SIGNIFICANT ACCOUNTING POLICIES (i) Basis of accounting The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been brpared on accrual basis under the historical cost convention. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year. (ii) Use of estimates The brparation 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 period. The Management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise. (iii) Inventories Inventories are valued at the lower of cost and moving weighted average price and the net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty. (iv) Cash and cash equivalents Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances, highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. (v) Cash flow statement Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. (vi) Debrciation and amortisation Debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Debrciation on tangible fixed assets has been provided on the straight-line method as per the useful life brscribed in Schedule II to the Companies Act, 2013 except in respect of moulds and dies debrciated over the useful life of 1 to 15 years, wherein, the life of the said assets has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc. Asset costing less than Rs. 5,000 each are fully debrciated in the year of capitalisation Leasehold land are amortised over the period of lease term Debrciation on addition to fixed assets is provided on pro-rata basis from the month the assets are put to use. Debrciation on sale/deduction from fixed assets is provided for up to the month of sale, deduction, discardment as the case may be. Intangible assets comprising of product design, prototypes, etc., either acquired or internally developed are amortised over a period of ten years, the estimated minimum useful life of the related products. Cost of software is amortised over a period of 5 years or less depending on the estimated useful life of asset. The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern. (vii) Revenue recognition Sales are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the dispatch of goods to customers. Sales include excise duty but exclude sales tax and value added tax. Interest income is recognised on a time proportionate basis taking into account the amount invested and rate applicable. Dividend income is accounted for when the right to receive is established. (viii) Fixed Assets (Tangible/ Intangible) Fixed assets are carried at cost less accumulated debrciation/ amortisation and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. Subsequent expenditure on fixed assets after its purchase / completion is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its brviously assessed standard of performance. Fixed assets acquired and put to use for project purpose are capitalised and debrciation thereon is included in the project cost till the project is ready for its intended use. Capital work-in-progress: Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest. Pre-operative expenditure (pending allocation): Expenses directly related to construction activity or incidental thereto, are allocated to fixed assets at the time of completion of the project. Intangible assets under development: Expenditure on Research and development eligible for capitalisation are carried as Intangible assets under development where such assets are not yet ready for their intended use." (ix) Foreign currency transactions Transactions denominated in foreign currencies are recorded at the exchange rates brvailing on the date of the transaction. Monetary items denominated in foreign currencies at the period-end are translated at the exchange rates brvailing on the Balance Sheet date. Non-monetary items denominated in foreign currencies are carried at cost. Any income or expense on account of exchange differences either on settlement or on translation of transactions are charged to the Statement of Profit and Loss. (x) Investments Long term investments are carried individually at cost, less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments includes acquisition charges such as brokerage, fees and duties. (xi) Employee benefits Employee benefits includes gratuity, compensated absences, long service award and contribution to provident fund, employees’ state insurance and superannuation fund. Defined contribution plans The Company’s contribution to provident fund, employees’ state insurance, superannuation fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made. In respect of certain employees, provident fund contributions are made to a Trust where the interest rate payable to the members of such Trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. The remaining contributions are made to a government administered provident fund towards which the Company has no further obligations beyond its monthly contributions. Defined benefit plans For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested. The retirement benefit obligation recognised in the Balance Sheet rebrsents the brsent value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the brsent value of available refunds and reductions in future contributions to the schemes. Long-term employee benefits Compensated absences and long service awards which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the brsent value of the defined benefit obligation as at the Balance Sheet date. The cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date and actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Short-term employee benefits The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the period/year when the employees render the service (xii) Leases Lease arrangements where the risk and rewards incidental to ownership of the assets substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the statement of profit and loss. (xiii) Borrowing costs Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. (xiv) Earnings per share Basic earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares outstanding duri ng the period. Diluted earnings per share is computed by dividing the profit after tax as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. (xv) Taxes on income Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961. The provision for taxation for the period January 1, 2015 to March 31, 2016 comprises the residual tax liability for the assessment year 2015- 16 relevant to the year April 1, 2014 to March 31, 2015 and the liability, which has accrued on the profit for the year April 1, 2015 to March 31, 2016, under the provisions of the Income-tax Act, 1961. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to 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 recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed debrciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Current and deferred tax relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss. (xvi) Research and development expenses Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product’s technological feasibility has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilised for research and development are capitalised and debrciated in accordance with the policies stated for Fixed assets (Tangible/Intangible). (xvii) Impairment of assets The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their brsent value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss. (xviii) Provisions and contingencies A provision is recognised when the Company has a brsent 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 brsent 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. (xix) Employee share based payments The Company has formulated Employee Stock Option Scheme (ESOS) in accordance with the SEBI Guidelines. The Scheme provide for grant of options to employees of the Company to acquire equity shares of the Company that vest in a graded manner and that are to be exercised within a specified period. In accordance with the SEBI Guidelines, the Company has constituted an Employee Stock Option Plan - 2006. Employee Stock Options granted by the Company are accounted under the ‘Intrinsic Value Method’ stated in the Guidance Note on Employee Share Based Payments issued by the Institute of Chartered Accountants of India. (xx) Provision for warranty The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures. The timing of outflows will vary as and when warranty claim will arise. As per the terms of the contracts, the Company provides post-contract services / warranty support to some of its customers. The Company accounts for the post-contract support / provision for warranty on the basis of the information available with the Management duly taking into account the current and past technical estimates. (xxi) Operating cycle Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current EMPLOYEE STOCK OPTION PLAN a. 2,08,900 (2,08,900) options on October 22, 2007, exercisable over a period of seven years after vesting on October 23, 2010 at an exercise price of Rs. 462 (including brmium of Rs. 452) per option, out of which 3,000 (29,500) options are outstanding at period/ year end. During the period/year, 26,500 (2,500) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 462 (including brmium of Rs. 452 each) per equity share. b. 40,000 (40,000) options on April 29, 2010, exercisable over a period of seven years after vesting on April 29, 2011 at an exercise price of Rs. 695 (including brmium of Rs. 685) per option are outstanding as at period/year end. c. 15,400 (15,400) options on November 8, 2010, exercisable over a period of seven years after vesting on November 8, 2013 at an exercise price of Rs. 1,411 (including brmium of Rs. 1,401) per option out of which Nil (Nil) options are outstanding at period/year end. During the period/year, Nil (15,400) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 1,411 (including brmium of Rs. 1,401 each) per equity share. d. 1,08,200 (1,08,200) options on May 6, 2011, exercisable over a period of seven years after vesting on May 6, 2014 at an exercise price of Rs. 1,162 (including brmium of Rs. 1,152) per option out of which 32,100 (60,200) options are outstanding at period/year end. During the period/year, 28,100 (48,000) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 1,162 (including brmium of Rs. 1,152 each) per equity share. e. 5,400 (5,400) options on February 11, 2012, exercisable over a period of seven years after vesting on February 11, 2015 at an exercise price of Rs. 1,770 (including brmium of Rs. 1,760) per option out of which 3,600 (5,400) options are outstanding at period/year end. During the period/year, 1,800 (Nil) equity shares were issued and allotted as fully paid up at an exercise price of Rs. 1,770 (including brmium of Rs. 1,760 each) per equity share. f. 5,000 (5,000) options on December 16, 2013, exercisable over a period of seven years after vesting on December 15, 2016 at an exercise price of Rs. 4,915 (including brmium of Rs. 4,905) per option are outstanding as at period/year end. g. 22,500 (22,500) options on August 11, 2014, exercisable over a period of seven years after vesting on August 11, 2017 at an exercise price of Rs. 8,477.50 (including brmium of Rs. 8,467.50) per option out of which 16,000 (22,500) options are outstanding at period/ year end. During the period/year, 6,500 (Nil) options were forfeited. h. 5,400 (5,400) options on November 12, 2014, exercisable over a period of seven years after vesting on November 12, 2017 at an exercise price of Rs. 12,993.65 (including brmium of Rs. 12,983.65) per option are outstanding as at period/year end. i. 22,300 (Nil) options on January 12, 2015, exercisable over a period of seven years after vesting on January 11, 2016 at an exercise price of Rs. 14,739 (including brmium of Rs. 14,729) per option are outstanding as at period/year end. j. 4,500 (Nil) options on March 20, 2015, exercisable over a period of seven years after vesting on March 19, 2018 at an exercise price of Rs. 16,112 (including brmium of Rs. 16,102) per option are outstanding as at period/year end. k. 53,000 (Nil) options on May 08, 2015, exercisable over a period of seven years after vesting on May 07, 2018 at an exercise price of Rs. 14,807 (including brmium of Rs. 14,797) per option are outstanding as at period/year end. l. 6,590 (Nil) options on July 21, 2015, exercisable over a period of seven years after vesting on July 20, 2018 at an exercise price of Rs. 21,248 (including brmium of Rs. 21,238) per option are outstanding as at period/year end. m. 7,800 (Nil) options on November 06, 2015, exercisable over a period of seven years after vesting on November 05, 2018 at an exercise price of Rs. 17,678 (including brmium of Rs. 17,668) per option are outstanding as at period/year end. n. 4,200 (Nil) options on February 05, 2016, exercisable over a period of seven years after vesting on February 04, 2019 at an exercise price of Rs. 16,894 (including brmium of Rs. 16,884) per option are outstanding as at period/year end. o. Each option entitles the holders thereof to apply for and be allotted one equity share of the face value of Rs. 10 each CAPITAL AND OTHER COMMITTMENTS Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 96.92 crores (Rs. 139.79 crores). The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee’s benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements. SEGMENT REPORTING As the Company’s business activities falls within a single primary business segment viz. "Automobile products and related components" and is a single geographical segment, the disclosure requirements of Accounting Standard – 17 "Segment Reporting" specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 are not applicable. 1.Pursuant to the enactment of the Companies Act, 2013 (the ‘Act’) , the Company, w.e.f. January 1, 2015, has reviewed the estimated economic useful lives of its fixed assets generally in accordance with that provided in the Schedule II to the Act. As a result (after considering the transitional provision specified in the Schedule II), the debrciation charge for the fifteen months from January 1, 2015 to March 31, 2016 is higher by Rs. 41.86 crores and debrciation amounting to Rs. 3.79 crores (net of deferred tax amounting to Rs. 2.01 crores) has been adjusted from the opening balance of retained earnings 2.The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. 3There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company. 4.Figures in brackets rebrsent brvious year’s figures. 5.The figures for the current period are for a period of fifteen months from January 1, 2015 to March 31, 2016, whereas the corresponding brvious years figures are for twelve months from January 1, 2014 to December 31, 2014. As such corresponding figures for the brvious year are not directly comparable with those of current period. .Previous year’s figures have been recast/regrouped, wherever necessary to confirm the current period’s brsentation. |