Mar 31, 2023
1 GENERAL INFORMATION
TIL Limited (the ''Company'') is engaged in manufacturing and marketing of a comprehensive range of material handling, lifting, port and road construction solutions with integrated customer support and after sales service. Overall the Company''s products and services are termed as Materials Handling Solutions (MHS). The Company has two manufacturing facilities -Kamarhatty and Kharagpur in West Bengal. The Company is a Public Limited Company and is listed in Bombay, Calcutta and National Stock Exchange in India.
1.1 Recent Accounting Developments
The Ministry of Corporate Affairs (MCA) notifies new standards or amendments to the existing standards under the Companies (Indian Accounting Standards) Rules as issued from time to time. On 31st March 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
Ind AS 1, Presentation of Financial Statements - This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after 1st April 2023. The Company has evaluated the amendment and the impact of the amendment is insignificant in the Standalone Financial Statements.
Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after 1st April 2023. The Company has evaluated the amendment and there is no impact on its Standalone Financial Statements.
Ind AS 12, Income Taxes - This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after 1st April 2023. The Company has evaluated the amendment and there is no impact on its Standalone Financial Statements.
2 Significant Accounting Policies
These Standalone Financial Statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 except as referred in Note No. 33. The Standalone Financial Statements have also been prepared in accordance with the relevant presentation requirements of the Companies Act, 2013.
The financial statements are prepared in accordance with the historical cost convention, except for certain items (e.g. financial instruments) that are measured at fair values, as explained in the accounting policies.
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, except leasing transactions that are within the scope of Ind AS 116 - "Leasesâ, and measurements that have some similarities to Fair Value but are not Fair Value, such as net realizable value in Ind AS 2 - "Inventories" or value in use in Ind AS 36 - "Impairment of Assetsâ.
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 - "Presentation of Financial Statementsâ based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents; the Company has ascertained its operating cycle as 12 months for the purpose of current - non current classification of assets and liabilities.
Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment, i f any.
Cost is inclusive of all directly attributable expenses including borrowing cost related to acquisition. Expenses capitalized also include applicable borrowing costs for qualifying assets, if any. All upgradation/enhancements are charged off as revenue expenditure unless they bring similar significant additional benefits. 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 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 Standalone Statement of Profit and Loss.
Capital Work in Progress is stated at cost (including borrowing cost, where applicable, and adjustment for exchange difference), incurred during construction/installation/preoperative periods relating to items or projects in progress.
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of the carrying amount and the Fair Value less cost to sale.
An impairment loss is recognized for any initial or subsequent write-down of the asset to Fair Value less costs to sell. A gain is recognized for any subsequent increases in Fair Value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset is recognized at the date of de-recognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Non-current assets (or disposal group classified as held for sale are presented separately in the balance sheet.
Intangible Assets that the Company controls and from which it expects future economic benefits are capitalized upon acquisition and measured initially:
a. for assets acquired in a business combination or by way of a Government grant, at Fair Value on the date of acquisition/grant.
b. for separately acquired assets, at cost comprising the purchase price (including import duties and non refundable taxes) and directly attributable costs to prepare the asset for its intended use.
Internally generated assets for which the cost is clearly identifiable are capitalized at cost. Research expenditure is recognized as an expense when it is incurred. Development costs are capitalized only after the technical and commercial feasibility of the asset for sale or use has been established. Thereafter, all directly attributable expenditure incurred to prepare the asset for its intended use are recognized as the cost of such assets.
An item of Property Plant and Equipments (PPE) is de-recognized upon disposal or when no future economic benefits are expected to arise from its use or disposal. Gain or loss arising on the disposal or retirement of an item of PPE 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.
Depreciation on Property, Plant and Equipment has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013. Intangible Assets are amortized on straight line basis as follows: Computer Software - 2 to 5 years.
Technical Knowhow - 3 to 5 years.
The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization period is revised to reflect the changed pattern, if any.
Impairment loss, if any, is provided to the extent, the carrying amount of assets or cash generating units exceed their recoverable amount. Recoverable amount is higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life. 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. Any reversal of an impairment loss is recognized immediately in profit and loss.
Inventories are stated at lower of cost and net realizable value. The cost is calculated on weighted average method. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its present location and condition and includes, where applicable, appropriate overheads based on normal level of activity. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Net realizable value is the estimated selling price less estimated costs for completion and sale. Obsolete, slow moving and defective inventories are identified periodically and, where necessary, a provision is made for such inventories.
The functional and presentation currency of the Company is Indian Rupee. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at Fair Value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the Fair Value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognized in the Standalone Statement of Profit and Loss in the period in which they arise except for exchange differences on transactions entered into in order to hedge certain foreign currency risks.
The Company enters into derivative financial instruments, primarily foreign exchange forward contracts, to manage its exposure to foreign exchange risks.
Derivatives are initially recognized at Fair Value and are subsequently re-measured to their Fair Value at the end of each reporting period. The resulting gains/losses is recognized in the Standalone Statement of Profit and Loss.
Investment in subsidiaries are carried at cost less accumulated impairment, if any.
2.13 Financial Instruments, Financial Assets, Financial Liabilities and Equity Instruments Recognition: Financial assets include Investments, Trade Receivables, Advances, Security Deposits, Cash and Cash Equivalents. Such assets are initially recognized at transaction price when the Company becomes party to contractual obligations. The transaction price includes transaction costs unless the asset is being fair valued through the Statement of Profit and Loss.
Classification: Management determines the classification of an asset at initial recognition depending on the purpose for which the assets were acquired. The subsequent measurement of financial assets depends on such classification.
(a) Amortized cost, where the financial assets are held solely for collection of cash flows arising from payments of principal and/or interest.
(b) Fair Value Through Other Comprehensive Income (FVTOCI), where the financial assets are held not only for collection of cash flows arising from payments of principal and interest but also from the sale of such assets. Such assets are subsequently measured at Fair Value, with unrealised gains and losses arising from changes in the Fair Value being recognized in other comprehensive income.
(c) Fair Value Through Profit or Loss (FVTPL), where the assets are managed in accordance with an approved investment strategy that triggers purchase and sale decisions based on the Fair Value of such assets. Such assets are subsequently measured at Fair Value, with unrealised gains and losses arising from changes in the Fair Value being recognized in the Standalone Statement of Profit and Loss in the period in which they arise. Trade Receivables, Advances, Security Deposits, Cash and Cash Equivalents etc. are classified for measurement at amortized cost while investments may fall under any of the aforesaid classes.
Impairment: The Company assesses at each reporting date whether a financial asset (or a group of financial assets) such as investments, trade receivables, advances and security deposits held at amortized cost and financial assets that are measured at Fair Value through other comprehensive income are tested for impairment based on evidence or information that is available without undue cost or effort. Expected credit losses are assessed and loss allowances recognized if the credit quality of the financial asset has deteriorated significantly since initial recognition.
Reclassification: When the business model is changed, the Company shall reclassify all affected financial assets prospectively from the reclassification date as subsequently measured at amortized cost, Fair Value through other comprehensive income, Fair Value through profit or loss without restating the previously recognized gains, losses or interest and in terms of the reclassification principles laid down in the Ind AS relating to Financial Instruments.
De-recognition: Financial assets are derecognized when the right to receive cash flows from the assets has expired, or has been transferred, and the Company has transferred substantially all of the risks and rewards of ownership.
Concurrently, if the asset is one that is measured at:
(a) Amortized cost, the gain or loss is recognized in the Statement of Profit and Loss;
(b) Fair Value through other comprehensive income, the cumulative Fair Value adjustments previously taken to reserves are reclassified to the Statement of Profit and Loss unless the asset represents an equity investment in which case the cumulative Fair Value adjustments previously taken to reserves is reclassified within equity.
Income Recognition: Interest income is recognized in the Standalone Statement of Profit and Loss using the effective interest method. Dividend income is recognized in the Standalone Statement of Profit and Loss when the right to receive dividend is established.
Financial Liabilities: Borrowings, trade payables and other financial liabilities are initially recognized at the value of the respective contractual obligations. They are subsequently measured at amortized cost. Any discount or premium on redemption/settlement is recognized in the Statement of Profit and Loss as finance cost over the life of the liability using the effective interest method and adjusted to the liability figure disclosed in the Balance Sheet.
Financial liabilities are derecognized when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled and on expiry.
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 period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.
Offsetting Financial Instruments: Financial assets and liabilities are offset and the net amount is included in the Balance Sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
The legally enforceable right must not be contingent in future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or counterparty.
Equity Instruments: Equity instruments are recognized at the value of the proceeds, net of direct costs of the capital issue.
Derivatives: Derivatives are initially recognized at Fair Value and are subsequently remeasured to their Fair Value at the end of each reporting period. The resulting gains/losses are recognized in the Statement of Profit and Loss immediately.
Revenue from contract with customers is recognized when the Company satisfies performance obligation by transferring promised goods and services to the customer. Performance obligations may be satisfied at a point of time or over a period of time. Performance obligations satisfied over a period of time are recognized as per the terms of relevant contractual agreements/arrangements. Performance obligations are said to be satisfied at a point of time when the customer obtains controls of the asset.
Revenue is measured based on transaction price, stated net of discounts, returns and applicable taxes. Transaction price is recognized based on the price specified in the contract, net of the estimated sales incentives/discounts. Accumulated experience is used to estimate and provide for the discounts/right of return, using the expected value method.
Government grants are recognized when there is reasonable assurance that the grant will be received, and the Company will comply with the conditions attached to the grant. Accordingly, government grants:
a) related to or used for assets are included in the Balance Sheet as deferred income and recognized as income over the useful life of the assets.
b) related to incurring specific expenditures are taken to the Standalone Statement of Profit and Loss on the same basis and in the same periods as the expenditures incurred.
c) by way of financial assistance on the basis of certain qualifying criteria are recognized as they become receivable.
Borrowing cost comprises interest and other costs incurred in connection with borrowing the funds. All borrowing costs are recognized in the Statement of Profit and Loss using the effective interest method except to the extent attributable to qualifying Property Plant Equipment (PPE) which are capitalized to the cost of the related assets. A qualifying PPE is an asset, that necessarily takes a substantial period of time to get ready for its intended use or sale.
The undiscounted amount of Short-term Employee Benefits (i.e. benefits payable within one year) are recognized in the period in which the employee services are rendered.
Contributions towards provident funds are recognized as expense. Provident fund contributions in respect of employees are made to Trusts - ''Tractors (India) Limited Provident Institution'' and ''TIL Limited (Kamarhatty Works) Provident Fund Institution'' being administered by the trustees of the said fund for the benefit of employees of the Company and such Trusts invest funds following a pattern of investment prescribed by the Government. The interest rate payable to the members of the Trusts is not lower than the rate of interest declared annually by the
Central Government under the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, on account of interest, is made good by the Company.
Contributions under Employees'' Pension Scheme is made as per statutory requirements and charged as expenses for the year.
The Company also contributes to the Central Government administered Employees'' State Insurance Scheme for its eligible employees, which is a defined contribution plan.
Provisions for Gratuity for eligible employees (being a defined benefit plan) is made on the basis of year-end actuarial valuation using Projected Unit Credit Method.
In respect of certain eligible employees who have attained 45 years of age as on 1st April 2009, provision for Superannuation under defined benefit plan is made on the basis of year end actuarial valuation using Projected Unit Credit Method.
In respect of certain eligible employees who have not attained 45 years of age as on 1st April 2009 provision for Superannuation i s made : -
- under defined contribution scheme in respect of services rendered with effect from 1st April 2009.
- under defined benefit scheme in respect of services rendered up to 31st March 2009, based on frozen pensionable salary as on 31st March 2009, using Projected Unit Credit Method.
Service costs and net interest expense or income is reflected in the Statement on Profit and Loss. Gain or Loss on account of remeasurement are recognized immediately through other comprehensive income in the period in which they occur.
Accrued liability towards compensated absence, covering eligible employees, evaluated on the basis of year-end actuarial valuation using Projected Unit Credit Method, is recognized as a charge.
Ind AS 19 - Plan Amendment, Curtailment or Settlement
It requires an entity to use updated assumptions to determine current service costs and net interest for the remainder of the period after a plan amendment, curtailment or settlement, and to recognize in the Statement of Profit and Loss as part of past service cost, or 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 determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. 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 the 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 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 liabilities include these options when it is reasonably certain that they will be exercised.
The ROU asset are initially recognized at cost, which comprise 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 cost less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
ROU 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. ROU of assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying value may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. higher of the Fair Value less cost to sale 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 using Cash Generating Unit (CGU) to which the asset belongs.
As per Ind AS- 116, lease liability is initially measured 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. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made.
A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
Taxes on income comprise of current taxes and deferred taxes. Current tax in the Statement of Profit and Loss is provided as the amount of tax payable in respect of taxable income for the period using tax rates and tax laws enacted during the period, together with any adjustment to tax payable in respect of previous years.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the amounts used for taxation purposes (tax base), at the tax rates and tax laws enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognized for the future tax consequences to the extent it is probable that future taxable profits will be available against which such unused tax losses can be utilized.
Income tax, in so far as it relates to items disclosed under other comprehensive income or equity, are disclosed separately under other comprehensive income or equity, as applicable.
Deferred tax assets and liabilities are offset when there is legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on net basis, or to realize the asset and settle the liability simultaneously.
Tax Credit is recognized in respect of Minimum Alternate Tax (MAT) as per the provisions of Section 115JAA/115JB of the Income Tax Act, 1961 based on convincing evidence that the Company will recover the same against normal income tax within the statutory time frame which is reviewed at each Balance Sheet Date.
Provisions are recognized when, as a result of a past event, the Company has a legal or constructive obligation; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. The amount so recognized is a best estimate of the consideration required to settle the obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.
In an event when the time value of money is material, the provision is carried at the present value of the cash flows estimated to settle the obligation.
A disclosure of a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation and the likelihood of outflow of resources, is remote, no provision or disclosure of contingent liability is made.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM is responsible for allocating resources and assessing performance of the operating segments. Based on such the Company operates in one operating segment, viz. Materials Handling Solutions (MHS).
Basic earnings per share are calculated by dividing the profit and loss for the year attributable to shareholders by the weighted average number of shares outstanding during the year. For the purpose of calculating diluted earnings per share, the profit and loss for the year attributable to Shareholders and weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential shares.
Cash and cash equivalents in the Balance Sheet comprise cash at banks and on hand and short term deposits with an original maturity of three months or less, which are subject to an insignificant risk of change in value. For the purpose of the statement of cash flows, cash and cash equivalents include cash on hand, term deposits and other short-term highly liquid investments, net of bank overdrafts as they are considered an integral part of the Company''s cash management. Bank overdrafts are shown within short term borrowings in the Balance Sheet.
The preparation of Financial Statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the Financial Statements and the results of operations during the reporting period end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. 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.
Judgements in Applying Accounting Policies
The preparation of the Company''s Standalone Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Key Sources of Estimation of Uncertainity
The following are the key assumptions concerning the future, and other key sources of estimation of uncertainity 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.
As described in the significant accounting policies, the Company reviews the estimated useful lives of property, plant and equipment and intangible assets at the end of each reporting period.
Some of the Company''s assets and liabilities are measured at Fair Value for financial reporting purposes. Fair Value measurements are categorised 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
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠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
⢠Level 3 inputs are unobservable inputs for the asset or liability. The Company engages third party valuers, where required, to perform the valuation.
Information about the valuation techniques and inputs used in determining the Fair Value of various assets and liabilities are disclosed in the notes to the Financial Statements.
The determination of Company''s liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognized in the Statement of Profit and Loss and in other comprehensive income. Such valuation depend upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in notes to the Financial Statements.
The Company has ongoing litigations with various regulatory authorities. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management''s assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in notes 37.1 to 37.3 to the Financial Statements.
The Company reviews the condition of its inventories and makes provision against obsolete and slow-moving inventory items which are identified as no longer suitable for sale or use. Company estimates the net realizable value for such inventories based primarily on the latest invoice prices and current market conditions. The Company carries out an inventory review at each balance sheet date and makes provision against obsolete and slow-moving items. The Company reassesses the estimation on each Balance Sheet date.
The Company assesses impairment based on Expected Credit Losses (ECL) model on trade receivables. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historically observed default rates are updated and changes in the forward-looking estimates are analysed.
As the lenders have classified the loan facilities as NPA and have stopped charging interest in some cases, the Management is recognizing interest as per the latest interest rate available with them on prudence.
Determining whether the investments in subsidiaries are impaired requires an estimate in the value in use. In considering the value in use, the Management anticipates the future cash flows, discount rates and other factors of the underlying businesses/companies.
In case, where the operations have stopped, the value in use is derived from the net assets value. Investment over and above the net book value is recognized as impairment.
The period of lease in case of expired lease contract pending renewal, the best available data based on negotiations with the lessor and period of prior agreement is considered.
4 PROPERTY, PLANT AND EQUIPMENT
Particulars |
As at 31.03.2023 |
As at 31.03.2022 |
Net Carrying Amounts of |
||
Freehold Land |
1,756 |
1,756 |
Buildings |
5,268 |
5,664 |
Plant and Equipment |
2,308 |
2,655 |
Furniture and Fixtures |
186 |
348 |
Office Equipment |
6 |
11 |
Vehicles |
65 |
112 |
Total |
9,589 |
10,546 |
Mar 31, 2018
1 GENERAL INFORMATION
TIL Limited (the ''Company'') is engaged in manufacturing and marketing of a comprehensive range of material handling, lifting, port and road construction solutions with integrated customer support and after sales service. Overall the Company''s products and services are termed as Materials Handling Solutions (MHS). The Company has two manufacturing facilities -Kamarhatty and Kharagpur in West Bengal. The Company is a Public Limited Company and is listed in Bombay, Calcutta and National Stock Exchange in India.
2 SIGNIFICANT ACCOUNTING POLICIES
2.1 Statement of Compliance
These financial statements have been prepared in accordance with Indian Accounting Standards (In AS) notified under Section 133 of the Companies Act, 2013. The financial statements have also been prepared in accordance with the relevant presentation requirements of the Companies Act, 2013. Up to the year ended 31st March 2017, the Company prepared its financial statements in accordance with the requirements of the previous Generally Accepted Accounting Principles (Previous GAAP), which includes Standards notified under the Companies (Accounting Standards) Rules, 2006. These are the Company''s first In AS financial statements. The date of transition to In AS is 1st April 2016. Details of the first time exceptions and optional exemptions availed by the Company and principal adjustments along with related reconciliations are detailed in Note 35.
2.2 Basis of Preparation
The financial statements are prepared in accordance with the historical cost convention, except for certain items (e.g. financial instruments) that are measured at fair values, as explained in the accounting policies.
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, except leasing transactions that are within the scope of In AS 17 - " Leases", and measurements that have some similarities to fair value but are not fair value, such as net realizable value in In AS 2 - " Inventories " or value in use in In AS 36 - "Impairment of Assets".
2.3 Operating Cycle
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 In AS 1 - "Presentation of Financial Statements" based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents; the Company has ascertained its operating cycle as 12 months for the purpose of current - non current classification of assets and liabilities.
2.4 Property, Plant and Equipment - Tangible Assets
Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment, if any. For this purpose, cost includes deemed cost which represents the carrying value of property, plant and equipment recognized as at 1st April 2016 measured as per the previous GAAP. Cost is inclusive of all directly attributable expenses including borrowing cost related to acquisition. Expenses capitalized also include applicable borrowing costs for qualifying assets, if any. All up gradation / enhancements are charged off as revenue expenditure unless they bring similar significant additional benefits. 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 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. Capital Work in Progress is stated at cost (including borrowing cost, where applicable, and adjustment for exchange difference), incurred during construction / installation / preoperative periods relating to items or project in progress.
2.5 Intangible Assets
Intangible Assets that the Company controls and from which it expects future economic benefits are capitalized upon acquisition and measured initially:
a. for assets acquired in a business combination or by way of a government grant, at fair value on the date of acquisition/grant,
b. for separately acquired assets, at cost comprising the purchase price (including import duties and non-refundable taxes) and directly attributable costs to prepare the asset for its intended use,
Internally generated assets for which the cost is clearly identifiable are capitalized at cost. Research expenditure is recognized as an expense when it is incurred. Development costs are capitalized only after the technical and commercial feasibility of the asset for sale or use has been established. Thereafter, all directly attributable expenditure incurred to prepare the asset for its intended use are recognized as the cost of such assets. For transition to In AS, the Company has elected to continue with the carrying value of all of its intangible assets recognized as of 1st April 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
2.6 Depreciation and Amortization
Depreciation on Property, Plant and Equipment has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013,
Intangible Assets are amortized on straight line basis as follows:
Computer Software- 2 to 5 years.
Technical Knowhow - 3 to 5 years.
The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization period is revised to reflect the changed pattern, if any.
2.7 Impairment of Assets
Impairment loss, if any, is provided to the extent, the carrying amount of assets or cash generating units exceed their recoverable amount. Recoverable amount is higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life,
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.
2.8 Inventories
Inventories are stated at lower of cost and net realizable value. The cost is calculated on weighted average method, Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its present location and condition and includes, where applicable, appropriate overheads based on normal level of activity. Net realizable value is the estimated selling price less estimated costs for completion and sale. Obsolete, slow moving and defective inventories are identified periodically and, where necessary, a provision is made for such inventories,
2.9 Foreign Currency Transactions
The functional and presentation currency of the Company is Indian Rupee. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated,
Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except for exchange differences on transactions entered into in order to hedge certain foreign currency risks,
2.10 Investment in Subsidiaries
Investment in subsidiaries are carried at cost less accumulated impairment, if any,
2.11 Financial instruments, Financial assets, Financial liabilities and Equity instruments
Recognition: Financial assets include Investments, Trade receivables, Advances, Security Deposits, Cash and cash equivalents. Such assets are initially recognized at transaction price when the Company becomes party to contractual obligations. The transaction price includes transaction costs unless the asset is being fair valued through the Statement of Profit and Loss.
Classification: Management determines the classification of an asset at initial recognition depending on the purpose for which the assets were acquired. The subsequent measurement of financial assets depends on such classification.
Financial assets are classified as those measured at:
(a) amortized cost, where the financial assets are held solely for collection of cash flows arising from payments of principal and/or interest.
(b) fair value through other comprehensive income (FVTOCI), where the financial assets are held not only for collection of cash flows arising from payments of principal and interest but also from the sale of such assets. Such assets are subsequently measured at fair value, with unrealized gains and losses arising from changes in the fair value being recognized in other comprehensive income.
(c) fair value through profit or loss (FVTPL), where the assets are managed in accordance with an approved investment strategy that triggers purchase and sale decisions based on the fair value of such assets. Such assets are subsequently measured at fair value, with unrealized gains and losses arising from changes in the fair value being recognized in the Statement of Profit and Loss in the period in which they arise.
Trade Receivables, Advances, Security Deposits, Cash and Cash Equivalents etc. are classified for measurement at amortized cost while investments may fall under any of the aforesaid classes.
Impairment: The Company assesses at each reporting date whether a financial asset (or a group of financial assets) such as investments, trade receivables, advances and security deposits held at amortized cost and financial assets that are measured at fair value through other comprehensive income are tested for impairment based on evidence or information that is available without undue cost or effort. Expected credit losses are assessed and loss allowances recognized if the credit quality of the financial asset has deteriorated significantly since initial recognition.
Reclassification: When the business model is changed, the Company shall reclassify all affected financial assets prospectively from the reclassification date as subsequently measured at amortized cost, fair value through other comprehensive income, fair value through profit or loss without restating the previously recognized gains, losses or interest and in terms of the reclassification principles laid down in the Ind AS relating to Financial Instruments.
De-recognition: Financial assets are derecognized when the right to receive cash flows from the assets has expired, or has been transferred, and the Company has transferred substantially all of the risks and rewards of ownership. Concurrently, if the asset is one that is measured at:
(a) amortized cost, the gain or loss is recognized in the Statement of Profit and Loss;
(b) fair value through other comprehensive income, the cumulative fair value adjustments previously taken to reserves are reclassified to the Statement of Profit and Loss unless the asset represents an equity investment in which case the cumulative fair value adjustments previously taken to reserves is reclassified within equity
Income Recognition: Interest income is recognized in the Statement of Profit and Loss using the effective interest method. Dividend income is recognized in the Statement of Profit and Loss when the right to receive dividend is established.
Financial Liabilities: Borrowings, trade payables and other financial liabilities are initially recognized at the value of the respective contractual obligations. They are subsequently measured at amortized cost. Any discount or premium on redemption / settlement is recognized in the Statement of Profit and Loss as finance cost over the life of the liability using the effective interest method and adjusted to the liability figure disclosed in the Balance Sheet, Financial liabilities are derecognized when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled and on expiry
Offsetting Financial Instruments: Financial assets and liabilities are offset and the net amount is included in the Balance Sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
Equity Instruments: Equity instruments are recognized at the value of the proceeds, net of direct costs of the capital issue.
Derivatives: Derivatives are initially recognized at fair value and are subsequently premeasured to their fair value at the end of each reporting period. The resultant gains / losses is recognized in the Statement of Profit and Loss immediately,
2.12 Revenue
Revenue is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of returns and discounts to customers.
Revenue from the sale of goods includes excise and other duties which the Company pays as a principal but excludes amounts collected on behalf of third parties, such as sales tax and value added tax (till 30th June 2017) and Goods and Service Tax (from 1st July 2017),
Revenue from the sale of goods is recognized when significant risks and rewards of ownership have been transferred to the customer, which is mainly upon delivery, the amount of revenue can be measured reliably and recovery of the consideration is probable. Revenue from services is recognized in the periods in which the services are rendered,
2.13 Government Grant
The Company may receive government grants that require compliance with certain conditions related to the Company''s operating activities or are provided to the Company by way of financial assistance on the basis of certain qualifying criteria. Government grants are recognized when there is reasonable assurance that the grant will be received, and the Company will comply with the conditions attached to the grant,
Accordingly, government grants, export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same,
2.14 Employee Benefits
The undiscounted amount of Short-term Employee Benefits ( i.e. benefits payable within one year ) are recognized in the period in which the employee services are rendered,
Contributions towards provident funds are recognized as expense. Provident fund contributions in respect of employees are made to Trusts - ''Tractors (India) Limited Provident Institution'' and '' TIL Limited (Kamarhatty Works)
Provident Fund Institution'' being administered by the trustees of the said fund for the benefit of employees of the company and such Trusts invest funds following a pattern of investment prescribed by the Government. The interest rate payable to the members of the Trusts is not lower than the rate of interest declared annually by the Central Government under the Employees'' Provident Funds and Miscellaneous Provisions Act,1952 and shortfall, if any, on account of interest, is made good by the Company
Contributions under Employees'' Pension Scheme is made as per statutory requirements and charged as expenses for the year.
The Company also contributes to the Central Government administered Employees'' State Insurance Scheme for its eligible employees, which is a defined contribution plan.
Provisions for Gratuity for eligible employees (being a defined benefit plan) is made on the basis of year-end actuarial valuation using Projected Unit Credit Method.
In respect of certain eligible employees who have attained 45 years of age as on 1st April 2009, provision for Superannuation under defined benefit plan is made on the basis of year end actuarial valuation using Projected Unit Credit Method.
In respect of certain eligible employees who have not attained 45 years of age as on 1st April 2009 provision for Superannuation i s made : -
- under defined contribution scheme in respect of services rendered with effect from 1st April 2009.
- under defined benefit scheme in respect of services rendered up to 31st March 2009, based on frozen pensionable salary as on 31st March 2009, using Projected Unit Credit Method.
Service costs and net interest expense or income is reflected in the Statement on Profit and Loss. Gain or Loss on account of remeasurements are recognized immediately through other comprehensive income in the period in which they occur.
Accrued liability towards compensated absence, covering eligible employees, evaluated on the basis of year-end actuarial valuation using Projected Unit Credit Method, is recognized as a charge.
2.15 Leases
Leases are recognized as a finance lease 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. Assets used under finance leases are recognized as property, plant and equipment in the Balance Sheet for an amount that corresponds to the lower of fair value and the present value of minimum lease payments determined at the inception of the lease and a liability is recognized for an equivalent amount. The minimum lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in the Statement of Profit and Loss. Rentals payable under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the term of the relevant lease unless the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
2.16 Taxes on Income
Taxes on income comprise of current taxes and deferred taxes. Current tax in the Statement of Profit and Loss is provided as the amount of tax payable in respect of taxable income for the period using tax rates and tax laws enacted during the period, together with any adjustment to tax payable in respect of previous years,
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the amounts used for taxation purposes (tax base), at the tax rates and tax laws enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognized for the future tax consequences to the extent it is probable that future taxable profits will be available against which such unused tax losses can be utilized. Income tax, in so far as it relates to items disclosed under other comprehensive income or equity, are disclosed separately under other comprehensive income or equity, as applicable,
Deferred tax assets and liabilities are offset when there is legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on net basis, or to realize the asset and settle the liability simultaneously
Tax Credit is recognized in respect of Minimum Alternate Tax (MAT) as per the provisions of Section 115JAA / 115JB of the Income Tax Act, 1961 based on convincing evidence that the Company will recover the same against normal income tax within the statutory time frame which is reviewed at each Balance Sheet Date,
2.17 Provisions
Provisions are recognized when, as a result of a past event, the Company has a legal or constructive obligation; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. The amount so recognized is a best estimate of the consideration required to settle the obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. In an event when the time value of money is material, the provision is carried at the present value of the cash flows estimated to settle the obligation.
2.18 Operating Segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM is responsible for allocating resources and assessing performance of the operating segments. Based on such the Company operates in one operating segment, viz. Materials Handling Solutions (MHS).
2.19 Standards issued but not Effective
On 28th March 2018, the Ministry of Corporate Affairs (MCA) has notified In AS 115 - "Revenue from Contract with Customersâ and certain amendments to existing land AS. These amendments shall be applicable to the Company from 1st April 2018,
(a) Issue of In AS 115 - "Revenue from Contract with Customers"
In AS 115 will supersede the current revenue recognition guidance including In AS 18 "Revenueâ, In AS 11 "Construction Contractsâ and the related interpretations. In AS 115 provides a single model of accounting for revenue arising from contracts with customers based on the identification and satisfaction of performance obligations.
(b) Amendments to Existing issued In AS
The MCA has also carried out amendments in existing accounting standards, namely In AS 21 "The Effects of Changes in Foreign Exchange Ratesâ, In AS 40 "Investment Propertyâ, In AS 12 "Income Taxesâ, In AS 28 "Investments in Associates and Joint Venturesâ and In AS 112 "Disclosure of Interests in Other Entitiesâ, Application of above standards are not expected to have any significant impact on the Company''s Financial Statements,
3 Use of Estimates and Judgments
The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. 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.
Judgments in applying accounting policies
The judgmentsâ, apart from those involving estimations (see notes 3.1 to 3.6), that the Company has made in the process of applying its accounting policies and that have a significant effect on the amounts recognized in these financial statements pertain to useful life of intangible assets. Refer note 2.6 to the financial statements,
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,
3.1 Useful lives of Property, Plant and Equipments and Intangible Assets
As described in the significant accounting policies, the Company reviews the estimated useful lives of property, plant and equipment and intangible assets at the end of each reporting period,
3.2 Fair Value Measurements and Valuation Processes
Some of the Company''s assets and liabilities are measured at fair value 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:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or i indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability. The Company engages third party values, where required, to perform the valuation,
Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in the notes to the financial statements,
3.3 Actuarial Valuation
The determination of Company''s liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognized in the Statement of Profit and Loss and in other comprehensive income. Such valuation depend upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in notes to the financial statements.
3.4 Claims, Provisions and Contingent Liabilities
The Company has ongoing litigations with various regulatory authorities. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management''s assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in notes 31.1 to 31.4 to the financial statements.
3.5 Inventory Obsolescence
The Company reviews the condition of its inventories and makes provision against obsolete and slow-moving inventory items which are identified as no longer suitable for sale or use. Company estimates the net realizable value for such inventories based primarily on the latest invoice prices and current market conditions. The Company carries out an inventory review at each balance sheet date and makes provision against obsolete and slow-moving items. The Company reassesses the estimation on each balance sheet date.
3.6 Impairment of Financial Assets
The Company assesses impairment based on expected credit losses (ECL) model on trade receivables. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historically observed default rates are updated and changes in the forward-looking estimates are analyzed.
Notes:-
* Amount is below the rounding off norm adopted by the Company.
4.1 Ownership of a flat (Carrying Value '' 1 Lakh as on 31.03.2018) belonging to the Company in a Co-operative Housing Society is registered in the name of the Managing Director of erstwhile Spun dish Engineering Limited.
4.2 For details of PPE given as security against borrowing - Refer Note 16.1.
Notes:-
*Amount is below the rounding off norm adopted by the Company.
6.1 Technical Know-how acquired represents technical drawings, designs etc. relating to manufacture of the Company''s products acquired pursuant to various agreements conferring the right to manufacture and usage only.
6.2 During the year 2017-18, the Company has internally developed a design for a pick-n carry crane featuring 4 Section boom with extended length reaching up to 17m with a maximum capacity of 15 MT at 2.5 m radius over front for pick-n carry operations and 8 MT at 2.5 m radius for 360° slew on-tire duties. The Company has launched this product and accordingly the Company has capitalized the related design expenses as follows:
A Income Tax Expenses / (Benefits)
The Company is subject to income tax in India on the basis of standalone financial statements. As per the Income Tax Act, the Company is liable to pay income tax which is the higher of regular income tax payable and the amount payable based on the provisions applicable for Minimum Alternate Tax (MAT),
MAT paid in excess of regular income tax during a year can be carried forward for a period of 15 years and can be setoff against future tax liabilities,
Mar 31, 2012
1.1 Basis of preparation
These Financial Statements have been prepared in accordance with the
Generally Accepted Accounting Principles in India (Indian GAAP) under
the historical cost convention on accrual basis, except for certain
tangible assets which are carried at revalued amounts. These Financial
Statements have been prepared to comply in all material aspects with
the accounting standards notified under section 211 (3C) [Companies
(Accounting Standards) Rules 2006, as amended] and the other relevant
provisions of the Companies Act, 1956.
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 Schedule VI to the Companies Act, 1956. Based on
the nature of products and the time between the acquisition of assets
for processing and their realization in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months for the
purpose of current - noncurrent classification of assets and
liabilities.
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 recognized in the periods in which
the results are known / materialize.
1.3 Revenue Recognition
Revenue from sales/services (exclusive of Sales Tax / Value Added Tax)
is recognized on accrual basis in keeping with related arrangements
with customers and is net of credit notes on account of returns and
allowances. Rental income is recognized on prefab basis over the period
of the contract
1.4 Other Income
interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
1.5 Fixed Assets
Fixed Assets (comprising both tangible and intangible items) are stated
at cost except in case of certain items of Land, Buildings and Plant
and Machinery which are stated on the basis of revaluation (with
corresponding credit to the Revaluation Reserve Account), being
inclusive of resultant write ups.
Software is capitalized where it is expected to provide future enduring
economic benefit Capitalization costs includes license fees and cost of
implementation / system integration services. The costs are capitalized
in the year in which the relevant software is implemented for use.
Impairment loss, if any, is recognized wherever the caning amount of
fixed assets of a cash generating unit exceeds its recoverable amount
i.e. net setting price or value in use, whichever is higher.
1.6 Depreciation
Depreciation (including amortization) is calculated in the following
manner:
(a) Leasehold land is amortized over the period of lease.
(b) Depreciation on revalued assets other than land is calculated on
their respective revalued amounts at rates considered applicable by the
values (being higher that the rates prescribed in Schedule XIV to the
Companies Act 1956) on straight line method.
(c) In respect of other assets, at rates prescribed in Schedule XIV to
the Companies Act 1956 on 'Straight Line Method' except Plant and
Machinery given under operating leases which are depreciated over a
period of 6 years, being the useful life as estimated by the management
(d) Technical Know-how fee is mortised under straight line method over
total useful lives (currently 5 to 10 years), as estimated by the
Management
(e) Software is mortised over a period of three years from the date of
capitalization.
1.7 Investments
Investments that are readily realizable and are intended to be held for
not more than one year from the date, on which such investments are
made, are classified as current investments. All other investments are
classified as long term investments. Current investment are earned at
cost or fair- value whichever is lower. Long term investments are
carried at cost However, provision for diminution is made to recognize
a decline, other than temporary in the value of the investments, such
reduction being determined and made for each investment individually.
1.8 Inventories
Raw materials, components, stores and spares are valued at lower of
cost and net realizable value. However, materials and other items held
for use in production in inventories are not written down below cost if
the finished products in which they with be incorporated are expected
to be sold at or above cost Cost of raw materials, components and
stores and spares is determined on a weighted average basis.
Work-m-progress and Finished Goods are valued at lower of cost and net
realizable value. Cost includes direct materials and labor and a
proportion of manufacturing overheads based on normal operating
capacity. Cost of Finished Goods includes Excise Duty and is determined
on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated cost of completion and estimated
costs necessary to make the sale.
1.9 Taxation
Current Tax in respect of taxable income is provided for the year based
on applicable tax rates and laws. Minimum Alternate Tax (MAT) paid in
accordance with the tax laws, which gives future economic benefits in
the form of adjustment in future income tax liability, is considered as
an asset if there is convincing evidence that the Company will pay
normal income tax. Accordingly, MAT is recognized as an asset in the
Balance Sheet when it is probable that future economic benefit
associated with it will flow to the Company. Defined Tax is recognized
subject to the consideration of prudence in respect of deferred tax
assets, on timing differences, being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods and is measured
using tax rates and laws that have been enacted or substantively
enacted by the Balance Sheet date. Deferred tax assets are reviewed at
each Balance Sheet date to re-assess realization.
1.10 Employee Benefits
Short-term Employee benefits (i.e. benefits payable within one year)
are recognized in the period in which the employee services are
rendered. Contributions towards provident funds are recognized as
expense. Provident fund contributions in respect of employees are made
to common trust- Tractors India Employees Provident Fund' (being
administered by the trustees of the said fund for the benefit of
employees of the company and its subsidiary company i.e. Tractors India
Private Limited) and such Trust invest funds following a pattern of
investment prescribed by the Government The interest rate payable to
the members of the Trusts is not lower than the rate of interest
declared annually by the Central Government under the Employees'
Provident Funds and Miscellaneous Provisions Act,1952 and shortfall, if
any, on account of interest, is made good by the Company.
Contributions under Employees' Pension Scheme is made as per
statutory requirements and charged as expenses for the year.
The Company also contributes to the Central Government administered
Employees' State Insurance Scheme for its eligible employees, which
is a defined contribution plan.
Provisions for Gratuity for eligible employees (being a defined benefit
plan) is made on the basis of year-end actuarial valuation using
Projected unit credit method.
In respect of certain eligible employees who have attained 45 years of
age as on 1st April 2009, provision for Superannuation under defined
benefit plan is made on the basis of year end actuarial valuation using
Projected unit credit method.
In respect of certain eligible employees who have not attained 45 years
of age as on 1st April 2009 provision for Superannuation is made:-
- under defined contribution scheme in respect of services rendered
with effect from 1 st April 2009.
- under defined benefit scheme in respect of services rendered up to
31st March 2009, based on frozen pensionable salary as on 31st March
2009 using Projected unit credit method.
Actuarial gains / losses arising in Defined Benefit Plans are
recognized in the Statement of Profit and Loss as income or expenses in
the year in which they occur.
Accrued liability towards compensated absence, covering eligible
employees, evaluated on the basis of year-end actuarial valuation using
Projected unit credit method, is recognized as a charge.
1.11 Foreign Currency Transactions and Translation
Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the yearend are translated at year
end rates or at contract rates, covered by forward exchange contracts.
The difference in transactions of monetary assets and liabilities and
realized gains and losses on foreign exchange transactions are
recognized in the Statement of Profit and Loss. In respect of
transactions covered by forward exchange contracts, the difference
between the contract rate and the spot rate on the date of transaction
is charged to the Statement of Profit and Loss over the period of the
contract. Profit/(Loss) on cancellation of forward contracts are
recognized as income or as expenses for the year. Foreign currency non
monetary items carried in terms of historical cost are reported using
the exchange rate at the date of transactions.
1.12 Borrowing Costs
Borrowing Cost, if any, that are attributable to the acquisition,
construction or production of 'Qualifying Assets' are capitalized as
part of cost of such assets. A 'Qualifying Asset' is an asset that
necessarily requires a substantial period of time to get ready for its
intended use or sale. All other borrowing costs are recognized as
expenses in the period in which they are incurred.
1.13 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,
1.14 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.
1.15 Provision for warranty
Provision for warranty related costs are recognized when the product is
sold, Provision is based on historical experience. The estimate of such
warranty-related costs are reviewed periodically by the management.
Mar 31, 2011
1. The Financial Statements are prepared to comply in all material
aspects with all the applicable accounting principles in India, the
applicable Accounting Standards notified under section 211(3C) of the
Companies Act, 1956 and the relevant provisions of the Companies Act,
1956.
2.1 Sales
Revenue from sales/services (exclusive of Sales Tax/ Value Added Tax)
is being recognised on accrual basis in keeping with related
arrangements with customers and is net of credit notes on account of
returns and allowances.
2.2 Fixed Assets
Fixed Assets (comprising both tangible and intangible items) are stated
at cost except in case of certain items of Land , Buildings and Plant
and Machinery which are stated on the basis of revaluation (with
corresponding credit to the Revaluation Reserve Account), being
inclusive of resultant write ups.
Software are capitalised where it is expected to provide future
enduring economic benefit. Capitalisation costs includes license fees
and cost of implementation/system integration services. The costs are
capitalised in the year in which the relevant software is implemented
for use.
Impairment loss, if any, is recognised wherever the carrying amount of
fixed assets of a cash generating unit exceeds its recoverable amount
i.e. net selling price or value in use, whichever is higher.
2.3 Depreciation
Depreciation (including amortisation) is calculated in the following
manner :
(a) Leasehold land is amortised over the period of lease.
(b) Depreciation on revalued assets other than land is calculated on
their respective revalued amounts at rates considered applicable by the
valuers on the straight line method. (Also refer Note 3 below)
(c) In respect of other assets, at rates prescribed in Schedule XIV to
the Companies Act, 1956 on Straight Line Method except Plant and
Machinery given under operating leases which are depreciated over a
period of 3 to 6 years, being the useful life as estimated by the
management.
(d) Technical Know-how fees are amortised under straight line method
over total useful lives ( currently 5 to 10 years), as estimated by the
Management.
(e) Software capitalised, are amortised within a period of three years
from the date of capitalisation.
2.4 Investments
Long term Investments are stated at cost less provision, if any, for
permanent diminution in value .
2.5 Inventories
Inventories, other than Stores are valued at lower of weighted average
cost/actual cost (inclusive of conversion expenses and applicable
overheads for manufacturing activities) and net realisable value.
Stores are valued at weighted average cost less write offs.
Loose Tools acquired prior to 1st September, 2008 are written off over
a period up to 5 years, after retaining 10% residual value. Loose Tools
acquired on or after 1st September,2008 are fully charged off.
2.6 Taxation
Current Tax in respect of taxable income is provided for the year based
on applicable tax rates and laws. Deferred Tax is recognised subject to
the consideration of prudence in respect of deferred tax assets, on
timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods and is measured using tax
rates and laws that have been enacted or substantively enacted by the
Balance Sheet date. Deferred tax assets are reviewed at each Balance
Sheet date to re-assess realisation.
2.7 Employee Benefits
2.7.1 Short-term Employee benefits (i.e. benefits payable within one
year) are recognised in the period in which the employee services are
rendered.
Contributions towards provident funds are recognised as expense.
Provident fund contributions in respect of employees are made to common
trust-Tractors India Employees Provident Fund ( being administered by
the trustees of the said fund for the benefit of employees of the
company and its subsidary company i.e. Tractors India Private Limited)
and such Trust invest funds following a pattern of investment
prescribed by the Government. The interest rate payable to the members
of the Trusts is not lower than the rate of interest declared annually
by the Central Government under the Employees Provident Funds and
Miscellaneous Provisions Act,1952 and shortfall, if any, on account of
interest, is made good by the Company. (Also refer note 18.2 below)
Contributions under Employees Pension Scheme is made as per statutory
requirements and charged as expenses for the year.
2.7.3 The Company also contributes to the Central Government
administered Employees State Insurance Scheme for its eligible
employees, which is a defined contribution plan.
2.7.4 Provisions for Gratuity for eligible employees is (being a
defined benefit plan) made on the basis of year-end actuarial valuation
using Projected unit credit method.
2.7.5 In respect of certain eligible employees who have attained 45
years of age as on 1st April 2009, provision for Superannuation under
defined benefit plan is made on the basis of year end actuarial
valuation (Note 18.3 below) using Projected unit credit method.
In respect of certain eligible employees who have not attained 45 years
of age as on 1st April 2009 provision for Superannuation is made :-
- under defined contribution scheme in respect of services rendered
with effect from 1st April 2009.
- under defined benefit scheme in respect of services rendered up to
31st March 2009, based on frozen pensionable salary as on 31st March
2009 (refer Note 18.3 below) using Projected unit credit method.
2.7.6 Actuarial gains/ losses arising in Defined Benefit Plans are
recognised in the Profit and Loss Account as income or expenses in the
year in which they occur.
Accrued liability towards Leave Encashment benefits, covering eligible
employees, evaluated on the basis of year-end actuarial valuation,
using Projected unit credit method, is recognised as a charge.
2.8 Foreign Currency Transactions
Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the year end are translated at year
end rates or at contract rates, where covered by forward exchange
contracts. The difference in transactions of monetary assets and
liabilities and realised gains and losses on foreign exchange
transactions are recognised in the Profit and Loss Account. In respect
of transactions covered by forward exchange contracts, the difference
between the contract rate and the spot rate on the date of transaction
is charged to the Profit and Loss Account over the period of the
contract. Profit/(Loss) on cancellation of forward contracts are
recognised as income or as expenses for the year. Foreign currency
non-monetary items carried in terms of historical cost are reported
using the exchange rate at the date of transactions.
2.9 Borrowing Cost
Borrowing Cost, if any, that are attributable to the acquisition,
construction or production of Qualifying Assets are capitalised as
part of cost of such assets. A Qualifying Asset is an asset that
necessarily requires a substantial period of time to get ready for its
intended use or sale. All other borrowing costs are recognised as
expenses in the period in which they are incurred.
2.10 Leases
For assets acquired under Operating Lease, rentals payable are charged
to Profit and Loss Account. Assets acquired under Finance Lease are
capitalised at lower of the Fair Value and Present Value of Minimum
Lease Payments. Assets leased out under operating leases are
capitalised. Rental income is recognised on accrual basis over the
lease term.
3. Based on the valuation report submitted by the valuers appointed
for the purpose, certain items of the Companys fixed assets (viz.
Freehold and Leasehold Land, Freehold and Leasehold Buildings and Plant
and Machinery) were revalued on 31st March,1993 after considering the
following factors :-
- The then estimated current market value pertaining to Leasehold Land
and Freehold Land and Buildings thereon.
- Value of Plant and Machinery based on their the then current cost of
replacement.
- Adjustments for the then condition, the standard of maintenance,
depreciation up to valuation date etc.
The resultant revaluation surplus of Rs. 247,234 thousand, arising from
the aforesaid revaluation, were transferred to Revaluation Reserve as
reflected in the Companys annual accounts for 1992-93.
Depreciation on these revalued assets as calculated in the manner
indicated in Note 2.3(b) above includes an additional charge of Rs. 1,545
thousand (Previous Year Rs. 1,545 thousand)and an amount equivalent to
the additional charge has been transferred to the Profit and Loss
Account from Revaluation Reserve; such transfer, according to an
authoritative professional view being acceptable for the purpose of the
Companys annual accounts. In consequence, the effective depreciation
rates (other than leasehold land) are as per Schedule XIV to the
Companies Act, 1956.
Mar 31, 2010
1.1 Sales
Revenue from sales/services (exclusive of Sales Tax/ Value Added Tax)
is being recognised on accrual basis in keeping with related
arrangements with customers and is net of credit notes on account of
returns and allowances.
1.2 Fixed Assets
Fixed Assets (comprising both tangible and intangible items) are stated
at cost except in case of certain items of Land, Buildings and Plant
and Machinery which are stated on the basis of revaluation (with
corresponding credit to the Revaluation Reserve Account), being
inclusive of resultant write ups.
Software are capitalised where it is expected to provide future
enduring economic benefit. Capitalisation costs include license fees
and cost of implementation/ system integration services. The costs are
capitalised in the year in which the relevant software is implemented
for use.
Impairment loss, if any, is recognised wherever the carrying amount of
fixed assets of a cash generating unit exceeds its recoverable amount
i.e. net selling price or value in use, whichever is higher.
1.3 Depreciation
Depreciation (including amortisation) is calculated in the following
manner:
(a) Leasehold land is amortised over the period of lease.
(b) Depreciation on revalued assets other than land is calculated on
their respective revalued amounts at rates considered applicable by the
valuers on the straight line method. (Also refer Note 3 below)
(c) In respect of other assets, at rates prescribed in Schedule XIV to
the Companies Act, 1956 on Straight Line Method except Plant and
Machinery under operating leases which are depreciated over a period of
3 to 6 years, being the useful life as estimated by the management.
(d) Technical Know-how fees are amortised under straight line method
over total useful lives (currently 5 to 10 years), as estimated by the
Management.
(e) Software capitalised, are amortised within a period of three years
from the date of capitalisation.
1.4 Investments
Long term Investments are stated at cost less provision, if any, for
permanent diminution in value.
1.5 Inventories
Inventories, other than Stores and Loose Tools are valued at lower of
weighted average cost (inclusive of conversion expenses and applicable
overheads for manufacturing activities) and net realisable value.
Stores are valued at weighted average cost less write offs.
Loose Tools acquired prior to 1 st September, 2008 are written off over
a period up to 5 years, after retaining 10% residual value. Loose Tools
acquired on or after 1st September,2008 are fully charged off.
1.6 Taxation
Current Tax in respect of taxable income is provided for the year based
on applicable tax rates and laws. Deferred Tax is recognised subject to
the consideration of prudence in respect of deferred tax assets, on
timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods and is measured using tax
rates and laws that have been enacted or substantively enacted by the
Balance Sheet date. Deferred tax assets are reviewed at each Balance
Sheet date to re-assess realisation.
1.7 Employee Benefits
1.7.1 Short-term Employee benefits (i.e. benefits payable within one
year) are recognised in the period in which the employee services are
rendered.
1.7.2 Contributions towards provident funds are recognised as expense.
Provident fund contributions in respect of employees are made to Trusts
administered by the Company and such Trusts invest funds following a
pattern of investments prescribed by the Government. The interest rate
payable to the members of the Trusts is not lower than the rate of
interest declared annually by the Central Government under the
Employees Provident Funds and Miscellaneous Provisions Act,1952 and
shortfall, if any, on account of interest, is made good by the Company.
(Also refer note 19.2 below) Contributions under Employees Pension
Scheme is made as per statutory requirements and charged as expenses
for the year.
1.7.3 The Company also contributes to the Central Government
administered Employees State Insurance Scheme for its eligible
employees, which is a defined contribution plan.
1.7.4 Provisions for Gratuity for eligible employees is (being a
defined benefit plan) made on the basis of year-end actuarial
valuation.
1.7.5 In respect of certain eligible employees who have attained 45
years of age as on 1st April 2009, provision for Superannuation under
defined benefit plan is made on the basis of year end actuarial
valuation (Refer Note 19.3 below)
In respect of certain eligible employees who have not attained 45 years
of age as on 1st April 2009 provision for Superannuation is made :-
under defined contribution scheme in respect of services rendered with
effect from 1st April, 2009.
under defined benefit scheme in respect of services rendered up to 31st
March, 2009, based on frozen pensionable salary as on 31st March, 2009.
(Refer Note 19.3 below)
1.7.6 Actuarial gains / losses arising in Defined Benefit Plans are
recognised in the Profit and Loss Account as income or expenses in the
year in which they occur.
1.7.7 Accrued liability towards Leave Encashment benefits, covering
eligible employees, evaluated on the basis of year-end actuarial
valuation, is recognised as a charge.
1.8 Foreign Currency Transactions
Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the year end are translated at year
end rates or at contract rates, where covered by forward exchange
contracts. The difference in transactions of monetary assets and
liabilities and realised gains and losses on foreign exchange
transactions are recognised in the Profit and Loss Account, In respect
of transactions covered by forward exchange contracts, the difference
between the contract rate and the spot rate on the date of transaction
is charged to the Profit and Loss Account over the period of the
contract. Profit/ (Loss) on cancellation of forward contracts are
recognised as income or as expenses for the year. Foreign currency non
monetary items carried in terms of historical cost are reported using
the exchange rate at the date of transactions.
1.9 Borrowing Cost
Borrowing Cost, if any, that are attributable to the acquisition,
construction or production of Qualifying Assets are capitalised as
part of cost of such assets. A Qualifying Asset is an asset that
necessarily requires a substantial period of time to get ready for its
intended use or sale. All other borrowing costs are recognised as
expenses in the period in which they are incurred.
1.10 Leases
For assets acquired under Operating Lease, rentals payable are charged
to Profit and Loss Account. Assets acquired under Finance Lease are
capitalised at lower of the Fair Value and Present Value of Minimum
Lease Payments.
Assets leased out under operating leases are capitalised. Rental income
is recognised on accrual basis over the lease term.
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