NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2015 1.OVERVIEW Jay Ushin Limited (CIN No.L52110DL1986PLC025118) is a public limited Company incorporated in 1986 and started commercial production in 1989. It is listed on the Bombay Stock Exchange (BSE) and is a joint venture company between the Jay Ushin Limited and Ushin Ltd, Japan. Jay Ushin Limited has its corporate office in Gurgaon (Haryana), has its manufacturing units in Gurgaon, Manesar (Haryana), Bhiwadi (Rajasthan), Sriperumbudur (Tamilnadu) and Bangalore (Karnataka). The Company is primarily in the business of manufacturing and sale of automobile Components for two and four wheeler. The financial statements reflect the results of the activities undertaken by the Company during the year April 1,2014 to March 31,2015. 2.SIGNIFICANT ACCOUNTING POLICIES (a) Basis for Preparation of Financial Statements These financial statements have been complied with the Generally Accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013. The financial statements are brpared on accrual basis under the historical cost convention. The financial statements are brsented in Indian rupees rounded off to the nearest Lacs .All amount in Rs. Lacs, unless otherwise stated. All assets and liabilities have been classified as current or non-current as per the Company's operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle to be 12 months for the purpose of current-non-current of assets and liabilities, (b Use of estimates The brparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based upon management's best knowledge of current events and actions the Company may undertake in future, actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods. (c)Fixed Assets TangibleAssets Tangible Assets are stated at cost, less accumulated debrciation and impairment loss, if any. The cost of Tangible Assets comprises its purchase price, borrowing cost and any cost directly attributable to bringing the asset to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets. Subsequent expenditures related to an item of Tangible Asset are added to its book value only if they increase the future benefits from the existing asset beyond its brviously assessed standard of performance. Projects under which assets are not ready for their intended use are disclosed under Capital Work-in-Progress. Intangible fixed assets Intangible assets are stated at their cost of acquisition, less accumulated amortization and accumulated impairment losses thereon, if any. Cost includes all cost incurred to bring the assets to its brsent location and condition. An intangible asset is recognized where it is probable that future economic benefits attributable to the asset will flow to the enterprise and where its cost can be reliably measured. (d)Debrciation/Amortisation TangibleAssets Tangible fixed assets except leasehold land are debrciated on the straight line method on a pro-rata basis from the date the assets are ready for intended use. Debrciation and amortisation on sale/discard of fixed assets is provided for up to the date of sale, deduction or discard of fixed assets as the case may be. Debrciation is provided based on useful life of the assets as brscribed in Schedule II to the Companies Act, 2013. Leasehold land is amortised over the period of lease. All assets costing Rs. 5,000 or less individually are debrciated at the rate of 100%. Intangible Assets The Company capitalises the technical know-how fee paid to the foreign collaborators at cost which is written off to revenue over the period of four years. Costs relating to Software, which are acquired, are capitalised and amortised on a straight line basis over the period of six years. (e)Impairment of assets At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount ofthe asset exceeds its recoverable amount, an impairment loss is recognised in the statement of profit and loss to the extent the carrying amount exceeds the recoverable amount. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined (net of debrciation or amortisation), if no impairment loss had been recognised. After impairment, debrciation is provided on the revised carrying amount of the asset over its remaining useful life. (f)Investments Accounting treatment Investments, which are readily realisable and 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 Non-current investments. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. If an investment is acquired, or partly acquired, by the issue of shares or other securities, the acquisition cost is the fair value of the securities issued. If an investment is acquired in exchange for another asset, the acquisition is determined by reference to the fair value of the asset given up or by reference to the fair value of the investment acquired, whichever is more clearly evident. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Non-Current investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss. Classification in the financial statements Investments that are realisable within the period of twelve months from the balance sheet date are classified as current investment. All other investments are classified as non-current investments. (g) Revenue recognition a. Revenue from sale of goods (including scrap sales) is recognised on delivery ofthe merchandise to the customer, when the significant riskand rewards ofthe ownership of goods have been transferred to the customer. Sales are inclusive of excise duty but net of returns, rebate, VATand Central sales tax. B .Revenue in respect of insurance claims and excise & custom duty refund claim are recognised as and when the same are received c. Dividend income is recognised, when the right to receive the same is established. d.Interest income is recognised on a time proportion basis taking into account the amount outstanding and the interest rate applicable. e.Export benefits with respect to duty exemption pass book licenses purchased is recognised as revenue on a proportionate basis based on utilization of such Licenses. f.Lease income is recognized in the Statement of Profit and Loss on a straight line basis over the lease term. Costs, including debrciation are recognized as an expense in the Statement of Profit and Loss. (h)Inventories Raw material, packing material, stores and spares are valued at lower of cost, determined on the first in first out basis (FIFO) or net realisable value. However, raw 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. Finished goods and work in progress are valued at lower of cost, determined on the first in first out basis (FIFO)or net realizable value. Cost of finished goods includes excise duty. Excise duty payable on finished goods is accounted for upon manufacture and transfer of finished goods to the stores. Payment of excise duty is deferred till the clearance of goods from the factory brmises. Cost of inventories comprises all cost of purchases, cost of conversion and other costs incurred in bringing the inventory to their brsent location and condition. (i)Borrowing Costs Borrowing costs include exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Profit and Loss Statement in the period in which they are incurred, (j) Foreign currency transactions Foreign currency transactions are recorded at the exchange rates brvailing at the date of the transactions. Exchange differences arising on settlement of transactions are recognised as income or expense in the year in which they arise. At the balance sheet date, all monetary assets and liabilities denominated in foreign currency are reported at the exchange rates brvailing at the balance sheet date by recognising the exchange difference in the statement of profit and loss. Non-monetary foreign currency items are carried at cost. Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss Statement, except in case of long term liabilities, where they relate to acquisition of Fixed Assets, in which case they are adjusted to the carrying cost of such assets, (k) Employee benefits Short term employee benefits All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, and bonus etc. are recognized in the Statement of Profit and Loss in the period in which the employee renders the related service. Long term employee benefits i) Defined contribution plan Provident fund and employees' state insurance schemes: All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both the employee and the employer make monthly contributions to the plan at a brdetermined rate (brsently 12%) of the employees' basic salary (subject to a maximum basic salary of Rs.15,000 per month per employee, as per the provisions of The Employees Provident Fund & Miscellaneous Provisions Act, 1952). These contributions are made to the fund administered and managed by the Government of India. In addition, some employees of the Company are covered under the employees' state insurance scheme, which is also a defined contribution scheme recognized and administered by the Government of India. The Company's contributions to both these schemes are expensed off in the Statement of Profit and Loss. The Company has no further obligations under these plans beyond its monthly contributions. ii)Defined benefit plan Gratuity The Company provides for retirement benefits in the form of Gratuity. Benefits payable to eligible employees ofthe Company with respect to gratuity, a defined benefit plan is accounted for on the basis of an actuarial valuation as at the balance sheet date. In accordance with the Payment of Gratuity Act, 1972, the plan provides for lump sum payments to vested employees on retirement, death while in service or on termination of employment in an amount equivalent to 15 days basic salary for each completed year of service. Vesting occurs upon completion of five years of service or death of employee which ever is earlier. The brsent value of such obligation is determined by the projected unit credit method and adjusted for past service cost and fair value of plan assets as at the balance sheet date through which the obligations are to be settled. The resultant actuarial gain or loss on change in brsent value of the defined benefit obligation or change in return ofthe plan assets is recognised as an income or expense in the statement of profit and loss. The expected return on plan assets is based on the assumed rate of return of such assets. iii)Other long term employee benefits: Leave Encashment Benefits under the Company's leave encashment scheme constitute other employee benefits. The iability in respect of leave encashment is provided on the basis of an actuarial valuation done by an independent actuary at the end of the year using the Projected Unit Credit Method. Actuarial gain and losses are recognized immediately in the Statement of Profit and Loss. (I) Leases A Operating Lease As a lessee Leases in which a significant portion ofthe risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the statement of profit and loss on a straight-line basis over the period of the lease or the terms of underlying agreement/s, as the case may be. As a lessor The Company has leased certain tangible assets and such leases where the Company has substantially retained all the risks and rewards of ownership are classified as operating leases. Lease incomes on such operating leases are recognised in the statement of profit and loss on a straight line basis over the lease term. b.Finance Lease Finance leases, which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease term at the lower of the fair value ofthe assets and brsent value of minimum lease rentals. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance ofthe liability. Finance charges are recognized as finance costs in the Statement of Profit and Loss. Lease management fees, legal charges and other initial direct costs of lease are capitalized, (m) Tax Expense Tax expense for the year, comprising current tax and deferred tax,is included in determining the net profit/(loss) for the year. Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. Deferred income tax reflect the current period timing differences between taxable income and accounting income for the period and reversal of timing differences of earlier years/period. Deferred tax is recognised for all timing differences. Deferred tax assets are carried forward to the extent it is reasonably / virtually certain (as the case may be) that future taxable profit will be available against which such deferred tax assets can be realised. Such assets are reviewed at each balance sheet date and written down to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised. Minimum Alternative Tax (MAT) payable in a year is charged to Statement of Profit and Loss as current tax. Minimum Alternative Tax credit is recognised as an asset only to the extent and when there is convincing evidence that the Company will pay normal income tax during the specified period. The said asset is created by way of a credit to the Statement of Profit and Loss and is shown as MAT Credit Entitlement. Such asset is reviewed at each balance sheet date and the carrying amount is written down to the extent there is no longer convincing evidence to the effect that the Company will pay normal tax during the specified period. Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted at the balance sheet date, (n) Provisions, contingent liabilities and contingent assets Provisions Provisions are recognized when the Company has a brsent obligation as a result of past events and it is more likely that an outflow of resources will be required to settle the obligations and the amount has been reliably estimated. Such provisions are not discounted to their brsent value and are determined based on the management's estimation of the obligation required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect management's current estimates. Contingent liabilities A disclosure for a contingent liability is made where it is more likely than not that a brsent obligation or possible obligation may result in or involve an outflow of resources. When no brsent or possible obligation exists and the possibility of an outflow of resources is remote, no disclosure is made. Contingent assets Contingent assets are neither recorded nor disclosed in the financial statements, (o) Cash and cash equivalents In the cash flow statement, Cash and cash equivalents include cash in hand, cash balances with bank and margin money deposited with bank. (p) Earnings Per Share Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average numbers of equity shares outstanding during the period are adjusted for events of bonus issue, share split or consolidation of shares. For calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed converted as of the beginning of the period, unless they have been issued at a laterdate (q) Product warranty expenses A provision is made for future warranty cost based on management's estimates of such future costs in respect of sales where the warranty period has not expired, (r) Research and Development Revenue expenditure on research and development is charged against the profit for the year in which it is incurred. Capital expenditure on research and development is shown as an addition to fixed assets and debrciated accordingly, (s) Material Events Material events occurring after balance sheet date and till the date of signing of financials are taken into cognizance. 1.Consequent to the notification issued by the Ministry of Corporate Affairs on December 29, 2011, the Company adopted the option qiven in paraqraph 46A of the Accountinq Standard-11 "The Effects of Chanqes in Foreiqn Exchanqe Rates" with effect from April 1, 2011. Accordinqly, the exchanqe difference on foreiqn currency denominated lonq term borrowinqs relatinq to acquisition of debrciable capital assets are adjusted in the carryinq cost of such assets and the exchanqe difference on other lonq term foreiqn currency monetary items is amortised w.e.f. April 1, 2011 over its tenor till maturity. Consequent to the adoption of the policy, the company has transferred foreiqn exchanqe fluctuation loss (net) of Rs. 10.67 Lacs (brvious year Rs. 1.91 Lacs) durinq the year ended March 31, 2015 to debrciable capital assets and foreiqn exchanqe fluctuation loss (net) of Rs. 0.33 Lacs (Previous year Rs. 0.06 Lacs) to capital work in proqress. 2.The company has recoqnized provision for expected warranty claims on products sold durinq the last two years as per warranty period on respective models, based on past experience of level of repairs and returns. Assumption used to calculate the provision for warranties are based on current sales level and current information available about returns based on the warranty period for all products sold. 3. Previous year figures have been rearrange/regrouped wherever necessary. As per our report of even date ForS S Kothari Mehta & Co. (Chartered Accountants) Firm Registration No.: 000756N For and on behalf of the Board of Directors of Jay Ushin Limited CIN No. L52110DL1986PLC025118 K K Tulshan Partner Membership No.: 85033 J P Minda Chairman DIN : 00045623 Ashwani Minda Managing Director DIN :00049966 S K Vijayvergia Vice President (Finance) Place: Gurgaon Dated: May 28, 2015 |