumulated depreciation and impairment losses, if any. The cost comprises its purchase price net of any trade discounts and rebates, including any import duties and other taxes (other than those subsequently recoverable from the tax authorities) and any directly attributable expenditure on making the asset ready for its intended use. subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
on transition to ind As, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 april 2016, measured as per the previous GAAp, and use that carrying value as the deemed cost of such property, plant and equipment.
Capital work-in-progress: assets which are not yet ready for their intended use are carried at cost comprising direct cost, related incidental expenses and attributable interest (in case of qualifying assets).
Depreciation on property, plant and equipment has been provided on the straight-line method on the basis of estimated useful life determined based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc. The useful lives of the assets are as below:
|
Asset |
Management estimate of useful life |
Useful life as per Schedule ii |
|
Buildings |
30 years |
30 years |
|
Plant and machinery |
15 years |
15 years |
|
Vehicles |
5 years |
8 years |
|
Furniture and fixtures |
5 years |
10 years |
|
Office equipment |
3 years |
5 years |
|
Computers and data processing units |
3 years |
3 to 6 years |
Freehold land is not depreciated.
Depreciation method, useful lives and residual values are reviewed at the end of each financial year.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in statement of profit and loss.
7. Intangible assets
Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the tax authorities) and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in which the expenditure is incurred. the amortisation expense on intangible assets is recognised in the statement of profit and loss. an intangible asset 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 measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.
amortisation method, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate.
intangible assets which comprise of software licence has a useful life of 5 years.
on transition to ind As, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at 1 april 2016, measured as per the previous GAAp, and use that carrying value as the deemed cost of such intangible assets.
8. Impairmenti. Impairment of financial instruments
the Company recognises loss allowances for expected credit losses on financial assets measured at amortised cost.
at each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. a financial asset is ''credit-impaired'' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
The Company measures loss allowances at an amount equal to lifetime expected credit losses, except for debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.
Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit losses.
Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
in all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Company is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company''s historical experience and informed credit assessment and including forward-looking information.
The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realising security (if any is held).
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive).
presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FvoCI, the loss allowance is charged to profit or loss and is recognised in oCi.
write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. this is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company''s procedures for recovery of amounts due.
ii. Impairment of property, plant and equipment and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment 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). when it is not possible to estimate the recoverable amount of an individual asset, the Company 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 cashgenerating units, or otherwise they are allocated to the smallest Company of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. in assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset (or cash-generating unit) for which the estimates of future cash flows have not been adjusted.
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.
if the recoverable amount of the cash-generating unit is less than the carrying value of the unit, the impairment loss is allocated first to reduce the carrying value of any goodwill allocated to the unit and then to the other assets of the unit in proportion to the carrying value of each asset in the unit.
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, 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.
9. Borrowings and borrowing costs
Borrowing are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of profit and loss over the period of the borrowings using the effective interest rate method. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Borrowing costs are interest and other costs incurred in connection with the borrowing of funds.
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 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 profit or loss in the period in which they are incurred.
The Company''s lease asset classes primarily consist of leases for IT Assets and vehicles. The Company assesses whether a contract contains a lease, at inception of a contract. a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROUâ) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. RoU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. Lease liabilities are
re-measured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented and lease payments have been classified as financing cash flows.
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
Cash flows from operating activities are reported using the indirect method, whereby profit / (loss) is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated.
13. Foreign currency transactions and translations(i) Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The financial statements are presented in Indian Rupee (INR), which is the Company''s functional and presentation currency.
(ii) Transactions and balances
In preparing the standalone financial statements, transactions in currencies other than the entity''s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. All nonmonetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. All monetary assets and liabilities in foreign currency are reinstated at the end of accounting period.
Exchange differences are recognised in profit or loss, except exchange differences arising from the translation of the following items which are recognised in OCI:
⢠equity investments at fair value through OCI (FVOCI);
⢠qualifying cash flow hedges to the extent that the hedges are effective.
14. Revenue recognition
The Company derives revenues primarily from rendering management and information technology services to the subsidiaries and joint venture/associate entities and from Trade Mark fee in accordance with the terms of the agreements with the Group entities. Revenue is recognized upon transfer of control of promised services to customers (i.e. upon rendering of services) at an amount that reflects the consideration that the Company expects to receive in exchange for those services.
Dividend Income
Dividend income is accounted when the right to receive it is established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Other income
Interest income is recognised using the effective interest method. the ''effective interest rate'' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:
- the gross carrying amount of the financial asset; or
- the amortised cost of the financial liability.
15. Employee benefits Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
Defined contribution plans
Provident fund
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards Government administered provident fund scheme. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or
loss in the periods during which the related services are rendered by employees.
Superannuation fund
This is a defined contribution plan, where a portion of the eligible employees'' salary, as per the choice exercised by the respective employees, is contributed towards superannuation fund administered by the Trustees and managed by Life Insurance Corporation of India (LIC). There are no further obligations for future superannuation benefits other than the annual contributions which is recognized as expense as and when due.
Defined benefit plans Gratuity
The Company provides for gratuity, a defined benefit plan (the "Gratuity Planâ) administered by LIC covering eligible employees in accordance with the payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses / gains are recognised in the other comprehensive income in the year in which they arise. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit and loss.
Other Long term employee benefits compensated absences
Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. Those that are expected to be encashed after 12 months from the end of the year are treated as other long-term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end. The obligation is measured on the basis of an annual independent actuarial valuation using the projected unit credit method. Remeasurements gains or losses are recognised in profit or loss in the period in which they arise.
16. expenditure on corporate Social Responsibility (cSR)
The Company accounts the expenditure incurred towards Corporate social Responsibility as required under the Act as a charge to the statement of profit and
loss. As at the balance sheet date, an asset / liability is recognized for the difference between the amount spent and the amount required to be spent as per the provisions of the Act.
17. Provisions and contingent liabilities
provisions: provisions are recognised when there is a present obligation as result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value unless the effect of time value of money is material. when discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. when there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.
Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to an item recognised directly in equity or in other comprehensive income.
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. it is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
b. Deferred tax:
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits. Deferred tax is not recognised for temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
19. Financial and corporate guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109;and
24. Recent pronouncements
Ministry of Corporate Affairs ("MCAâ) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued time to time. On 23 March, 2022,MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, as below.
ind AS 16 - Property Plant and equipment
The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributabe cost considered as part of cost of an item of property,plant and equipment. The effective date for adoption of this amendmnet is annual period begining on or after 1 April, 2022. The Company has evaluated the amendment and there is no impact on its financial statements.
ind As 37 - Provsions ,contingent iabilities and contingent assets
The amendments specifies that the ''cost of fulfilling'' a contract comprieses the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract(examples would be direct labour,materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The effective date for adoption of this amendment is annual periods beginning on or after 1 April, 2022, although early adoption is permitted. The Company has evaluated the amendment and the impat is not expected to be material
Ind AS 103 - Reference to Conceptual Framework
The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date. These changes do not significantly change the requirements of Ind AS 103. The Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 109 - Annual Improvements to Ind AS (2021)
The amendment clarifies which fees an entity includes when it applies the ''10 percent'' test of Ind AS 109 in assessing whether to derecognise a financial liability. The Company does not expect the amendment to have any significant impact in its financial statements.
- the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind As 115.
Basic earnings per share is computed by dividing the profit after tax (including the post tax effect of exceptional items, if any) by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the profit after tax (including the post tax effect of exceptional items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the additional dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented.
21. Investment in subsidiaries and Joint venture/associates
Investment in subsidiaries and joint venture/associate entities are measured at cost less accumulated impairment as per ind As 27.
The final dividend on shares is recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Board of Directors.
the Company holds strategic investments in subsidiaries and joint venture/associate entities (collectively called "the Groupâ) that are primarily engaged in single segment viz., manufacturing/marketing of components and providing technological services for Transportation industry and also provides consultancy and other services to the Group. segment reporting information is provided in the consolidated financial statements of the group.
Mar 31, 2019
Corporate Information, Significant Accounting Policies and Significant Accounting Judgments, Estimates and Assumptions 1 Corporate Information
Rane Holdings Limited ("RHL" or "the Company'') is the holding company whose main activity is investing in Rane group Companies that are engaged primarily in the manufacturing/marketing of components and providing technological services for the transportation industry, mainly the automotive sector. The Rane Group''s investment profile includes subsidiaries, joint ventures and associate. The Company''s income stream comprises of (i) dividend from the investments made in the group companies, (ii) trade mark fee for use of "RANE" trade mark and (iii) service fee from group companies for providing service in the areas of management, information technology, business development and infrastructure.
2 Significant Accounting Policies
2.1 Statement of Compliance
The standalone financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of The Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules 2015 and other relevant provisions of the Act.
Except for the changes below, the Company has consistently applied accounting policies to all periods.
The Company has adopted Ind AS 115 ''Revenue from Contracts with Customers'' with the date of initial application being April 1, 2018. Ind AS 115 establishes a comprehensive framework on revenue recognition. Ind AS 115 replaces Ind AS 18 ''Revenue'' and Ind AS
11 ''Construction Contracts''. The application of Ind AS 115 did not have material impact on the financial statements. As a result, the comparative information has not been restated.
Appendix B to Ind AS 21 ''The Effects of Changes in Foreign Exchange Rates'': 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 is effective from April 1, 2018. The Company has evaluated the effect of this amendment on the financial statements and concluded that the impact is not material.
2.2 Basis of preparation
The financial statements have been prepared on the historical cost 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 exchange for services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis.
I n addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
1. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
2. Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
3. Level 3 inputs are unobservable inputs for the asset or liability
2.3 Property, Plant and Equipment and Intangible assets
2.3.1 Property, Plant and Equipment
Land and buildings held for use in providing services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated.
Properties in the course of providing of services or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Companyâs 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.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
2.3.2 Estimated useful lives of the assets are as follows:
Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.
Assets costing less than Rs,10,000 each are fully depreciated in the year of acquisition.
The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
An item of property, plant and equipment is derecognized 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 recognized in the statement of profit and loss.
2.3.3Intangible assets
Intangible assets with finite useful lives are carried at cost less accumulated amortization and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the tax authorities) and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates.
The intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the company for its use. The amortization period are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern.
Subsequent expenditure on an intangible asset after its purchase / completion is recognized as an expense when incurred, unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.
Derecognition of intangible assets An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in the statement of profit or loss when the asset is derecognized.
Estimated useful life of the intangible assets are as follows:
License Fee on Software - 3 Years or license period whichever is lower
The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern.
Assets costing less than Rs,10,000 each are fully depreciated in the year of acquisition.
2.4 Leasing:
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Operating Lease :
Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed or the payments to the less or are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.
I n the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
2.5 Foreign Currencies:
2.5.1 Functional and presentation currency:
Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the entity operates (âthe functional currencyâ). The financial statements are presented in Indian Rupee (INR), which is the company''s functional and presentation currency.
2.5.2 Transactions and balances:
Transactions in foreign currencies are recorded on initial recognition at the exchange rate prevailing on the date of transaction.
Any gains or losses arising due to differences in exchange rates at the time of transaction are classified as follows:
The exchange differences pertaining to restatement of long-term monetary items(investments) are recognized through Other Comprehensive Income
The exchange differences pertaining to restatement of Trade Receivables are recognized through Statement of Profit or Loss.
2.6 Provisions and contingencies
Provisions are recognized 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 amount of the obligation.
The amount recognized 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).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liability is disclosed in the notes for (i) possible obligation which will be confirmed only by future events not wholly within the control of the company or (ii) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are neither recognized nor disclosed in the financial statements.
2.7 Operating Cycle
Based on the nature of 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.
2.8 Revenue recognition
2.8.1 Service Fee and Trade Mark Fee
The Company derives revenues primarily from management and information technology services to the subsidiaries and joint ventures and from Trade Mark fee in accordance with the terms of the agreements with the Group entities. Revenue is recognized upon rendering of services and measured based on the consideration specified in contracts.
2.8.2 Dividend Income
Dividend income is accounted for when the right to receive it is established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
2.9 Taxation:
Income tax expense represents the sum of the tax currently payable and deferred tax.
2.9.1. Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâ 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 Companyâs current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
2.9.2 Deferred tax
Deferred tax is recognized 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 recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
2.10 Employee benefits
Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences.
2.10.1 Defined contribution plans
The Company''s contribution to provident fund and superannuation fund are considered as defined contribution plans.
The Company contributes to a government administered provident fund on behalf of its employees, which are charged to the Statement of Profit and Loss. The Company has no obligations for future provident fund/superannuation fund benefits other than its monthly contributions.
Fixed contributions to the Superannuation Fund, which is administered by Company nominated trustees and managed by Life Insurance Corporation of India, are charged to the Statement of Profit and Loss.
2.10.2 Defined benefit plans
For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with Actuarial Valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.
2.10.3 Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. The cost of such compensated absences is accounted as under :
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
(b) in case of non-accumulating compensated absences, when the absences occur.
2.10.4 Defined benefit costs are categorized as follows:
1. Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
2. Net interest expense or income; and
3. Re-measurement
a. The company presents the first two components of defined benefit costs in profit or loss in the line item âEmployee benefits expenseâ.
b. Past service cost is recognized in profit or loss in the period of a plan amendment.
c. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
d. Re-measurement, 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), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Re-measurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.
2.10.5 Long-term employee benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the Balance Sheet date.
2.11 Earnings Per Share
The Company presents basic and diluted earnings per share (EPS) data for its equity shares. Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.
2.12 Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks, cherubs and drafts on hand.
2.12.1 Cash flow statement
Cash flows are reported using the indirect method, whereby profit for the year is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
2.13 Impairment of 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). When it is not possible to estimate the recoverable amount of an individual asset, the Company 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 company of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
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 recognized immediately in profit or 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, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
2.14 Segment Reporting:
The Company holds strategic investments in subsidiaries and joint ventures (collectively called âthe Groupâ) that are primarily engaged in single segment viz., manufacturing/marketing of components and providing technological services for Transportation industry and also provides consultancy and other services to the Group. Further the Company does not have any operations outside India. As such there are no separate reportable segments as per Ind AS 108 âSegment Reportingâ.
2.15
2.15.1 Critical accounting judgments
In the application of the Company''s accounting policies, which are described in note 3, the directors of the Company are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from 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 recognized 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.
2.15.2 Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
2.15.2.1 Fair value measurements and valuation
processes
In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party qualified values to perform the valuation. The management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.
2.15.2.2 Employee Benefits
The cost of defined benefit plans are determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. Further details are given in note 32.
2.15.2.3 Taxation:
Tax expense is calculated using applicable tax rate and laws that have been enacted or substantially enacted. In arriving at taxable profit and all tax bases of assets and liabilities, the Company determines the taxability based on tax enactments, relevant judicial pronouncements and tax expert opinions, and makes appropriate provisions which includes an estimation of the likely outcome of any open tax assessments / litigations. Any difference is recognized on closure of assessment or in the period in which they are agreed. Deferred income tax assets are recognized to the extent that it is probable that future taxable income will be available.
2.16 Financial instruments
Financial assets and financial liabilities are recognized when the company becomes a party to the contractual provisions of the instruments.
Initial Recognition
Financial assets and financial liabilities are initially measured at fair 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 at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in the statement of profit and loss.
Subsequent Measurement
1. Financial assets
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
(i) Classification of financial assets
The Company classifies its financial assets in the following measurement categories:
a) those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
b) those measured at amortized cost
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
a. Amortized Cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on these assets that is subsequently measured at amortized cost is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
b. Fair value through other comprehensive income (FVTOCI)
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other income/ (expense).
c. Fair value through profit or loss (FVTPL)
Assets that do not meet the criteria for amortized cost or FVTOCI are measured at fair value through profit or loss. A gain or loss on these assets that is subsequently measured at fair value through profit or loss is recognized in the statement of profit and loss.
(i) Impairment of financial assets
All financial assets classified as at amortized cost shall be tested for impairment under Ind AS 109 and measured using Expected Credit Loss (ECL) model.
For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables.
(ii) Derecognition of financial assets
A financial asset is derecognized only when the company has transferred the rights to receive cash flows from the financial asset. Where the Company has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset.
2. Financial liabilities and equity instruments
Equity and Debt instruments issued by the 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.
All financial liabilities are subsequently measured at amortized cost using the effective interest rate method or at FVTPL.
(a) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.
(b) Financial liabilities at amortized cost
Financial liabilities that are not held-for-trading and are not designated at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest rate method. Interest expense that is not capitalized as part of costs of an asset is included in the ''Finance costs'' line item.
(c ) Financial liabilities at FVTPL
Liabilities that do not meet the criteria for amortized cost are measured at fair value through profit or loss. A gain or loss on these assets that is subsequently measured at fair value through profit or loss is recognized in the statement of profit and loss.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
2.17 Standards issued but not yet effective
(a) Ind AS 116 - Leases:
On March 30, 2019, the Ministry of Corporate Affairs notified the Companies (Indian Accounting Standards) Amendment Rules, 2019 containing Ind AS 116 - Leases and related amendments to other Ind ASs. Ind AS 116 replaces Ind AS 17 - Leases and related interpretation and guidance. The standard sets out principles for recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the less or. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than
12 months, unless the underlying asset is of low value. Currently, operating lease expenses are charged to the statement of profit and loss. The Standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the less or accounting requirements as per Ind AS 17. Ind AS 116 is effective for annual periods beginning on or after April 1, 2019. The Company is currently evaluating the effect of the above on its standalone financial statements.
(b) Amendment to Ind AS 12 - Income taxes:
Appendix C to Ind AS 12, Uncertainty over Income Tax Treatments: On March 30, 2019, Ministry of Corporate Affairs (""MCA"") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2019 containing Appendix C to Ind AS 12, Uncertainty over Income Tax Treatments which clarifies the application and measurement requirements in Ind AS 12 when there is uncertainty over income tax treatments. The current and deferred tax asset or liability shall be recognized and measured by applying the requirements in Ind AS 12 based on the taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates determined by applying this appendix. The amendment is effective for annual periods beginning on or after April 1, 2019.
On March 30, 2019, the Ministry of Corporate Affairs has notified limited amendments to Ind AS 12 - Income Taxes. The amendments require an entity to recognize the income tax consequences of dividends as defined in Ind AS 109 when it recognizes a liability to pay a dividend. The income tax consequences of dividends are linked more directly to past transactions or events that generated distributable profits than to distributions to owners. Therefore, an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events. The amendment will come into force for accounting periods beginning on or after April 1, 2019.
(c) Amendment to Ind AS 19 - Employee Benefits:
On March 30, 2019, the Ministry of Corporate Affairs has notified limited amendments to Ind AS 19 -Employee Benefits in connection with accounting for plan amendments, curtailments and settlements. The amendments require an entity to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement and to recognize in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognized because of the impact of the asset ceiling. The amendment will come into force for accounting periods beginning on or after April 1, 2019, though early application is permitted.
Note:
5.1 During the year 2018-19 :
5.1.1 Rane (Madras) Limited (RML), a subsidiary company, issued and alloted 3,65,630 equity shares of RS,10/- each pursuant to conversion of 3,65,630 warrants held and excursed by the company by paying the entire balance ofRs,75% of issue price amounting to RS,1,500 Lakhs. Post subscription, the company holds 61.64% in equity share capital of RML.
5.1.2 The Company has acquired 2,52,000 (3.75%) equity shares of Rane Engine Valve Limited (REVL), a subsidiary company through the stock market. Post-acquisition, the company holds 54.82% in equity share capital of REVL.
5.1.3 The Company has acquired 18,870 equity shares of Rane Brake Lining Limited (RBL), a subsidiary company at prevailing market prices aggregating to RS,101 Lakhs through the stock market.
5.1.4 The Company has invested an aggregate sum of RS,585 Lakhs in the preferential allotment of Compulsorily Convertible Preference Shares issued by Rane t4u Private Limited, a subsidiary company.
5.1.5 The company has divested its entire holding of 3,60,003 (48.97%) in equity shares of Rs,10/- each fully paid up of JMA Rane Marketing Limited, a joint venture company.
5.1.6 The Company has invested an aggregate sum of Rs,841 Lakhs (USD 1,125,000) in AutoTech Fund I, L. P towards its share of capital contribution as one of the Limited Partners in the Fund.
5.2 RBL is a Board controlled subsidiary of the company as the company has the right to appoint majority of the Board of Directors of RBL.
5.3 The Subsidiary company RML carried out the valuation of the investments made in its step down subsidiary company Rane Precision Diecasting Inc. USA (RPDC) to assess the possibility of any impairment by estimating the future cash flow projections based on the most recent long term forecast and concluded that there is no impairment of its investments made in / loans and guarantees given to its intermediate and step down subsidiary amounting to Rs,96.83 crore. The valuation is dependent on the step-down subsidiary successfully securing new businesses and is also subject to fluctuations in the market demand.
For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks, cheques and drafts on hand. Cash and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be reconciled to the related items in the balance sheet as above.
The Company has one class of equity share having a par value of Rs,10/- per share. Each holder of equity share is entitled to one vote per share. The dividend when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting. Repayment of capital on liquidation will be in proportion to the number of equity shares held.
15.2 Details of shares held by each shareholder holding more than 5 percent of equity shares in the company:
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss except to the extent permitted as per Companies Act , 2013 and rules made there under. Securities premium reserve represents premium received on equity shares issued, which can be utilized only in accordance with the provisions of the Companies Act, 2013 (the Act) for specified purposes.
The capital redemption reserve represents amount transferred from Statement of Profit and Loss in accordance with Sec 55(2)(c) of the Companies Act 2013 on redemption of preference shares in the prior years.
On February 19, 2019, an interim dividend of Rs,8 per share (total dividend Rs,1,142 Lakhs ) was paid to the holders of fully paid equity shares.
In respect of the year ended March 31, 2019, the directors propose that a dividend of Rs,11 per share be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs,1,571 Lakhs.
As at 31 March 2019, the interest rate range from 8.60% p.a to 10.75% p.a
1. The term loans outstanding as at 31 March 2019 which are availed from Tata Capital Financial Services and Federal Bank Limited are secured by a charge created on the company''s land located at Chittaranjan Road, Chennai on Pari-passu basis.
2. The company is having working capital credit facility of Rs,500 Lakhs with Citi Bank, N.A by hypothecating current assets and moveable fixed assets. There is no outstanding balance as on 31 March 2019 and 31 March 2018.
Based on, and to the extent of information received from the suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), and relied upon by the auditors there are no dues as at 31 March 2019 and 31 March 2018.
The company has financial risk management policies in place to ensure that all payables are paid within the agreed credit terms.
The company has applied Ind AS 115 âRevenue from contracts with customersâ with effect from 1 April 2018. The performance obligations under all service contracts are satisfied when the services are rendered. Ind AS 115 did not have a material impact on the amount or timing of recognition of reported revenue.
22.1 Trade Receivables
The Company classifies the right to consideration in exchange for services/ deliverables as receivable.
A receivable is a right to consideration that is unconditional upon passage of time. Revenue is recognized as and when the related services are rendered to the customer.
Trade receivable are presented net of impairment in the Balance Sheet.
22.2 Transaction price allocated to the remaining performance obligation
Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts where the revenue recognized corresponds directly with the value to the customer of the entity''s performance completed to date, typically those contracts where invoicing is on time and material basis.
Mar 31, 2018
1.1 Statement of Compliance
The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Section 133 of the 2013 Act read with the Companies (Indian Accounting Standards) Rules 2015 and other relevant provisions of the 2013 Act.
Upto the year ended 31 March, 2017, the Company prepared the financial statements in accordance with the requirements of the previous GAAP, which includes standards notified under the Companies (Accounting Standards) Rules, 2006 and other relevant provisions of the 2013 Act.
These are the Companyâs first Ind AS financial statements. The date of transition to the Ind AS is 01 April, 2016. Refer Note 37 for details of the first-time adoption exceptions and exemptions availed by the Company.
1.2 Basis of preparation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with the Companies (Accounting Standards) Rules, 2015 and the relevant provisions of the Companies Act, 2013 (âthe 2013 Actâ). Upto the year ended 31 March, 2017, the company prepared the financial statements in accordance with the requirements of previous GAAP, which includes standards notified under the Companies (Accounting Standards) Rules, 2006 and other relevant provisions of the 2013 Act. These are the Companyâs first Ind AS financial statements. The date of transition to the Ind AS is 01 April, 2016.
The financial statements have been prepared on the historical cost 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 exchange for services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these financial statements is determined on such a basis.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
1. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
2. Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
3. Level 3 inputs are unobservable inputs for the asset or liability.
1.3 Property, Plant and Equipment and Intangible assets
1.3.1 Property, Plant and Equipment
Land and buildings held for use in providing services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated.
Properties in the course of providing of services or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Companyâs 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.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
1.3.2 Estimated useful lives of the assets are as follows:
Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.
Assets costing less than Rs.10,000 each are fully depreciated in the year of acquisition.
During the year 2016-17, the company has revised the useful life of buildings from 60 years to 30 years after considering the following aspects:
a. High Frequency of usage
b. increase in repair & maintenance charges and replacement
c. Modification to the aesthetic structure of the buildings for expansion and other purposes.
The Company has calculated depreciation adopting revised useful life of 30 years for both office and residential building. The incremental depreciation on account of the above revision, for the year ended 31 March, 2017 is Rs.25.76 Lakhs.
The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
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.
Deemed cost on transition to Ind AS
For transition to Ind AS, the company has elected to continue with the carrying value of all of its tangible assets recognised as of 01 April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
1.3.3 Intangible assets
Intangible assets with finite useful lives are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities) and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates.
The intangible assets are amortised over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the group for its use. The amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern.
Subsequent expenditure on an intangible asset after its purchase / completion is recognised as an expense when incurred, unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.
Derecognition of intangible assets
An intangible asset 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, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in the statement of profit or loss when the asset is derecognised.
Estimated useful life of the intangible assets are as follows:
License Fee on Software - 3 Years or license period whichever is lower.
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern.
Assets costing less than Rs.10,000 each are fully depreciated in the year of acquisition.
Deemed cost on transition to Ind AS
The Company has elected to continue with the carrying value of all of its intangible assets recognised as on 01 April, 2016 measured as per the previous GAAP and use the carrying value as its deemed cost as of transition date.
1.4 Leasing:
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Operating Lease:
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed or the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
I n the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
1.5 Foreign Currencies:
1.5.1 Functional and presentation currency
Items included in the financial statements of the group are measured using the currency of the primary economic environment in which the entity operates (âthe functional currencyâ). The financial statements are presented in Indian Rupee (INR), which is the groupâs functional and presentation currency.
1.5.2 Transactions and balances:
Transactions in foreign currencies are recorded on initial recognition at the exchange rate prevailing on the date of transaction.
Any gains or losses arising due to differences in exchange rates at the time of transaction are classified as follows:
The exchange differences pertaining to restatement of long-term monetary items (investments) are recognised through Other Comprehensive Income
The exchange differences pertaining to restatement of Trade Receivables are recognised through Statement of Profit or Loss
1.6 Provisions and contingencies
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 amount of 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).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liability is disclosed in the notes for (i) possible obligation which will be confirmed only by future events not wholly within the control of the company or (ii) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are neither recognized nor disclosed in the financial statements.
1.7 Operating Cycle
Based on the nature of activities of the Company and the normal time between acquisition of assets and their realisation 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
1.8 Revenue recognition
1.8.1 Service Fee and Trade Mark Fee
Revenues from Service Fee and Trade Mark Fee are recognised on accrual basis in accordance with terms of the relevant agreements.
1.8.2 Dividend Income
Dividend income is accounted for when the right to receive it is established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
1.9 Taxation:
Income tax expense represents the sum of the tax currently payable and deferred tax.
1.9.1 Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâas 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 Companyâs current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
1.9.2 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 the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
1.10 Employee benefits
Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences.
1.10.1 Defined contribution plans
The Companyâs contribution to provident fund and superannuation fund are considered as defined contribution plans.
The Company contributes to a government administered provident fund on behalf of its employees, which are charged to the Statement of Profit and Loss. The Company has no obligations for future provident fund/ superannuation fund benefits other than its monthly contributions.
Fixed contributions to the Superannuation Fund, which is administered by Company nominated trustees and managed by Life Insurance Corporation of India, are charged to the Statement of Profit and Loss.
1.10.2 Defined benefit plans
For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with Actuarial Valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.
1.10.3 Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. The cost of such compensated absences is accounted as under :
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
(b) in case of non-accumulating compensated absences, when the absences occur.
1.10.4 Defined benefit costs are categorized as follows:
1. Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
2. Net interest expense or income; and
3. Re-measurement
a. The company presents the first two components of defined benefit costs in profit or loss in the line item âEmployee benefits expenseâ.
b. Past service cost is recognised in profit or loss in the period of a plan amendment.
c. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
d. Re-measurement, 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), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.
1.10.5 Long-term employee benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date.
1.11 Earnings Per Share
The Company presents basic and diluted earnings per share (EPS) data for its equity shares. Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.
1.12 Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks, cheques and drafts on hand.
1.12.1 Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
1.13 Impairment of 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). When it is not possible to estimate the recoverable amount of an individual asset, the Company 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 company of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
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 profit or 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 profit or loss.
1.14 Segment Reporting:
The Company holds strategic investments in subsidiaries and joint ventures (collectively called âthe Groupâ) that are primarily engaged in single segment viz., manufacture / marketing of components and providing technological services for Transportation industry and also provides consultancy and other services to the Group. Further the Company does not have any operations outside India. As such there are no separate reportable segments as per Ind AS 108ââSegment Reportingâ.
1.15
1.15.1 Critical accounting judgements and key sources of estimation uncertainty
I n the application of the Companyâs accounting policies, which are described in note 3, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from 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.
1.15.2 Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
1.15.
1.1 Fair value measurements and valuation processes
I n estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.
1.15.
1.2 Employee Benefits
The cost of defined benefit plans are determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. Further details are given in note 32.
1.15.
1.3 Taxation:
Tax expense is calculated using applicable tax rate and laws that have been enacted or substantially enacted. In arriving at taxable profit and all tax bases of assets and liabilities, the Company determines the taxability based on tax enactments, relevant judicial pronouncements and tax expert opinions, and makes appropriate provisions which includes an estimation of the likely outcome of any open tax assessments / litigations. Any difference is recognised on closure of assessment or in the period in which they are agreed. Deferred income tax assets are recognized to the extent that it is probable that future taxable income will be available.
1.16 Financial instruments
Financial assets and financial liabilities are recognised when the company becomes a party to the contractual provisions of the instruments.
Initial Recognition
Financial assets and financial liabilities are initially measured at fair 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 at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the statement of profit and loss.
Subsequent Measurement
1. 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.
(i) Classification of financial assets
The Company classifies its financial assets in the following measurement categories:
a) those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
b) those measured at amortised cost
The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash flows.
a. Amortised Cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on these assets that is subsequently measured at amortised cost is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
b. Fair value through other comprehensive income (FVTOCI)
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other income/ (expense).
c. Fair value through profit or loss (FVTPL)
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a these assets that is subsequently measured at fair value through profit or loss is recognised in the statement of profit and loss.
(ii) Impairment of financial assets
All financial assets classified as at amortised cost shall be tested for impairment under Ind AS 109 and measured using Expected Credit Loss (ECL) model.
For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
(iii) Derecognition of financial assets
A financial asset is derecognised only when the Company has transferred the rights to receive cash flows from the financial asset. Where the Company has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset.
2. Financial liabilities and equity instruments
Equity and Debt instruments issued by a 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.
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
(a) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
(b) Financial liabilities at amortised cost
Financial liabilities that are not held-for-trading and are not designated 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 âFinance costsâline item.
(c) Financial liabilities at FVTPL
Liabilities that do not meet the criteria for amortised cost are measured at fair value through profit or loss. A gain or loss on these assets that is subsequently measured at fair value through profit or loss is recognised in the statement of profit and loss.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
1.18 Standards issued but not yet effective
(a) Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On 28 March, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from 01 April, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.
(b) Ind AS 115- Revenue from Contract with Customers: On 28 March, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Ind AS 115, Revenue from 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 entityâs contracts with customers. The effect on adoption of Ind AS 115 is expected to be insignificant.
Mar 31, 2017
1 Brief about the Company
Rane Holdings Limited ("RHLâ or "the Companyâ) is the holding company whose main activity is investing in Rane group Companies that are engaged primarily in the manufacture and marketing of auto components. The Rane Group''s investment profile includes subsidiaries, joint ventures and associate. The Company''s income stream comprises of (i) dividend from the investments made in the group companies, (ii) trade mark fee for use of ''RANE'' trade mark and (iii) service fee from group companies for providing service in the areas of management, information technology, business development and infrastructure.
2 Significant Accounting Policies
2.1 Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Actâ). The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year. Also refer Note 38.
2.2 Use of estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
2.3 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
2.4 Cash flow statement
Cash flows are reported using the indirect method, whereby profit before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
2.5 Depreciation and amortization
2.5.1 Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule
II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.
Buildings - 30 Years
Vehicles - 5 Years
Furniture and Fittings - 5 Years
Office Equipment - 3 Years
2.5.2 Intangible assets are amortized over their estimated useful life as follows:
License Fee on Software - 3 Years or license period whichever is lower
The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern.
2.5.3 Assets costing less than Rs. 10,000 each are fully depreciated in the year of acquisition.
2.5.4 During the year the company has revised the useful life of buildings from 60 years to 30 years after considering the following aspects:
a. High Frequency of usage
b. increase in repair & maintenance charges and replacement
c Modification to the aesthetic structure of the buildings for expansion and other purposes.
The Company has calculated depreciation effective from April 01, 2016 adopting revised useful life of 30 years for both office and residential building. The incremental depreciation on account of the above revision, for the year ended 31 March, 2017 is Rs.25.76 Lakhs.
2.6 Revenue recognition
2.6.1 Service Fee and Trade Mark Fee
Revenues from Service Fee and Trade Mark Fee are recognized on accrual basis in accordance with terms of the relevant agreements.
2.6.2 Other Income
Dividend income is accounted for when the right to receive it is established.
2.7 Property, Plant and Equipment and Intangible assets
2.7.1 Property, Plant and Equipment
Property, Plant and Equipment are carried at cost less accumulated depreciation/amortization and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities) and any directly attributable expenditure on making the asset ready for its intended use. Subsequent expenditure on fixed assets after its purchase / completion is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.
2.7.2 Intangible assets
Intangible assets are carried at cost less accumulated amortization and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities) and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion is recognized as an expense when incurred, unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.
2.8 Investments
2.8.1 Long Term Investments
Long-term investments, are carried individually at cost less provision for diminution, other than temporary, in the value of such investments.
2.8.2 Current Investments
Current investments are carried individually, at the lower of cost and fair value. Cost of investments includes acquisition charges such as brokerage, fees and duties.
2.9 Employee benefits
Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences.
2.9.1 Defined contribution plans
The Company''s contribution to provident fund and superannuation fund are considered as defined contribution plans.
The Company contributes to a government administered provident fund on behalf of its employees, which are charged to the Statement of Profit and Loss. The Company has no obligations for future provident fund/super annuation fund benefits other than its monthly contributions.
Fixed contributions to the Superannuation Fund, which is administered by Company nominated trustees and managed by Life Insurance Corporation of India, are charged to the Statement of Profit and Loss.
2.9.2 Defined benefit plans
For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with Actuarial Valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortized on a straight line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.
2.9.3 Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. The cost of such compensated absences is accounted as under:
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
(b) in case of non-accumulating compensated absences, when the absences occur.
2.9.4 Long-term employee benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the Balance Sheet date.
2.10 Operating Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis over the lease term.
2.11 Earnings Per Share
Basic earnings per share is computed by dividing the profit after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the profit after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.
2.12 Taxes on income
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable Income tax laws.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.
2.13 Impairment of assets
The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment, if any indication of impairment exists. If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognized for such excess amount. The impairment loss is recognized as an expense in the Statement of Profit and Loss.
The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor.
When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, to the extent the amount was previously charged to the Statement of Profit and Loss.
2.14 Provisions and contingencies
Provisions are recognized when the Company has a present obligation as a result of past events and when a reasonable estimate of the amount of obligation can be made.
Contingent liability is disclosed in the notes for (i) possible obligation which will be confirmed only by future events not wholly within the control of the company or (ii) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are neither recognized nor disclosed in the financial statements.
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding employee benefits) are not discounted to their present value and are determined based on the best estimate 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 estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements.
2.15 Service Tax Input Credit
Service tax input credit is accounted for in the books, in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilizing the credit.
2.16 Operating cycle
Based on the nature of the 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.
2.17 Dividend
The final dividend on shares is recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company''s Board of Directors.
Mar 31, 2016
1 BRIEF ABOUT THE COMPANY
Rane Holdings Limited ("RHL" or "the Company'') is the holding company
whose main activity is investing in Rane group Companies that are
engaged primarily in the manufacture and marketing of auto components.
The Rane Group''s investment profile includes subsidiaries, joint
ventures and associate. The Company''s income stream comprises of (i)
dividend from the investments made in the group companies, (ii) trade
mark fee for use of "RANE" trade mark and (iii) service fee from group
companies for providing service in the areas of management, information
technology, business development and infrastructure.
2 SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the 2013 Act"). The financial statements have
been prepared on accrual basis under the historical cost convention.
The accounting policies adopted in the preparation of the financial
statements are consistent with those followed in the previous year.
Also refer Note 37.
2.2 use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognized in the periods in which
the results are known / materialize.
2.3 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
2.4 Cash fow statement
Cash fows are reported using the indirect method, whereby profit before
extraordinary items and tax is adjusted for the effects of transactions
of non-cash nature and any deferrals or accruals of past or future cash
receipts or payments. The cash fows from operating, investing and
financing activities of the Company are segregated based on the
available information.
2.5 Depreciation and amortization
Depreciation on tangible fixed assets has been provided on the
straight-line method as per the useful life prescribed in Schedule II
to the Companies Act, 2013 except in respect of the following
categories of assets, in whose case the life of the assets has been
assessed as under based on technical advice, taking into account the
nature of the asset, the estimated usage of the asset, the operating
conditions of the asset, past history of replacement, anticipated
technological changes, manufacturers warranties and maintenance
support, etc.
Vehicles - 5 Years
Furniture and Fittings - 5 Years
Office Equipment - 3 Years
Assets costing less than Rs, 10,000 each are fully depreciated in the
year of acquisition.
Intangible assets are amortized over their estimated useful life as
follows:
License Fee on Software - 3 Years or license period whichever is lower
The estimated useful life of the intangible assets and the amortization
period are reviewed at the end of each financial year and the
amortization method is revised to reflect the changed pattern.
2.6 Revenue recognition
2.6.1 Service Fee and Trade Mark Fee Revenues from Service Fee and
Trade Mark Fee are recognized on accrual basis in accordance with terms
of the relevant agreements.
2.6.2 Other Income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
2.7 Fixed Assets
2.7.1 Tangible Fixed Assets
Fixed assets are carried at cost less accumulated depreciation/
amortization and impairment losses, if any. The cost of fixed assets
comprises its purchase price net of any trade discounts and rebates,
including any import duties and other taxes (other than those
subsequently recoverable from the taxing authorities) and any directly
attributable expenditure on making the asset ready for its intended
use. Subsequent expenditure on fixed assets after its purchase /
completion is capitalized only if such expenditure results in an
increase in the future benefits from such asset beyond its previously
assessed standard of performance.
2.7.2 Intangible Fixed Assets
Intangible assets are carried at cost less accumulated amortization and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing authorities) and
any directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. Subsequent
expenditure on an intangible asset after its purchase / completion is
recognized as an expense when incurred, unless it is probable that such
expenditure will enable the asset to generate future economic benefits
in excess of its originally assessed standards of performance and such
expenditure can be measured and attributed to the asset reliably, in
which case such expenditure is added to the cost of the asset.
2.8 Investments
2.8.1 Long Term Investments
Long-term investments, are carried individually at cost less provision
for diminution, other than temporary, in the value of such investments.
2.8.2 Current Investments
Current investments are carried individually, at the lower of cost and
fair value. Cost of investments includes acquisition charges such as
brokerage, fees and duties.
2.9 Employee benefits
Employee benefits include provident fund, superannuation fund, gratuity
fund and compensated absences.
2.9.1 Defined contribution plans
The Company''s contribution to provident fund and superannuation fund
are considered as defined contribution plans.
The Company contributes to a government administered provident fund on
behalf of its employees, which are charged to the Statement of Profit
and Loss. The Company has no obligations for future provident
fund/superannuation fund benefits other than its monthly contributions.
Fixed contributions to the superannuation fund, which is administered
by Company nominated trustees and managed by Life Insurance Corporation
of India, are charged to the Statement of Profit and Loss.
2.9.2 Defined benefit plans
For defined benefit plans in the form of gratuity fund, the cost of
providing benefits is determined using the Projected Unit Credit
method, with Actuarial Valuations being carried out at each Balance
Sheet date. Actuarial gains and losses are recognized in the Statement
of Profit and Loss in the period in which they occur. Past service cost
is recognized immediately to the extent that the benefits are already
vested and otherwise is amortized on a straight-line basis over the
average period until the benefits become vested. The retirement benefit
obligation recognized in the Balance Sheet represents the present value
of the defined benefit obligation as adjusted for unrecognized past
service cost, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus
the present value of available refunds and reductions in future
contributions to the schemes.
2.9.3 Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognized
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service. The cost of such
compensated absences is accounted as under :
(a) in case of accumulated compensated absences, when employees render
the services that increase their entitlement of future compensated
absences; and
(b) in case of non-accumulating compensated absences, when the absences
occur.
2.9.4 Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognized as a liability at the present value of
the defined benefit obligation as at the Balance Sheet date.
2.10 Operating Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the less or are recognized as
operating leases. Lease rentals under operating leases are recognized
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
2.11 Earnings Per Share
Basic earnings per share is computed by dividing the profit after tax
(including the post tax effect of extraordinary items, if any) by the
weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the profit after tax
(including the post tax effect of extraordinary items, if any) as
adjusted for dividend, interest and other charges to expense or income
relating to the dilutive potential equity shares, by the weighted
average number of equity shares considered for deriving basic earnings
per share and the weighted average number of equity shares which could
have been issued on the conversion of all dilutive potential equity
shares. Potential equity shares are deemed to be dilutive only if their
conversion to equity shares would decrease the net profit per share
from continuing ordinary operations. Potential dilutive equity shares
are deemed to be converted as at the beginning of the period, unless
they have been issued at a later date. The dilutive potential equity
shares are adjusted for the proceeds receivable had the shares been
actually issued at fair value (i.e. average market value of the
outstanding shares). Dilutive potential equity shares are determined
independently for each period presented. The number of equity shares
and potentially dilutive equity shares are adjusted for share splits /
reverse share splits and bonus shares, as appropriate.
2.12 Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the
provisions of the Income Tax Act, 1961 and other applicable Income tax
laws.
Deferred tax is recognized on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognized for all timing differences. Deferred tax
assets are recognized for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realized. However, if
there are unabsorbed depreciation and carry forward of losses and items
relating to capital losses, deferred tax assets are recognized only if
there is virtual certainty supported by convincing evidence that there
will be sufficient future taxable income available to realize the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set of. Deferred tax
assets are reviewed at each balance sheet date for their reliability.
2.13 Impairment of assets
The carrying values of assets / cash generating units at each balance
sheet date are reviewed for impairment, if any indication of impairment
exists. If the carrying amount of the assets exceed the estimated
recoverable amount, an impairment is recognized for such excess amount.
The impairment loss is recognized as an expense in the Statement of
Profit and Loss.
The recoverable amount is the greater of the net selling price and
their value in use. Value in use is arrived at by discounting the
future cash fows to their present value based on an appropriate
discount factor.
When there is indication that an impairment loss recognized for an
asset in earlier accounting periods no longer exists or may have
decreased, such reversal of impairment loss is recognized in the
Statement of Profit and Loss, to the extent the amount was previously
charged to the Statement of Profit and Loss.
2.14 Provisions and contingencies
Provisions are recognized when the Company has a present obligation as
a result of past events and when a reasonable estimate of the amount of
obligation can be made.
Contingent liability is disclosed in the notes for (i) possible
obligation which will be confirmed only by future events not wholly
within the control of the company or (ii) present obligations arising
from past events where it is not probable that an outfow of resources
will be required to settle the obligation or a reliable estimate of the
amount of the obligation cannot be made. Contingent assets are neither
recognized nor disclosed in the financial statements.
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outfow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding employee benefits)
are not discounted to their present value and are determined based on
the best estimate 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 estimates. Contingent liabilities are
disclosed in the Notes. Contingent assets are not recognized in the
financial statements.
2.15 Service Tax Input Credit
Service tax input credit is accounted for in the books, in the period
in which the underlying service received is accounted and when there is
no uncertainty in availing / utilizing the credit.
2.16 Operating cycle
Based on the nature of the 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.
Mar 31, 2013
1.1 Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
1.2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
1.3 Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before tax is adjusted for the effects of transactions of
non-cash nature and any deferrals or accruals of past or future cash
receipts or payments. The cash flows from operating, investing and
financing activities of the Company are segregated based on the
available information.
1.4 Depreciation and amortisation
1.4.1 Depreciation on Fixed Assets, other than those given in 2.4.2.
below, has been provided on straight-line basis at rates specified in
Schedule XIV of the Companies Act, 1956.
1.4.2 Depreciation on the following assets is charged on the basis of
their estimated useful lives at rates higher than those prescribed in
the Companies Act, 1956.
Vehicles - 5 Years
Furniture and Fittings - 5 Years
Office Equipment - 3 Years
Assets costing less than Rs.10,000 each are fully depreciated in the
year of acquisition.
1.4.3 Intangible assets are amortised over their estimated useful life
as follows:
License Fee on Software - 3 Years
1.5 Revenue recognition
1.5.1 Service Fee and Trade Mark Fee
Revenues from Service Fee and Trade Mark Fee are recognised on accrual
basis in accordance with terms of the relevant agreements.
1.5.2 Other Income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
1.6 Fixed Assets
1.6.1 Tangible Fixed Assets
Fixed assets, are carried at cost less accumulated depreciation and
impairment losses if any. Cost includes related taxes, duties, freight,
insurance, etc. attributable to the acquisition and installation of the
fixed assets but excludes duties and taxes that are recoverable from
tax authorities.
Capital work-in-progress includes cost of assets not ready for the
intended use.
1.6.2 Intangible assets
License Fee on Software are carried at cost less accumulated
amortisation and impairment loss if any.
1.7 Investments
1.7.1 Long Term Investments
Long-term investments, are carried individually at cost less provision
for diminution, other than temporary, in the value of such investments.
1.8 Employee benefits
Employee benefits include provident fund, superannuation fund, gratuity
fund and compensated absences.
1.8.1 Defined contribution plans
The Company''s contribution to provident fund and superannuation fund
are considered as defined contribution plans.
The Company contributes to a government administered Provident fund on
behalf of its employees, which are charged to the Statement of Profit
and Loss. The Company has no obligations for future provident fund
benefits other than its monthly contributions.
Fixed contributions to the Superannuation Fund, which is administered
by Company nominated trustees and managed by Life Insurance Corporation
of India, are charged to the Statement of Profit and Loss.
1.8.2 Defined benefit plans
The Company makes annual contribution to a Gratuity Fund administered
and managed by Life Insurance Corporation of India. The Company
accounts its liability for future gratuity benefits based on actuarial
valuation, as at the Balance Sheet date, determined using the Projected
Unit Credit method. Actuarial gains/losses are immediately recognised
in the Statement of Profit and Loss.
1.8.3 Short-term employee benefits
Short term employee benefits determined as per company''s policy/scheme,
are recognised as expense based on expected obligation on undiscounted
basis.
Benefits for compensated absences are accounted for based on the
actuarial valuation report.
1.8.4 Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of
the defined benefit obligation as at the Balance Sheet date less the
fair value of the plan assets out of which the obligations are expected
to be settled.
1.9 Operating Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis.
1.10 Earnings Per Share
Basic earnings per share is computed by dividing the profit after tax
by the weighted average number of equity shares outstanding during the
year. Diluted earnings per share is computed by dividing the profit
after tax as adjusted for dividend, interest and other charges to
expense or income (net of any attributable taxes) relating to the
dilutive potential equity shares, by the weighted average number of
equity shares considered for deriving basic earnings per share and the
weighted average number of equity shares which could have been issued
on the conversion of all dilutive potential equity shares. Potential
equity shares are deemed to be dilutive only if their conversion to
equity shares would decrease the net profit per share from continuing
ordinary operations. Potential dilutive equity shares are deemed to be
converted as at the beginning of the period, unless they have been
issued at a later date. The dilutive potential equity shares are
adjusted for the proceeds receivable had the shares been actually
issued at fair value (i.e. average market value of the outstanding
shares). Dilutive potential equity shares are determined independently
for each period presented. The number of equity shares and potentially
dilutive equity shares are adjusted for share splits / reverse share
splits and bonus shares, as appropriate.
1.11 Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabosrbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses, deferred
tax assets are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each balance sheet date for their realisability.
1.12 Impairment of assets
The carrying values of assets / cash generating units at each balance
sheet date are reviewed for impairment. If any indication of
impairment exists, the recoverable amount of such assets is estimated
and impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
1.13 Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate 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 estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are not recognised in the
financial statements.
Mar 31, 2012
1.1 Basis of accounting and preparation of financial statements
The financial statements are prepared under the historical cost
convention, on an accrual basis, in accordance with Generally Accepted
Accounting Principles in India (Indian GAAP) including the Accounting
Standards notified by the Government of India/issued by the Institute
of Chartered Accountants of India (ICAI), as applicable and the
relevant provisions of the Companies Act, 1956.
1.2 Presentation and disclosure of financial statements
For the year ended March 31, 2012, the revised Schedule VI notified
under the Companies Act, 1956, has become applicable to the Company,
for preparation and presentation of its financial statements. Though
adoption of revised Schedule VI does not impact recognition and
measurement principles followed, it has significant impact on
presentation and disclosures made in the financial statements. The
Company has also reclassified the previous year figures in accordance
with the requirements applicable in the current year.
1.3 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognized in the periods in which
the results are known / materialize.
1.4 Depreciation and amortization
1.4.1 Depreciation on Fixed Assets, other than those given in 2.4.2.
below, is charged on straight-line basis at rates specified in Schedule
XIV of the Companies Act, 1956.
1.4.2 Depreciation on the following assets is charged on the basis of
their estimated useful lives at rates higher than those prescribed in
the Companies Act, 1956.
Vehicles - 5 Years
Furniture and Fittings - 5 Years
Office Equipment - 3 Years
Assets costing less than Rs10,000 each are fully depreciated in the year
of acquisition
1.4.3 Intangible assets are amortized over their estimated useful life
as follows:
License Fee on Software - 3 Years
1.5 Revenue recognition
1.5.1 Service Fee and Trade Mark Fee
Revenues from Service Fee and Trade Mark Fee are recognized on accrual
basis in accordance with terms of the relevant agreements.
1.5.2 Dividend Income
Dividend income is recognized when the right to receive it is
established.
1.6 Fixed Assets
1.6.1 Tangible Fixed Assets
Fixed assets, are carried at cost less accumulated depreciation and
impairment loss if any. Cost includes related taxes, duties, freight,
insurance, etc. attributable to the acquisition and installation of the
fixed assets but excludes duties and taxes that are recoverable from
tax authorities.
Capital work in progress includes cost of assets not ready for the
intended use.
1.6.2 Intangible assets
License Fee on Software are carried at cost less accumulated
amortization and impairment loss if any.
1.7 Foreign currency transactions and translations
1.7.1 Initial recognition
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction.
1.7.2 Measurement of foreign currency monetary items at the Balance
Sheet date
Foreign currency transactions are recorded at the rates of exchange
prevailing on the date of the transactions. Monetary assets &
liabilities outstanding at the year-end are translated at the rate of
exchange prevailing at the year-end and the gain or loss, is recognized
in the Statement of Profit and Loss. Exchange differences arising on
actual payments / realizations and year-end restatements are dealt with
in the Statement of Profit and Loss.
1.7.3 Accounting of forward contracts and treatment of exchange
difference
The Company enters into forward exchange contracts to hedge its risks
associated with foreign currency fluctuations. The premium or discount,
arising at the inception of a forward exchange contract is amortized as
expense or income over the life of the contract. Exchange differences
on such a contract are recognized in the Statement of Profit and Loss
in the year in which the exchange rates change.
1.8 Investments
1.8.1 Long Term Investments
Long-term investments, are carried individually at cost less provision
for diminution, other than temporary, in the value of such investments.
1.8.2 Current Investments
Current investments are carried individually, at the lower of cost and
fair value.
Cost of investments include acquisition charges such as brokerage, fees
and duties.
1.9 Employee benefits
Employee benefits include provident fund, superannuation fund, gratuity
fund and compensated absences.
1.9.1 Defined contribution plans
The Company's contribution to provident fund and superannuation fund
are considered as defined contribution plans.
The Company contributes to a government administered Provident fund on
behalf of its employees, which are charged to the Statement of Profit
and Loss. The Company has no obligations for future provident fund
benefits other than its monthly contributions.
Fixed contributions to the Superannuation Fund, which is administered
by Company nominated trustees and managed by Life Insurance Corporation
of India, are charged to the Statement of Profit and Loss.
1.9.2 Defined benefit plans
The Company makes annual contribution to a Gratuity Fund administered
and managed by Life Insurance Corporation of India. The Company
accounts its liability for future gratuity benefits based on actuarial
valuation, as at the Balance Sheet date, determined using the Projected
Unit Credit method. Actuarial gains/losses are immediately recognized
in the Statement of Profit and Loss.
1.9.3 Short-term employee benefits
Short term employee benefits including accumulated compensated absences
determined as per company's policy/scheme are recognized as expense
based on expected obligation on undiscounted basis.
1.9.4 Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognized as a liability at the present value of
the defined benefit obligation as at the Balance Sheet date less the
fair value of the plan assets out of which the obligations are expected
to be settled.
1.10 Operating Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lesser are recognized as
operating leases. Lease rentals under operating leases are recognized
in the Statement of Profit and Loss on a straight-line basis.
1.11 Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Deferred tax is recognized on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognized for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognized only if there is virtual certainty that there
will be sufficient future taxable income available to realize such
assets. Other Deferred tax assets are recognized if there is reasonable
certainty that there will be sufficient future taxable income available
to realize such assets.
1.12 Provisions and contingencies
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate 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 estimates. Contingent liabilities
are disclosed in the Notes.
Mar 31, 2011
1. Basis of preparation of Financial Statements
1.1 The Financial Statements are prepared under the historical cost
convention, on an accrual basis, in accordance with Generally Accepted
Accounting Principles in India (Indian GAAP) including the Accounting
Standards notified by the Government of India / issued by the Institute
of Chartered Accountants of India (ICAI), as applicable and the
relevant provisions of the Companies Act, 1956 (the Act).
1.2 The preparation of Financial Statements requires the Management to
make estimates and assumptions considered in the reported amounts of
assets and liabilities (including contingent liabilities) as of the
date of the Financial Statements and the reported income and expenses
like provision for employee benefits, provision for doubtful
debts/advances, useful lives of fixed assets, provision for taxation
etc., during the reporting period. Management believes that the
estimates used in the preparation of the Financial Statements are
prudent and reasonable. Future results may vary from these estimates.
2. Fixed Assets
2.1 Tangible Assets
Fixed Assets are stated at historical cost less accumulated
depreciation. Cost includes related taxes, duties, freight, insurance
etc. attributable to the acquisition and installation of the fixed
assets but excludes duties and taxes that are recoverable from tax
authorities. Capital work in progress includes cost of assets not ready
for the intended use and includes advances paid to acquire fixed
assets.
2.2 Intangible Assets
Licence Fee on software is stated at cost.
3. Depreciation
3.1 Depreciation on fixed assets, other than those given in 3.2 below,
is charged on straight-line basis at rates specified in Schedule XIV of
the Companies Act, 1956.
3.2 Depreciation on the following assets is charged on the basis of
their estimated useful lives at rates higher than those prescribed in
the Companies Act, 1956.
3.3 Software license fee is amortized over a period of three years.
3.4 Assets costing less than Rs. 10,000 each are fully depreciated in
the year of acquisition.
4. Investments
4.1 Long term investments are carried at cost. Diminution in the value
of investments, other than temporary, is provided for.
4.2 Current investments are carried at lower of cost and fair value.
5. Foreign currency transactions
5.1 Foreign currency transactions are recorded at the rates of exchange
prevailing on the date of the transactions. Monetary assets &
liabilities outstanding at the year-end are translated at the rate of
exchange prevailing at the year-end and the gain or loss, is recognized
in the profit and loss account. Exchange differences arising on actual
payments / realisations and year-end restatements are dealt with in the
Profit & Loss Account.
5.2 The Company enters into forward exchange contracts to hedge its
risks associated with foreign currency fluctuations. The premium or
discount, arising at the inception of a forward exchange contract is
amortized as expense or income over the life of the contract. Exchange
differences on such a contract are recognised in the Profit & Loss
Account in the year in which the exchange rates change.
6. Employee Benefits
6.1 Employee benefits
Short Term
Short term employee benefits including accumulated compensated absences
determined as per company's policy/scheme are recognized as expense
based on expected obligation on undiscounted basis. Liability for long
term compensated absences is determined on the basis of actuarial
valuation as on the balance sheet date.
6.2 Post Retirement
Post Retirement Benefits comprise Provident Fund, Superannuation Fund
and Gratuity which are accounted for as follows:
Defined Contributions
Fixed contributions to the Superannuation Fund, which is administered
by Company nominated trustees and managed by Life Insurance Corporation
of India, are charged to the profit and loss account.
The Company contributes to a government administered Provident fund on
behalf of its employees, which are charged to the profit and loss
account. The company has no obligations for future provident fund
benefits other than its monthly contributions.
Defined Benefits
The liability for Gratuity to employees as at Balance Sheet date is
determined on the basis of actuarial valuation based on Projected Unit
Credit method and is funded with a Gratuity fund administered and
managed by Life Insurance Corporation of India. The liability thereof
paid / payable is absorbed in the accounts.
Actuarial gains and losses are charged to the profit and loss account.
7. Revenue recognition
7.1 Dividend income on investments is recognized when the right to
receive the payment is established.
7.2 Service fees and Trademark fees are recognized on accrual basis in
accordance with terms of the relevant agreements.
8. Operating Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments are recognised as an expense
in the revenue account as per the lease terms.
9. Taxes on Income
Provision for Current tax is made based on the liability computed in
accordance with the relevant tax rates and tax laws. Provision for
deferred tax is made for timing differences arising between the taxable
income and accounting income computed using the tax rates and the laws
that have been enacted or substantively enacted as of the balance sheet
date. Deferred Tax assets in respect of unabsorbed depreciation and
carry forward of losses are recognized if there is virtual certainty
that there will be sufficient future taxable income available to
realize such losses. Other deferred tax assets are recognized if there
is reasonable certainty that there will be sufficient future taxable
income available to realise such assets.
10. Provision, Contingent Liabilities and Contingent Assets
Provisions are recognized only when there is a present obligation as a
result of past events and when a reasonable estimate of the amount of
obligation can be made. Contingent liability is disclosed for (i)
possible obligation which will be confirmed only by future events not
wholly within the control of the company or (ii) present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation cannot be made. Contingent
assets are neither recognized nor disclosed in the financial
statements.
Mar 31, 2010
1. Scheme of Merger and Amalgamation :
A Scheme of Amalgamation as approved by the share holders of the
company between Rane Investments Limited, a wholly owned subsidiary,
and the Company was sanctioned by the High Court of Judicature at
Madras. The Scheme has been given effect to from the appointed date 1st
April, 2009.
2. Share Capital
Paid up Equity Share Capital includes the following:
a. 3,665,130 (3,665,130) Equity Shares of Rs.10 each allotted as fully
paid Bonus Shares from General Reserves
b. 1,650,000 shares with par value of Rs. 10 were allotted to the
promoters/promoters group on a preferential basis at a premium of Rs.
170 per share as per Securities and Exchange Board of India (Disclosure
and Investor Protection) Guidelines, 2000.
c. 4,496,493 shares with par value of Rs.10 were allotted to the
shareholders of Rane Engine Valves Limited (1,396,476) and Rane Brake
Linings Limited (3,100,017) under the scheme of Demerger, Merger and
Amalgamation approved by the Honorable High Court of Judicature at
Madras.
3. Secured Loans:
3.1 Term loan from Citibank NA is secured by a first charge on the
current assets and by an equitable mortgage of the CompanyÃs immovable
property at Perungudi. This is further secured by a second charge on
the immovable property at Rane Corporate Centre.
3.2 Term loan from Yes Bank is secured by a first charge on the
immovable property at Rane Corporate Centre and by a pari- passu first
charge on the movable fixed assets of the Company.
3.3 Term loan from HDFC Ltd is secured by an equitable mortgage of the
CompanyÃs immovable property at Boat Club Road.
3.4 Cash credit from Citibank NA is secured by a first charge on the
movable assets including plant & machinery, other current assets of the
Company and further secured by an equitable mortgage of the CompanyÃs
immovable property at Perungudi.
3.5 Cash credit from Yes Bank is secured by a pari-passu first charge
on the current assets of the Company.
4. Current Liabilities
4.1 Current liabilities include Commission payable to Executive
Chairman Rs. 6,030 (Rs. Ã000s) Previous year à Rs 3,950 (Rs.Ã000)
4.2 There are no amounts due and outstanding to be credited to the
Investor Education and Protection Fund.
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