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Notes to Accounts of The Hi-Tech Gears Ltd.
Mar 31, 2025
5.13 Provisions
Provisions are recognized when the Company has a present obligation
as a result of past events, for which it is probable that an outflow of
resources will be required to settle the obligation and a reliable
estimate of the amount can be made. Provisions required to settle
are reviewed regularly and are adjusted where necessary to reflect
the current best estimates of the obligation. Provisions are discounted
to their present values, where the time value of money is material.
5.14 Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the Basis of preparation.
The financial statements have been prepared on going concern basis
in accordance with generally accepted accounting principles in India.
Further, the financial statements have been prepared on a historical
cost basis except for following items:
occurrence or non-occurrence of one or more uncertain future events
beyond the control of the Company or a present obligation that is not
recognized because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company
does not recognize a contingent liability but discloses its existence in
the financial statements.
Contingent assets are neither recognised nor disclosed except when
realisation of income is virtually certain, related asset is disclosed.
5.15 Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period
are adjusted for the effects of all dilutive potential equity shares.
5.16 Derivative financial instruments and hedge accounting
Derivative financial instruments are accounted for at fair value through
profit and loss (FVTPL) except for derivatives designated as hedging
instruments in cash flow hedge relationships, which require a specific
accounting treatment.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify
as fair value hedges are recorded in the statement of profit and loss,
together with any changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk. The Company only
applies fair value hedge accounting for hedging foreign exchange
risk on recognised assets and liabilities.
Cash Flow Hedge
The Company has designated certain derivative contracts as hedging
instruments in cash flow hedge relationships.
The Company applied hedge accounting requirements in Ind AS 109
prospectively from 1 April 2019 to derivative instruments which could
be designated as effective cash flow hedges. These arrangements
had been entered into to mitigate foreign currency exchange risk and
interest rate risk arising from highly probable forecasted sales and
debt instruments denominated in foreign currency, in accordance with
the Companyâs risk management policy.
To the extent that the hedge is effective, changes in the fair value of
derivatives designated as hedging instruments in cash flow hedges
are recognised in other comprehensive income and included within
the cash flow hedge reserve in equity. Any ineffectiveness in the hedge
relationship is recognised immediately in profit or loss.
At the time the hedged item affects profit or loss, any gain or loss
previously recognised in other comprehensive income is reclassified
from equity to profit or loss and presented as a reclassification
adjustment within other comprehensive income.
5.17 Government Grant
Government grants are not recognised until there is reasonable
assurance that the Company will comply with the conditions attached
to them and that the grants will be received. Government grants are
recognised in the Statement of profit and loss on a systematic basis
over the periods in which the Company recognises the related costs
as expenses, if any, for which the grants are intended to compensate.
5.18 Significant management judgement and estimates
When preparing the financial statements, management makes a
number of judgements, estimates and assumptions about the
recognition and measurement of assets, liabilities, income and
expenses.
Significant management judgements
The following are significant management judgements in applying
the accounting policies of the Company that have the most significant
effect on the financial statements.
Recognition of deferred tax assets - The extent to which deferred
tax assets can be recognized is based on an assessment of the
probability of the Companyâs future taxable income against which the
deferred tax assets can be utilized.
Evaluation of indicators for impairment of assets - The evaluation
of applicability of indicators of impairment of assets requires
assessment of several external and internal factors which could result
in deterioration of recoverable amount of the assets.
Contingent liabilities - At each balance sheet date basis the
management judgment, changes in facts and legal aspects, the
Company assesses the requirement of provisions against the
outstanding contingent liabilities. However, the actual future outcome
may be different from this judgement.
Significant estimates
Information about estimates and assumptions that have the most
significant effect on recognition and measurement of assets, liabilities,
income and expenses is provided below. Actual results may be
substantially different.
Government grants - Grants receivables are based on estimates
for utilisation of grant as per the regulations as well as analysing
actual outcomes on a regular basis and compliance with stipulated
conditions. Changes in estimates or non-compliance of stipulated
conditions could lead to significant changes in grant income and are
accounted prospectively over the balance life of asset.
Defined benefit obligation (DBO) - Managementâs estimate of the
DBO is based on a number of underlying assumptions such as
standard rates of inflation, mortality, discount rate and anticipation of
future salary increases. Variation in these assumptions may
significantly impact the DBO amount and the annual defined benefit
expenses.
Useful lives of depreciable/amortisable assets - Management
reviews its estimate of the useful lives of depreciable/amortisable
assets at each reporting date, based on the expected utility of the
assets. Uncertainties in these estimates relate to technical and
economic obsolescence that may change the utilisation of assets.
Provisions - estimate for provisions recognised is based on
management best estimate of the expenditure required to settle the
present obligation at the year end and is based on historical
experience, expected changes in economic conditions, changes in
exchange rates.
The management assessed that cash and cash equivalents, trade receivables, other receivables, trade payables and other current financial
liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
(i) The fair values of the Companyâs interest-bearing borrowings, loans and receivables are determined by applying discounted cash flows
(âDCFâ) method, using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period.
(ii) The use of quoted market prices for quoted equity instruments.
(iii) Fair value of unquoted equity shares was determined based on the fair market value per share by the registered valuer for the year ended
March 31,2025.
(iv) Investment in subsidiaries are classified as equity investments have been accounted at historical cost less accumulated impairment, if any,
since these are scope out of Ind AS 109 for the purposes of measurement, the same have not been disclosed in the tables above.
(v) The use of quoted market prices for derivative contracts at balance sheet date. For hedge related disclosures, refer note 44.
During the financial year 2024-25 and 2023-24, there were no transfer between Level 1, Level 2 and Level 3 fair value measurements.
C) Market risk
i) Foreign exchange risk
The Company has international transactions and is exposed to foreign exchange risk arising from foreign currency transactions (imports and
exports). Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency
that is not the Companyâs functional currency. The Company does not hedge its foreign exchange receivables/payables.
ii) Derivative financial instrument
The Company uses derivative instruments as part of its management of exposure to fluctuations in foreign currency exchange rates. The
Company does not acquire or issue derivative financial instruments for trading or speculative purposes. The Company does not enter into
complex derivative transactions to manage the risks. The derivative transactions are normally in the form of forward contracts and these are
subject to the Company guidelines and policies.
The fair values of all derivatives are separately recorded in the balance sheet within current financial assets. Derivatives that are designated
as hedges are classified as current depending on the maturity of the derivative. The use of derivatives can give rise to credit and market risk.
The Company tries to control credit risk as far as possible by only entering into contracts with reputable banks and financial institutions. The
use of derivative instruments is subject to limits, authorities and regular monitoring by appropriate levels of management. The limits, authorities
and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in
the valuation of the underlying assets, liabilities or transactions, as derivatives are used only for risk management purposes.
Note - 44
Derivative financial instruments and hedge accounting
The Company is exposed to foreign currency risk from foreign currency borrowings and highly probable forecasted sales, primarily denominated in USD
and EURO. The Company has a risk management policy which aims to hedge foreign currency and interest rate arising from its borrowings denominated
in a currency other than the functional currency of the Company. The Company uses cross currency swap and interest rate swaps to hedge its exposure
to foreign currency and interest rate risk. The Company designates certain derivatives as hedging instruments in respect of foreign currency risk and
interest rate risk in cash flow hedges.
Hedge ineffectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure
that an economic relationship exists between the hedged item and hedging instrument. The Company uses dollar offset method using a hypothetical
derivatives, dollar offset method is a quantitative method that consists of comparing the change in fair value or cash flows of the hedging instrument
with the change in fair value or cash flows of the hedged item attributable to the hedged risk.
The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk and notional amount of the hedging instruments
are identical to the hedged items.
Note - 48
OTHER STATUTORY INFORMATION
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami
property.
(ii) The Company do not have any transactions with companies struck off.
(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with
the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate
Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding
(whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party
(Ultimate beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income
during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income
Tax Act, 1961).
(viii) The Company has borrowings from banks and others on the basis of security of current assets. The quarterly returns or statements of current
assets filed by the company with banks and others are in agreement with the books of accounts.
* The loan given to the subsidiary was unsecured and carried an interest @ 5.90% p.a. (monthly cumulative) during the previous year.
For YAPL & Co. For and on behalf of
Chartered Accountants The Hi-Tech Gears Limited
Firm Registration No. 017800N
CA. Sakshi Garg Deep Kapuria Pranav Kapuria
(Partner) Executive Chairman Managing Director
Membership No. 553997 DIN 00006185 DIN 00006195
UDIN: 25553997BMGXMC8263 Place: New Delhi Place: New Delhi
Kapil Rajora Naveen Jain
Place: Ludhiana Chief Financial Officer Company Secretary
Date: May 29, 2025
Mar 31, 2024
5.13 Provisions
Provisions are recognized when the Company has a present obligation as a result of past events, for which it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions required to settle are reviewed regularly and are adjusted where necessary to reflect the current best estimates of the obligation. Provisions are discounted to their present values, where the time value of money is material.
5.14 Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the Basis of preparation. The financial statements have been prepared on going concern basis in accordance with generally accepted accounting principles in India. Further, the financial statements have been prepared on a historical cost basis except for following items:
occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets are neither recognised nor disclosed except when realisation of income is virtually certain, related asset is disclosed.
5.15 Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
5.16 Derivative financial instruments and hedge accounting Derivative financial instruments are accounted for at fair value through profit and loss (FVTPL) except for derivatives designated as hedging instruments in cash flow hedge relationships, which require a specific accounting treatment.
The Company has designated certain derivative contracts as hedging instruments in cash flow hedge relationships.
The Company applied hedge accounting requirements in Ind AS 109 prospectively from 1 April 2019 to derivative instruments which could be designated as effective cash flow hedges. These arrangements had been entered into to mitigate foreign currency exchange risk and interest rate risk arising from highly probable forecasted sales and debt instruments denominated in foreign currency, in accordance with the Companyâs risk management policy.
All derivative financial instruments used for hedge accounting are recognised initially at fair value and reported subsequently at fair value in the balance sheet.
To the extent that the hedge is effective, changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in other comprehensive income and included within the cash flow hedge reserve in equity. Any ineffectiveness in the hedge relationship is recognised immediately in profit or loss.
At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income.
5.17 Government Grant
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received. Government grants are recognised in the Statement of profit and loss on a systematic basis over the periods in which the Company recognises the related costs as expenses, if any, for which the grants are intended to compensate.
5.18 Significant management judgement and estimates
When preparing the financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.
Significant management judgements
The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the financial statements.
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilized.
Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Contingent liabilities - At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.
Significant estimates
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.
Government grants - Grants receivables are based on estimates for utilisation of grant as per the regulations as well as analysing actual outcomes on a regular basis and compliance with stipulated conditions. Changes in estimates or non-compliance of stipulated conditions could lead to significant changes in grant income and are accounted prospectively over the balance life of asset.
Defined benefit obligation (DBO) - Managementâs estimate of the DBO is based on a number of underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Useful lives of depreciable/amortisable assets - Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utilisation of assets. Provisions - estimate for provisions recognised is based on management best estimate of the expenditure required to settle the present obligation at the year end and is based on historical experience, expected changes in economic conditions, changes in exchange rates.
Financial instruments i) Fair values hierarchy
Financial assets and liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1: Quoted prices (unadjusted) in active markets for financial instruments.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data rely as little as possible on entity specific estimates.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Companyâs exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.
a) Credit risk management
i) Credit risk rating
The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.
Management monitors rolling forecasts of the Companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.
Maturities of financial liabilities
The tables below analyse the Companyâs financial liabilities into relevant maturity groupings based on their contractual maturities.
ii) Derivative financial instrument
The Company uses derivative instruments as part of its management of exposure to fluctuations in foreign currency exchange rates. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes. The Company does not enter into complex derivative transactions to manage the risks. The derivative transactions are normally in the form of forward contracts and these are subject to the Company guidelines and policies.The fair values of all derivatives are separately recorded in the balance sheet within current financial assets. Derivatives that are designated as hedges are classified as current depending on the maturity of the derivative. The use of derivatives can give rise to credit and market risk. The Company tries to control credit risk as far as possible by only entering into contracts with reputable banks and financial institutions. The use of derivative instruments is subject to limits, authorities and regular monitoring by appropriate levels of management. The limits, authorities and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of the underlying assets, liabilities or transactions, as derivatives are used only for risk management purposes.
Derivative financial instruments and hedge accounting
The Company is exposed to foreign currency risk from foreign currency borrowings and highly probable forecasted sales, primarily denominated in USD and EURO. The Company has a risk management policy which aims to hedge foreign currency and interest rate arising from its borrowings denominated in a currency other than the functional currency of the Company. The Company uses cross currency swap and interest rate swaps to hedge its exposure to foreign currency and interest rate risk. The Company designates certain derivatives as hedging instruments in respect of foreign currency risk and interest rate risk in cash flow hedges.
Note - 45
Lease related disclosures
The Company has leases for land, solar plants, flat and office building. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability as a borrowings. Variable lease payments which do not depend on an index or a rate are excluded from the initial measurement of the lease liability and right of use assets. The Company classifies its right-of-use assets in a consistent manner to its property, plant and equipment.
Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublease the asset to another party, the right-of-use asset can only be used by the Company. Some leases contain an option to extend the lease for a further term. The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over office buildings and other premises the Company must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease.
OTHER STATUTORY INFORMATION
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company do not have any transactions with companies struck off.
(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(viii) The Company has borrowings from banks and others on the basis of security of current assets. The quarterly returns or statements of current assets filed by the company with banks and others are in agreement with the books of accounts.
For YAPL & Co. For and on behalf of
Chartered Accountants The Hi-Tech Gears Limited
Firm Registration No. 017800N
CA. Sakshi Garg Deep Kapuria Pranav Kapuria
(Partner) Executive Chairman Managing Director
Membership No. 553997 DIN 00006185 DIN 00006195
UDIN: 24553997BKBZLM2035 Place: New Delhi Place: New Delhi
Kapil Rajora Naveen Jain
Place: Ludhiana Chief Financial Officer Company Secretary
Date: May 29, 2024 Place: New Delhi Place: New Delhi
Mar 31, 2023
Rights, preferences and restrictions attached to equity shares
The Company has one class of equity shares with paid up value of '' 10 per share. Each holder of equity shares is entitled to one vote per share on all resolutions submitted to shareholders. They have right to participate in the profits of the company, if declared by the Board as interim dividend and recommended by the Board and declared by the members as final dividend. They are also entitled to bonus/right issue, as declared by Company from time to time. They have right to receive annual report of the Company, beside other rights available under the Companies Act and Listing Regulations.
In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the Company, beside other rights available under the Companies Act.
The distribution will be in proportion to the number of equity shares held by the shareholders.
Nature and purpose of other reserves General reserve
General reserve is created out of the accumulated profits of the Company as per the provisions of Companies Act.
Share options outstanding account
The account is used to recognise the grant date value of options issued to employees under Employee stock option plan and adjusted as and when such options are exercised or otherwise expire.
Retained earnings
All the profits made by the Company are transferred to retained earnings from statement of profit and loss.
Other comprehensive income
Other comprehensive income represents balance arising on account of changes in fair value of equity instruments carried at fair value through other comprehensive income and gain/(loss) booked on re-measurement of defined benefit plans.
Cash flow hedge reserve
The Company has taken a cross currency and interest rate swap to hedge the foreign currency risk of highly probable forecasted sales and foreign currency borrowings. To the extent hedge is effective, the change in fair value of hedging instrument is recognised in cash flow reserve.
Financial instruments i) Fair values hierarchy
Financial assets and liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1: Quoted prices (unadjusted) in active markets for financial instruments.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data rely as little as possible on entity specific estimates.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Investment in subsidiary is measured at cost and hence are not required to be disclosed as per Ind AS 107 âFinancial Instruments Disclosuresâ. Hence, the same have been excluded from the above table.
Valuation process and technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
(a) the use of quoted market prices for quoted equity instruments.
(b) for unquoted equity instruments, the Company has used discounted cash flow method (fair value approach) discounted at a rate to reflect the risk involved in the business.
(c) The use of quoted market prices for derivative contracts at balance sheet date. For hedge related disclosures, refer note 44.
The management assessed that cash and cash equivalents, trade receivables, other receivables, trade payables and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
(i) The fair values of the Companyâs interest-bearing borrowings, loans and receivables are determined by applying discounted cash flows (âDCFâ) method, using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 March 2023 was assessed to be insignificant.
Financial risk management
The Companyâs activities expose it to credit risk, liquidity risk and market risk. The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.
A) Credit risk
Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Companyâs exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.
a) Credit risk management
i) Credit risk rating
The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.
A: Low B: Medium C: High
The Company provides for expected credit loss based on the following:
Life time expected credit loss is provided for trade receivables.
Based on business environment in which the Company operates, a default on a financial asset is considered when the counter party fails to make payments within the agreed time period as per contract. Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions.
Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.
B) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.
Management monitors rolling forecasts of the Companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.
C) Market risk i) Foreign exchange risk
The Company has international transactions and is exposed to foreign exchange risk arising from foreign currency transactions (imports and exports). Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Companyâs functional currency. The Company does not hedge its foreign exchange receivables/payables.
ii) Derivative financial instrument
The Company uses derivative instruments as part of its management of exposure to fluctuations in foreign currency exchange rates. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes. The Company does not enter into complex derivative transactions to manage the risks. The derivative transactions are normally in the form of forward contracts and these are subject to the Company guidelines and policies.The fair values of all derivatives are separately recorded in the balance sheet within current financial assets. Derivatives that are designated as hedges are classified as current depending on the maturity of the derivative. The use of derivatives can give rise to credit and market risk. The Company tries to control credit risk as far as possible by only entering into contracts with reputable banks and financial institutions. The use of derivative instruments is subject to limits, authorities and regular monitoring by appropriate levels of management. The limits, authorities and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of the underlying assets, liabilities or transactions, as derivatives are used only for risk management purposes.
3) There are three legal cases filed by past employees against the Company for re-instatement/settlement of their dues/remuneration related matters. All cases are pending at various stages at Camp Court, Bhiwadi, Rajasthan. There are two cases filed in NCLT under the provision of IBC Act related to commercial dispute with parties. The financial impact of these cases, if any, is not identifiable and hence the same has not been provided in the financial statements of the Company.
B Commitments:
âCapital commitments (Net of advances)â
Estimated amount of contracts remaining to be executed on capital accounts '' 269.16 Mn after adjusting advances (Previous years: 31 March 2022: '' 187.19 Mn).
Dividends
A The Board of Directors at its meeting held on May 27, 2023 have recommended a Final dividend of '' . 2.50/- per equity share of '' 10/- each i.e. @ 25% on paid-up equity share capital of the company subject to approval of members at its ensuing Annual General Meeting.
Segment information
In line with the provisions of Ind AS 108 - operating segments, the operations of the Company fall primarily under manufacturing of gears and transmissions, which is considered to be the only reportable segment by the management.
Since all the manufacturing activity is done at India, therefore segregation of expenses/result/assets/liabilities to each of the geographic location is not practicable. The geographic segments individually contributing 10 percent or more of the Companyâs revenues are given below:
Derivative financial instruments and hedge accounting
The Company is exposed to foreign currency risk from foreign currency borrowings and highly probable forecasted sales, primarily denominated in USD and EURO. The Company has a risk management policy which aims to hedge foreign currency and interest rate arising from its borrowings denominated in a currency other than the functional currency of the Company. The Company uses cross currency swap and interest rate swaps to hedge its exposure to foreign currency and interest rate risk. The Company designates certain derivatives as hedging instruments in respect of foreign currency risk and interest rate risk in cash flow hedges.
Hedge ineffectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Company uses dollar offset method using a hypothetical derivatives, dollar offset method is a quantitative method that consists of comparing the change in fair value or cash flows of the hedging instrument with the change in fair value or cash flows of the hedged item attributable to the hedged risk.
The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk and notional amount of the hedging instruments are identical to the hedged items.
Lease related disclosures
The Company has leases for land, solar plants, flat and office building. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability as a borrowings. Variable lease payments which do not depend on an index or a rate are excluded from the initial measurement of the lease liability and right of use assets. The Company classifies its right-of-use assets in a consistent manner to its property, plant and equipment.
Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublease the asset to another party, the right-of-use asset can only be used by the Company. Some leases contain an option to extend the lease for a further term. The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over office buildings and other premises the Company must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease.
ESOP Related Disclosure
a. Description of share based payment arrangements i. Share Options Schemes
The Hi-Tech Gears Limited Stock Incentives Plan, 2021
The Scheme has been adopted by the Board of Directors on 12 April 2021, read with the Special Resolution passed by the Members of the Company on 29 September 2021 and shall be deemed to come into force with effect from 29 September 2021 being the date of approval by the Members. The maximum number of options that can be granted to any eligible employee were reserved at 600,000 Equitys shares representing 3.20% of the outstanding number of shares issued by the company on the date when the plan is approved. For vesting, there shall be a lock in of minimum period of one year between Grant of options and its vesting. Vesting of Options will take place over period of four years in the manner as under:
- On completion of Year 3 from date of Grant: 50% of options granted
- On completion of Year 4 from date of Grant: 50% of options granted
- Employeeâs continuity in the organization
- No disciplinary proceeding pending against the Participants on the date of vesting
OTHER STATUTORY INFORMATION
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company do not have any transactions with companies struck off.
(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(viii) The Company has borrowings from banks and others on the basis of security of current assets. The quarterly returns or statements of current assets filed by the company with banks and others are in agreement with the books of accounts.
Other matters
(i) In the opinion of the Board of Directors, the current assets, loans and advances are having the value at which they are stated in the balance sheet, if realised in the ordinary course of business.
(ii) Claims received against shortage/damage of materials which are not of significant values are not being shown separately. The same are accounted for on receipt basis.
Mar 31, 2018
1. Nature of operations
The Hi Tech Gears Limited (âthe Companyâ) is an auto component manufacturer (a Tier 1 supplier). The Company is domiciled in India and its corporate office is situated at 14th Floor, Tower-B, Millennium Plaza, Sushant Lok-I, Sector-27, Gurgaon-122002, Haryana, India.
2. General information and compliance with Ind AS These financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified by Ministry of Corporate Affairs (âMCAâ) under section 133 of the Companies Act, 2013 (âActâ) read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions of the Act. The Company has uniformly applied the accounting policies for the periods presented.
The financial statements for the year ended 31 March 2018 are the first financial statements which the Company has prepared in accordance with Ind AS. For all periods up to and including the year ended 31 March 2017, the Company had prepared its financial statements in accordance with accounting standards notified under section 133 of the Act, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP), which have been adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS. For the purpose of comparatives, financial statements for the year ended 31 March 2017 and opening balance sheet as at 1 April 2016 are also prepared and presented as per Ind AS.
The financial statements for the year ended 31 March 2018 along with the comparative financial information were authorized and approved for issue by the Board of Directors on 21 May 2018. The revisions to the financial statements is permitted by the Board of Directors after obtaining necessary approvals or at the instance of regulatory authorities as per provisions of the Act.
3. Basis of preparation
The financial statements have been prepared on going concern basis in accordance with generally accepted accounting principles in India. Further, the financial statements have been prepared on a historical cost basis except for following items:
Items Measurement basis
Certain financial assets Fair value and liabilities
Net defined benefits Fair value of plan assets (assets)/liability less present value of defined benefits bligations.
4. Recent accounting pronouncement
In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting
Standards) (Amendments) Rules, 2018, notifying amendments to Ind AS 12, âIncome taxesâ, Ind AS 21, âThe effects of changes in foreign exchange rates and also introduced new revenue recognition standard Ind AS 115 âRevenue from contracts with customersâ. These amendments rules are applicable to the Company from 1 April 2018.
Ind AS 115 âRevenue from Contracts with Customersâ (Ind AS 115)
Ministry of Corporate Affairs (âMCAâ) has notified new standard for revenue recognition which overhauls the existing revenue recognition guidance and supersedes Ind AS 18 - Revenue and Ind AS 11 -Construction contracts. The new standard provides a control-based revenue recognition model and provides a five step application principle to be followed for revenue recognition:
1. Identification of the contracts with the customer
2. Identification of the performance obligations in the contract
3. Determination of the transaction price
4. Allocation of transaction price to the performance obligations in the contract (as identified in step ii)
5. Recognition of revenue when performance obligation is satisfied.
The management is yet to assess the impact of this new standard on the Companyâs financial statements.
Amendment to Ind AS 12
The amendment to Ind AS 12 requires the entities to consider restriction in tax laws in sources of taxable profit against which entity may make deductions on reversal of deductible temporary difference (may or may not have arisen from same source) and also consider probable future taxable profit. The Company is evaluating the requirements of the amendment and its impact on the financial statements.
Amendment to Ind AS 21
The amendment to Ind AS 21 requires the entities to consider exchange rate on the date of initial recognition of advance consideration (asset/liability), for recognising related expense/income on the settlement of said asset/liability. The Company is evaluating the requirements of the amendment and its impact on the financial statements.
*During previous year, the Company incorporated a Wholly Owned Subsidiary Company in Canada viz. 2545887 Ontario Inc. (â254â). â254â has in turn acquired the 100% shares of 2504584 Ontario Inc., Canada (â250â) and Teutech Industries Inc., Canada (âTeutechâ) effective from 01 March 2017. Both â250â and âTeutechâ have some existing Subsidiary Companies in Canada and USA respectively. Pursuant to the provisions of the Companies Act, 2013, all such Companies have become the step down subsidiary companies of the Company.
**Amount showing investment made in Neo- Tech Auto System, Inc., USA of $ 10,000, for which allotment has been made on 21 September 2017.
***During the year 750 Equity shares of State Bank of Bikaner and Jaipur has been converted into 2100 Equity shares of State bank of India.
iv Rights, preferences and restrictions attached to equity shares
The Company has one class of equity shares with paid up value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share on all resolutions submitted to shareholders. They have right to participate in the profits of the company, if declared by the Board as interim dividend and recommended by the Board and declared by the members as final dividend. They are also entitled to bonus/right issue, as declared by Company from time to time. They have right to receive annual report of the Company, beside other rights available under the Companies Act and Listing Regulations.
In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the Company, beside other rights available under the Companies Act.
The distribution will be in proportion to the number of equity shares held by the shareholders.
vi Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash, by way of bonus shares and shares bought back for the period of 5 years immediately preceding the balance sheet date
The Company has not issued any shares pursuant to contract(s) without payment being received in cash.
No bonus shares have been issued in preceding 5 years.
The Company has not undertaken any buy back of shares.
Note - 4*
Other equity
(i) Nature and purpose of other reserves General reserve
General reserve is created out of the accumulated profits of the Company as per the provisions of Companies Act. Retained earnings
All the profits made by the Company are transferred to retained earnings from statement of profit and loss.
Other comprehensive income
Other comprehensive income represents balance arising on account of changes in fair value of equity instruments carried at fair value through other comprehensive income and gain/(loss) booked on re-measurement of defined benefit plans.
*Refer Part B (Other equity) of standalone statement of changes in equity as at 31 March 2018.
Note - 5A
Financial instruments
(i) Fair values hierarchy
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three Levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1: Quoted prices (unadjusted) in active markets for financial instruments.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data rely as little as possible on entity specific estimates.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
(ii) Financial instruments by category
For amortised cost instruments, carrying value represents the best estimate of fair value.
âInvestment in subsidiary is measured at cost and hence are not required to be disclosed as per Ind AS 107 âFinancial Instruments Disclosuresâ. Hence, the same have been excluded from the above table..
(iii) Financial assets measured at fair value - recurring fair value measurements
The following table shows the levels within the hierarchy of financial assets measured at fair value on a recurring basis at 31 March 2018 and 31 March 2017 :
The management assessed that cash and cash equivalents, trade receivables, other receivables, trade payables and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
(I ) The fair values of the Companyâs interest-bearing borrowings, loans and receivables are determined by applying discounted cash flows (âDCFâ) method, using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 March 2018 was assessed to be insignificant.
Note - 5 B
Financial risk management
The Companyâs activities expose it to credit risk, liquidity risk and market risk. The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.
(A) Credit risk
Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Companyâs exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.
a) Credit risk management
i) Credit risk rating
The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.
A: Low B: Medium C: High
Life time expected credit loss is provided for trade receivables.
Based on business environment in which the Company operates, a default on a financial asset is considered when the counter party fails to make payments within the agreed time period as per contract. Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions.
Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.
(B) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.
Management monitors rolling forecasts of the Companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.
Maturities of financial liabilities
The tables below analyse the Companyâs financial liabilities into relevant maturity groupings based on their contractual maturities.
(C) Market risk
(i) Foreign exchange risk
The Group has international transactions and is exposed to foreign exchange risk arising from foreign currency transactions (imports and exports). Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Companyâs functional currency. The Company does not hedge its foreign exchange receivables/payables.
(ii) Derivative financial instrument
The Company uses derivative instruments as part of its management of exposure to fluctuations in foreign currency exchange rates. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes. The Company does not enter into complex derivative transactions to manage the risks. The derivative transactions are normally in the form of forward contracts and these are subject to the Company guidelines and policies.
The fair values of all derivatives are separately recorded in the balance sheet within current financial assets. Derivatives that are designated as hedges are classified as current depending on the maturity of the derivative. The use of derivatives can give rise to credit and market risk. The Company tries to control credit risk as far as possible by only entering into contracts with reputable banks and financial institutions. The use of derivative instruments is subject to limits, authorities and regular monitoring by appropriate levels of management. The limits, authorities and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of the underlying assets, liabilities or transactions, as derivatives are used only for risk management purposes.â
a) Fair value hedge
The fair value hedges relate to forward covers taken to hedge currency exposure risks.
The Company uses foreign exchange contracts from time to time to optimize currency risk exposure on its foreign currency transactions. Fair value changes on such forward contracts are recognized in profit or loss.
b) Non-qualifying/economic hedge
The Company enters into derivative contracts which are not designated as hedges for accounting purposes, but provide an economic hedge of a particular transaction risk or a risk component of a transaction. Fair value changes on such derivative instruments are recognized in profit or loss.
ii) Interest rate risk
The Companyâs fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
The Companyâs variable rate borrowing is subject to interest rate. Below is the overall exposure of the borrowing:
(iii) Price risk
The Companyâs exposure to price risk arises from investments held and classified as FVOCI/ FVTPL. To manage the price risk arising from investments, the Company diversifies its portfolio of assets.
Sensitivity analysis
Profit or loss and equity is sensitive to higher/lower prices of instruments on the Companyâs profit for the year -
Note - 6
Related party disclosures
List of related parties and relationships
i) Parties where control exists:
Subsidiary Company:
(a) 2545887 Ontario Inc., Canada Step down subsidiaries:
( i ) Teutech Industries Inc., Canada
(ii) Teutech Holding Corporation, USA
(iii) Teutech LLC, USA
(iv) Teutech Leasing Corporation, USA
(v) 2504584 Ontario Inc., Canada
(vi) 2323532 Ontario Inc., Canada
(b) Neo Tech Auto Systems Inc., USA
Key Management Personnel (KMP) and their relatives
( i ) Mr. Deep Kapuria (Executive Chairman and Whole Time Director)
(ii) Mr. Pranav Kapuria (Managing Director)
Director)
(iii) Mr. Anuj Kapuria (Whole Time Director)
(iv) Mr. Sandeep Dinodia (Independent Director)
(v) Mr. Anil Kumar Khanna (Independent Director)
(vi) Mr. Krishna Chandra Verma (Independent Director)
(vii) Ms. Malini Sud (Independent Director)
(viii) Mr. Prosad Dasgupta (Independent Director)
(ix) Mr. Vinit Taneja (Independent Director)
(x) Mr. Ramesh Chandra Jain (Non Executive Director)
(xi) Mr. Bidadi Anjani Kumar (Non Executive Director)
(xii) Mr. Vijay Mathur (Chief Financial Officer)
(xiii) Mr. Shital Kumar Khatri (Company Secretary)
Enterprises over which key management personnel and relatives of such personnel exercise significant influence with whom transactions has been undertaken:-
( i ) Aquarian Fibrecement Private Limited
(ii) Vulcan Electro Controls Limited
(iii) The Hi-Tech Robotic Systemz Limited
(iv) The Hi-Tech Engineering Systems Private Limited
Note - 38
Capital management
The Companyâs objectives when managing capital are to:
- To ensure Companyâs ability to continue as a going concern, and
- To provide adequate return to shareholders
Management assesses the capital requirements in order to maintain an efficient overall financing structure. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. The Company manages its capital requirements by overseeing the following ratios -
*Net debt = non-current borrowings current borrowings current maturities of non-current borrowings interest accrued -cash and cash equivalents
Note - 7
Contingent liabilities and commitments (to the extent not provided for)
A Contingent liabilities
1) Details of bank guarantees are as under:-
3. There are five legal cases filed by past employees against the Company for re-instatement/settlement of their dues/remuneration related matters. Out of the aforesaid five cases, four cases are pending at various stages at Camp Court, Bhiwadi, Rajasthan and one case is pending at District Court, Gurgaon, Haryana. The financial impact of these cases, if any, is not identifiable and hence the same has not been provided in the financial statements of the Company.
B Commitments (net of advance):
Estimated amount of contracts remaining to be executed on capital accounts Rs. 1019.21 lakhs after adjusting advances (previous years: 31 March 2017: Rs. 601.78 lakhs and 1 April 2016 Rs. 241.66 lakhs).
Note - 8
Dividends
A The Board of directors at their meeting held on 21 May 2018 has proposed a final dividend of Rs. 2 per share for financial year 31 March 2018 (previous year: Rs. 1.50 per share) subject to approval of shareholders in annual general meeting. The above is in addition to an interim dividend of Rs. 1.5 per share for financial year 31 March 2018 (previous year Rs. 1.25 per share) declared and already paid.
Note - 9
Leases disclosure as lessee Operating leases
The Company has leased facilities under operating leases. Rentals are expensed with reference to lease terms and other considerations. The future lease payments in respect of these leases are as at under:
Finance leases
The Company had taken solar power plant on finance lease. The Companyâs obligations under finance leases are secured by the lessorâs title to the leased assets. Future minimum lease payments under finance lease are, as follows:
Note - 10
Segment information
In line with the provisions of Ind AS 108 - operating segments, the operations of the Company fall primarily under manufacturing of gears and transmissions , which is considered to be the only reportable segment by the management.
Since all the manufacturing activity is done at India, therefore segregation of expenses/result/assets/liabilities to each of the geographic location is not practicable. The geographic segments individually contributing 10 percent or more of the Companyâs revenues are given below:
Mortality rates inclusive of provision for disability -100% of IALM (2006 - 08)
*This provision reflects the amount that could be payable on account of foreign exchange adjustment on export.
Note - 11
Research and development expenditure includes employee benefits expenses amounting to Rs. 151.18 lakhs (31 March 2017: Rs. 136.51 lakhs), material consumed amounting to Rs. 9.85 Lakhs (31 March 2017: Rs. 7.87 lakhs) and stores and spares consumed of Rs. 60.24 lakhs (31 March 2017: Rs. 138.23 lakhs).
Note - 12 Other matters
(i ) In the opinion of the Board of Directors, the current assets, loans and advances are having the value at which they are stated in the balance sheet, if realised in the ordinary course of business.
(ii) Claims received against shortage/damage of materials which are not of significant values are not being shown separately. The same are accounted for on receipt basis.
B First time adoption of Ind AS
These are the Companyâs first financial statements prepared in accordance with Ind AS.
The accounting policies have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the Companyâs date of transition). An explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes.
C Ind AS optional exemptions
1 Deemed cost for property, plant and equipment and intangible assets
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets at their previous GAAP carrying value.
2 Designation of previously recognised financial instruments
Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS. The Company has elected to apply this exemption for its investment in equity investments.
3 Long term foreign currency monetary items
Ind AS 101 permits A first-time adopter may continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP.
D Ind AS mandatory exceptions 1 Estimates
An entityâs estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:
a) Investment in equity instruments carried at FVTPL or FVOCI
b) Impairment of financial assets based on expected credit loss model.
2 Classification and measurement of financial assets and liabilities
The classification and measurement of financial assets will be made considering whether the conditions as per Ind AS 109 are met based on facts and circumstances existing at the date of transition.
Financial assets can be measured using effective interest method by assessing its contractual cash flow characteristics only on the basis of facts and circumstances existing at the date of transition and if it is impracticable to assess elements of modified time value of money i.e. the use of effective interest method, fair value of financial asset at the date of transition shall be the new carrying amount of that asset. The measurement exemption applies for financial liabilities as well. Applying a requirement is impracticable when the entity cannot apply it after making every reasonable effort to do so. It is impracticable to apply the changes retrospectively if:
a) The effects of the retrospective application or retrospective restatement are not determinable;
b) The retrospective application or restatement requires assumptions about what managementâs intent would have been in that period;
The retrospective application or retrospective restatement requires significant estimates of amounts and it is impossible to distinguish objectively information about those estimates that existed at that time.
3 De-recognition of financial assets and liabilities
Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the derecognition requirements in Ind AS 109 retrospectively from a date of the entityâs choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.
The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.
E Other reconciliations between previous GAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.
Notes to first time adoption
1 Borrowings
Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method. Under previous GAAP, these transaction costs were shown as prepaid expense under non-current/ current assets as and when incurred. Accordingly, borrowings have been reduced with a corresponding adjustment to prepaid expense head in non-current/ current asset respectively.
2 Fair valuation of investment
Under previous GAAP, investments are shown at cost. Under Ind AS, such instruments are too be evaluated under Ind AS 109 which requires the Company to account for such instruments either at amortised cost or fair value. Ind AS requires the Company to record the fair value gains or (losses) on FVOCI equity instruments in case of fair value instrument. Accordingly as at 31 March 2017 âInvestmentsâ has been increased with a corresponding adjustment to other comprehensive income.
3 Impairment allowance on trade receivables using provision matrix approach
Under previous GAAP, provision for trade receivables is recognised on specific identification method based on management assessment of recoverability of trade receivables. As per Ind AS 109, the Company is required to apply expected credit loss model (provision matrix approach) for recognising the allowance for doubtful receivables.
4 Prior period errors
Under Ind AS, prior period errors need to be restated retrospectively and such restatement is made in the earliest comparative period presented and the amount of the adjustment is made in the opening balance of retained earnings of earliest year presented. As a result of this change, the profit for the year ended 31 March 2017 increased. There is no impact on the total equity as at 31 March 2017.
5 Government assistance
Under Ind AS, government grants shall be recognised in statement of profit and loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate.
6 Proposed dividend
Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend has been reversed with corresponding adjustment to retained earnings. As a result of this change, there is no impact on the profit for the year ended 31 March 2017.
7 Remeasurement of post-employment benefit obligations
Under Ind AS, actuarial gains and losses on defined benefit plan liabilities and plan assets are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, such measurements were charged to profit or loss for the respective year. As a result of this change, the profit for the year ended 31 March 2017 decreased. There is no impact on the total equity as at 31 March 2017.
8 Forward contracts
Under Ind AS 109, derivatives are fair valued and all fair value gains/losses recognised in statement of profit or loss. Alternatively, hedge accounting allows portion of the gain or loss on the hedging instrument that is determined to be an effective hedge to be recognised in other comprehensive income any remaining gain or loss on the hedging instrument that represents hedge ineffectiveness is recognised in statement of profit or loss. Management has decided not to opt hedge accounting and fair value gains/(losses) are recognised in statement of profit or loss. As a result of this change, the profit for the year ended 31 March 2017 increased. There is no impact on the total equity as at 31 March 2017.
9 Tax impact on adjustments
Retained earnings and statement of profit and loss has been adjusted consequent to the Ind AS transition adjustments with corresponding impact to deferred tax, wherever applicable.
10 Retained earnings
Retained earnings as at 1 April 2016 has been adjusted consequent to the above Ind AS transition adjustments.
11 Excise duty
Under Previous GAAP, revenue from sale of goods was presented net of excise duty whereas under Ind AS the revenue from sale of goods is presented inclusive of excise duty. The excise duty is presented on the face of the Statement of profit and loss as part of expenses.
12 Other comprehensive income
Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as âother comprehensive incomeâ includes re-measurements of defined benefit plans and fair value gains or (losses) on FVOCI equity instruments and their corresponding income tax effects. The concept of other comprehensive income did not exist under previous GAAP.
Mar 31, 2016
1 Basis of Preparation of Financial Statements
The Financial Statements are prepared under the historical cost convention on accrual basis and 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.
Accounting Policies not specifically referred to otherwise are consistent and in accordance with generally accepted accounting principles.
2 Use of Estimates
In preparing Company''s financial statements in conformity with accounting principles generally accepted in India, the Management is required to make estimates & assumptions that affect the reported amount of Assets & Liabilities and the disclosure of Contingent Liabilities at the date of the Financial Statements and the reported amount of revenues & expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized in the period the same is determined.
3 Inventories
The basis of valuation for various categories of inventories is as follows:-
Stores, Spares and : At cost or Net realizable
Toose Toofs and value, whichever is tower
Raw Materials (FIFO)
Work in progress : At material cost plus conversion cost on the basis of absorption costing or Net realizable value, whichever is tower
Finished Goods : At material cost plus conversion cost on the basis of absorption costing or Net realizable value, whichever is tower (Inclusive of excise duty payable)
Scrap : At realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated cost necessary to make the sale.
4 Provisions, Contingent Liabilities and Contingent Assets
The Company makes a provision when there is a present obligation as a result of a past event where the outflow of economic resources is probable & a reliable estimate of the amount of obligation can be made.
The disclosure is made for possible or present obligation that may require outflow of resources as contingent liability in the financial statements. Depending on the facts of each case and after due evaluation of relevant legal aspects, claims against the Company not acknowledged as debts are disclosed as contingent liabilities. In respect of the statutory matters, contingent liabilities are disclosed only for those demand(s) that are contested by the Company.
Contingent assets are neither recognized nor disclosed in the financial statements.
5 Revenue Recognition
The revenue from Sale of Goods is recognized on transfer of all significant risk & rewards of ownership to the buyer. Sale value is inclusive of excise duty. Price revisions of goods sold are accounted for at the time of billing except in the case where reasonable certainty has been measured up to the date of Balance Sheet.
Export Sale is accounted for at exchange rate notified by Central Govt. under Custom Law. Bills outstanding on the Balance Sheet date are reinstated with the exchange rate on that date and the difference on this account is booked in the Profit & Toss Account.
Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable. Dividend income is recognized, when right to receive is established.
Export incentives are accounted for on export of goods if the entitlements can be estimated with reasonable accuracy and conditions precedent to claim is fulfilled.
Revenue from services is recognized in accordance with specific terms of contract on performance.
6 Fixed Assets and Depreciation
All Tangible & Intangible Assets are stated at cost(net of taxes/duties which are eligible for credit) less accumulated depreciation and impairment of Toss, if any. Depreciation on Buildings and Plant and Equipment is charged on pro-rata basis on Straight Line Method based on the life assigned to each asset in accordance with Schedule II of Companies Act, 2013. Intangible assets are amortized over their respective individual estimated useful life on written down value basis commencing from the date, the asset is available to the company for its use. Depreciation on rest of the fixed assets has been provided on Written Down Value basis based on the life assigned to each asset in accordance with Schedule II of Companies Act, 2013.
7 Employee Benefits
(i) Short term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short term employee benefits to be paid in exchange for employee services are recognized as an expense as the related service is rendered by employeesâ.
(ii) Defined Contribution Plan
Payments to defined contribution retirement benefit schemes (such as Provident Fund, Employeeâs State Insurance Corporation) are charged to the statement of profit and toss of the year in which contribution to such schemes becomes due.
(iii) Defined Benefit Plan
For defined benefit schemes, the cost of providing benefits is determined using Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date. Actuarial gain & tosses are recognized in full in the statement of profit and toss for the period in which they occur.
The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligations as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets.
The Company makes annual contribution to the Employeeâs Group Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employeesâ. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of 6 months. Vesting occurs upon completion of 5 years of continued service.
The Company provides the liability for the leave encashment benefit of the employees at each balance sheet date on the basis of actuarial valuation, the amount of provision & paid during the year is charged to the statement of profit and toss.
8 Foreign Currency Transactions
(i) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction.
(ii) Foreign currency monetary assets and liabilities such as cash, receivables, payables, etc. are translated at year end exchange rates.
(iii) Exchange differences arising on settlement of transactions are recognized as income or expense in the year in which they arise, but pursuant to the notification of the Companies (Accounting Standards) Amended Rules 2009 issued on 31st March 2009, exchange differences relating to tong term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable capital asset are added to / deducted from the cost of the asset w.e.f.1st April 2007 and depreciated over the balance life of the asset.
(iv) Derivative Instruments and Hedge accounting:
The Company uses foreign exchange forward contracts and options to hedge its exposure to movements in foreign exchange rates. These foreign exchange forward contracts and options are not used for trading or speculation purposes.
For unexpired forward contracts or options that are designated as effective cash flow hedges the gain or loss from the effective portion of the hedge is recorded and reported directly in the shareholders'' fund ( under the head âHedging Reserve) and will be transferred to Profit and Loss account upon the occurrence of the events when the contracts get transacted.
The Company recognizes gains or losses from forward contracts and options that are not designated as effective cash flow hedges for accounting purposes in the profit and loss account in the period in which they occur.
9 Investments
Tong term investments are carried at cost. However provision for diminution, if any, is made to recognize a decline, other than temporary, in the value of investments.
Cost of an investment includes acquisition charges such as brokerage, fees and duties.
10 Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized 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 as expense to the statement of profit and toss in the period for which they relate to.
11 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or toss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or toss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
12 Provision for Current & Deferred Taxes
Tax expenses comprise current and deferred taxes. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws. Deferred income taxes reflects the impact of current period timing difference between taxable and accounting income for the period and reversal of timing differences of earlier years. Deferred taxes is measured based on the tax rates and the tax laws enacted or substantively enacted as at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty and sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are recognized on carry forward of unabsorbed depreciation and tax tosses only if there is virtual certainty that such deferred tax assets can be realized against future taxable profit. Excess/short provisions and interest thereon are recognized only on completion of assessment or where adjustments made by the Assessing Officer are disputed, on receiving the âOrder Giving Effect âto the tax determined by the CIT (Appeals) and thereafter on final settlement of further disputes.
13 Research and Development Costs
Revenue expenditure incurred on research and development has been charged to the statement of profit and toss for the year in which it is incurred. Capital expenditure is included in respective heads under fixed assets.
14 Impairment of Assets
At each Balance Sheet date, the Company reviews 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 of the asset exceeds its recoverable amount, an impairment toss is recognized in the Profit & Toss Account to the extent the carrying amount exceeds the recoverable amount.
15 Leases
Leases where the lesser effectively retains substantially all the risk and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and toss on a straight line basis over the lease term.
16 Cash and Cash Equivalents
Cash and Cash Equivalents for the purpose of cash ftow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less.
17 Cash Flow Statement
Cash flow statements are reported using the indirect method, whereby profit/ (loss) before extra-ordinary items/exceptional items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipt or payments. The cash flows from operating, investing and financing activities of the Group are segregated based on available information including taxes paid relating to these activities.
18 Prior period and extra ordinary items and changes in accounting policies having material impact on the financial affairs of the Company are disclosed appropriately.
19 Material events occurring after the Balance Sheet date are taken into cognizance and disclosed appropriately.
Company opted for the option to follow principles of notification of the Companies (Accounting Standards) Amendment Rules 2009 issued on 31st March 2009. Thereby exchange differences relating to tong-term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable capital asset are added to/ deducted from the cost of the asset under the head âAddition / Deletionâ of Note 11 and depreciated over the balance life of the asset.
Accordingly, Rs.6,771,412/-(Previous Year Rs.4,531,803/-) on account of foreign exchange fluctuation, have been included to the cost of fixed assets and profit for the year is higher by Rs.6,771,412/-(Previous Year profit for the year was higher by Rs.4,531,803/-)
NOTE â20'' - DISCTOSURE PURSUANT TO ACCOUNTING STANDARD-15 ON âEMPTOYEE BENEFITSâ
The following tables set out the funded and unfunded status of the gratuity plan and leave encashment amounts recognized in the Company''s financial statements as at 31stMarch, 2016:
The estimates of future salary increases, considered in the actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
NOTE â21â - SEGMENT INFORMATION (AS-17)
The Company is primarily engaged in the business of Gears and transmission components. Inherent nature of both the activities is governed by the same set of risk and returns; these have been grouped as a single segment in the above disclosures. Hi-Tech (E-Soft) is a division of the Company engaged in the business of engineering software solutions. But, its total revenue does not exceed 10% of total revenue. Hence, Hi-Tech (E-Soft) cannot be a primary segment for disclosure under AS-17 and therefore, Geographical segment can be considered as the primary segment. Geographical revenues are allocated based on the location of the customers. Geographic segments of the Company are America, India and Others.
Since all the manufacturing activity is done at India, therefore segregation of expenses/result/assets/liabilities to each of the geographic location is not practicable. The geographic segments individually contributing 10 percent or more of the Company''s revenues are given below:
NOTE â22â - RELATED PARTY DISCTOSURES AS REQUIRED BY ACCOUNTING STANDARD -18
(a) Related parties where control exists -NIL
(b) Name of the related parties and their relationship
Description of relationship Names of related parties
(i) Individuals controlling voting power/exercising significant Mr. Deep Kapuria influence and their relatives: Mr. Pranav Kapuria
Mr. Anuj Kapuria
(ii) Key management personnel and their relatives: Included in â(i)'' above
(iii) Enterprises over which anyone in (i) and (ii) exercises M/s Aquarian Fibrecement Pvt. Ltd. significant influence: M/s. Vulcan Electro Controls Ltd.
The Hi-Tech Robotic Systemz Ltd.
The Hi-Tech Engineering System Pvt. Ltd.
Note: Related parties have been identified by the Management.
Note:- Figures in brackets relates to the previous year
(4) There are five legal cases filed by past employees against the Company for re-instatement/settlement of their dues/ remuneration related matters. Out of the aforesaid five cases, four cases are pending at various stages at Camp Court, Bhiwadi, Rajasthan and one case is pending at District Court, Gurgaon, Haryana. The financial impact of these cases, if any, is not identifiable and hence the same has not been provided in the financial statements of the Company.
NOTE â23â - CORPORATE SOCIAL RESPONSIBILITY (CSR) EXPENDITURE
The Company was required to spend Rs. 47,86,711/- for the current financial year on CSR activities, i.e. 2% of its average net profits of the last three previous financial years, according to the provision of Section 135 of Companies Act, 2013 and rules made there under.
(a) Gross amount required to be spent during the Year Rs. 47,86,711/-
NOTE â24â
Enactment of the payment of Bonus (amendment) Act 2015 having come into force effective 1st day of April 2014, the company has made additional provision for Bonus as follows:
(i) A sum of Rs 18,163,746/- pertaining to the period from 1st April, 2015 to 31st March, 2016 is included in Employee benefit expenses.
(ii) (ii) A sum of Rs 6,655,287/- pertaining to the period from 1st April, 2014 to 31st March, 2015 is disclosed as an Exceptional item.
NOTE â25â
In the opinion of the Board of Directors, the Current Assets, Toans and Advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.
NOTE â26â
Claims received against shortage / damage of materials which are not of significant values are not being shown separately. The same are accounted for on receipt basis.
NOTE â27â
The figures have been rounded off to the nearest rupee.
NOTE â28â - PREVIOUS YEAR FIGURES
Previous year figures have been regrouped/ reclassified wherever necessary to correspond with the current year classifications/ disclosures.
Mar 31, 2015
NOTE 1 Â FUNDED STATUS OF GRATUITY PLAN & LEAVE ENCASHMENT
The following tables set out the funded and unfunded status of the
gratuity plan and leave encashment amounts recognized in the Company's
financial statements as at 31st March, 2015:
NOTE 2. Â CONTINGENT LIABILITIES & COMMITMENTS (TO THE EXTENT NOT
PROVIDED FOR)
A. Commitments:
Estimated amount of contracts remaining to be executed on capital
accounts Rs.62,206,931/- after adjusting advances (Previous year Rs.
924,080/-)
B. Contingent Liabilities:
1) Haryana State Industrial & Infrastructure Development Corporation
Ltd ('HSIIDC') had demanded an enhanced amount from the industrial plot
owners in Manesar, Haryana, based on the Hon'ble Supreme Court's order.
The Company, being a plot owner, received a demand notice of Rs.
3,552/- per sq mtr on it total plot of 12150 mtrs., totaling to
Rs.4,31,56,800/-, including interest. Out of above, Rs.1,20,76,614/-
was paid in previous years, at the time of registration of conveyance
deed. The calculation method of demand raised by HSIIDC was contested
by the Company through the Manesar Industries Welfare Association at
the Hon'ble High Court at Chandigarh. The Court, while staying the
calculation made by HSIIDC, has asked the plot owners to deposit five
installments, as per new schedule, till further orders. The company
paid Rs.3,20,70,471/- up to 2013-14 (including payments at the time of
registration, as aforesaid) and Rs. 67,50,000/- in 2014-15. The Hon'ble
court has pleased to reduce the demand to Rs. 3,313/- per sq mtrs.in
its order dt. Nov 11, 2014, totaling to Rs. 4,02,52,950/- together with
interest. The Company has not received the final demand notice from
HSIIDC after adjustment for the balance enhanced amount payable. Any
additional compensation, if payable, will have the effect of enhancing
the asset value of the land.
(5) There are four separate legal cases filed by past employees against
the Company for re-instatement/settlement of their remuneration
matters, which are currently running in the Camp Court, Bhiwadi,
Rajasthan. The financial impact of these cases, if any, is not
identifiable and hence the same has not been provided in the financial
statements.
(6) The Company has disputed entry tax liability being levied by the
Rajasthan Government from the financial year 2007-08 onwards. The
Hon'ble Supreme Court of India vide order dated 13.03.2015, has granted
stay to the Company on this matter and has given direction to deposit
50% of the entry tax arrears, remaining 50% balance in the form of bank
guarantee and full payment of future payments, subject to the outcome
of the case, which is still pending before the Hon'ble Supreme Court of
India. Accordingly, the company has deposited a sum of Rs. 64,36,111/-
to the credit of the Rajasthan State Government up to the current year
ended 31.03.2015. The Company has made provision in its books of
accounts for the balance also.
NOTE '3 Â LEASEHOLD PROPERTY
The company owns 9 flats on leasehold basis allotted by Ashiana Group
in Bhiwadi. Flats are not registered in name of company in view of
applicability of local laws.
NOTE 4 Â CORPORATE SOCIAL RESPONSIBILITY (CSR) EXPENDITURE
The Company was required to spend Rs.7,214,067/- for the current
financial year on CSR activities, i.e. 2% of its average net profits of
the last three previous financial years, according to the provision of
Section 135 of Companies Act, 2013 and rules made hereunder.
NOTE 5
In the opinion of the Board of Directors, the Current Assets, Loans and
Advances are having the value at which they are stated in the Balance
Sheet, if realized in the ordinary course of business.
NOTE 6
Claims received against shortage / damage of materials which are not of
significant values are not being shown separately. The same are
accounted for on receipt basis.
NOTE 7
The figures have been rounded off to the nearest rupee.
NOTE 8 Â PREVIOUS YEAR FIGURES
Previous year figures have been regrouped/ reclassified wherever found
necessary to correspond with the current year classification/
disclosure.
Mar 31, 2014
NOTE ''1'' - SEGMENT INFORMATION (AS-17)
The Company is primarily engaged in the business of Gears and
transmission components. Inherent nature of both the activities is
governed by the same set of risk and returns; these have been grouped
as a single segment in the above disclosures. Hi-Tech (E- Soft) is a
division of the Company engaged in the business of engineering software
solutions. But, its total revenue does not exceed 10% of total revenue.
Hence, Hi-Tech (E-Soft) cannot be a primarily segment for disclosure
under AS-17 and Geographical segment can be considered as the primary
segment. Geographical revenues are allocated based on the location of
the customer. Geographic segments of the Company are America, India
and Others.
NOTE ''2'' - CONTINGENT LIABILITIES & PROVISIONS
A. Contingent Liabilities not provided for:
1) Estimated amount of contracts remaining to be executed on capital
accounts Rs.924,080/- after adjusting advances (Previous year Rs.
30,334,709)
2) Haryana State Industrial & Infrastructure Development Corporation
Ltd (''HSIIDC'') had demanded an enhanced amount from the industrial plot
owners in Manesar, Haryana, based on the Hon''ble Supreme Court''s order.
The Company, being a plot owner, received a demand notice of
Rs.4,31,56,800/-, including interest. Out of above, Rs.1,20,76,614/-
was paid in previous years, at the time of registration of conveyance
deed. The calculation method of demand raised by HSIIDC is being
contested by the Company through the Manesar Industries Welfare
Association at the Hon''ble High Court at Chandigarh. The Court, while
staying the calculation made by HSIIDC, has asked the plot owners to
deposit three installments, as per new schedule, till further orders.
Accordingly, the company deposited the first installment of
Rs.62,50,000/- in 2012-13. The second and third installments of
Rs.70,32,537/- & Rs.67,11,320/- were paid as per court schedule in
2013-14. In view of above, till March 31, 2014, the company has paid
Rs.3,20,70,471/- and balance demand of Rs. 1,10,86,329/- is considered
as contingent liability, which is subjudice. Any additional
compensation, if payable, will have the effect of enhancing the asset
value of the land.
NOTE ''3'' - FINANCIAL INSTRUMENTS: RECOGNITION & MEASUREMENT
Company is following the principles of Accounting Standard (''AS'') 30
"Financial Instruments: Recognition and Measurement" in respect of its
derivative financial instruments.
Derivative financial instruments, which qualify for cash flow hedge
accounting and where the Company has met all the conditions of
effective Cash Flow hedge accounting, are fair valued at March 31,
2014. Consequently Hedging Reserve/Fair Valuation Loss on Derivative
balances is decreased to Rs NIL as on 31.03.2014 (Previous Year Rs
NIL).
Details on derivatives instruments and un-hedged foreign currency
exposures
I. The following derivative positions are open as at 31 March, 2014.
These transactions have been undertaken to act as economic hedges for
the Company''s exposures to various risks in foreign exchange markets
and may / may not qualify or be designated as hedging instruments.
(a) Forward exchange contracts and options [being derivative
instruments], which are not intended for trading or speculative
purposes but for hedge purposes to establish the amount of reporting
currency required or available at the settlement date of certain
payables and receivables.
(i) Outstanding forward exchange contracts entered into by the Company
as on 31 March, 2014: NIL (Previous Year Nil)
(ii) Outstanding option contracts entered into by the Company as on 31
March, 2014: NIL
NOTE ''4''
In the opinion of the Board of Directors, the Current Assets, Loans and
Advances are having the value at which they are stated in the Balance
Sheet, if realized in the ordinary course of business.
NOTE ''5''
Claims received against shortage / damage of materials which are not of
significant values are not being shown separately. The same are
accounted for on receipt basis.
NOTE ''6''
The figures have been rounded off to the nearest rupee.
NOTE ''7'' - PREVIOUS YEAR FIGURES
Previous year figures have been regrouped and rearranged wherever found
necessary.
Mar 31, 2013
NOTE ''1'' Â SEGMENT INFORMATION (AS-17)
The Company is primarily engaged in the business of Gears and
transmission components. Inherent nature of both the activities is
governed by the same set of risk and returns; these have been grouped
as a single segment in the above disclosures. Hi-Tech (E-Soft) is a
division of the Company engaged in the business of engineering software
solutions. But, its total revenue does not exceed 10% of total revenue.
Hence Hi-Tech (E-Soft) cannot be a primarily segment for discloser
under AS-17 and Geographical segment can be considered as the primary
segment. Geographical revenues are allocated based on the location of
the customer. Geographic segments of the Company are Americas, Europe,
India and Others.
Since all the manufacturing activity is done at India, therefore
segregation of expenses/result/assets/liabilities to each of the
geographic location is not practicable. The geographic segments
individually contributing 10 percent or more of the Company''s revenues
are given below:
NOTE ''2'' Â RELATED PARTY DISCLOSURES (AS-18)
(a) Enterprise in which company has control -NIL
(b) Key Management Personnel
1 Sh. Deep Kapuria Executive Chairman
2 Sh. Pranav Kapuria Managing Director
3 Sh. Anuj Kapuria Whole Time Director
(c) Details of related parties:
NOTE ''3'' Â CONTINGENT LIABILITIES & PROVISIONS
A. Contingent Liabilities not provided for:
1) Estimated amount of contracts remaining to be executed on capital
accounts Rs.30,334,709 after adjusting advances (Previous year Rs.
23,232,458)
2) Haryana State Industrial & Infrastructure Development Corporation
Ltd (''HSIIDC'') has demanded an enhanced amount from the industrial plot
owners in Manesar, Haryana, based on the Hon''ble Supreme Court''s order.
The Company received a demand notice of Rs. 4,31,56,800/-, including
interest. Out of above, Rs. 1,20,76,614/- was paid in previous year.
The calculation method of demand raised by HSIIDC is being contested by
the Company through the Manesar Industries Welfare Association in the
Hon''ble High Court at Chandigarh. The Court, while staying the
calculation made by HSIIDC, has asked the plot owners to deposit two
installments, one in March, 2013 and second in June 2013, till further
orders. Accordingly, the company has deposited the first installment of
Rs. 62,50,000/- during the year after due adjustments. The second
installment will be paid separately in financial year 2013 - 14. Any
additional compensation, if payable, will have the effect of enhancing
the asset value of the land. In view of above, till March 31, 2013, the
company has paid Rs. 1,83,26,614/- and balance demand of Rs.
2,48,30,186/- is considered as contingent liability, which is
subjudice, as explained above.
NOTE ''4'' Â FINANCIAL INSTRUMENTS: RECOGNITION & MEASUREMENT:
Company is following the principles of Accounting Standard (''AS'') 30
"Financial Instruments: Recognition and Measurement" in respect of its
derivative financial instruments.
Derivative financial instruments, which qualify for cash flow hedge
accounting and where the Company has met all the conditions of
effective Cash Flow hedge accounting, are fair valued at March 31,
2013. Consequently Hedging Reserve/Fair Valuation Loss on Derivative
balances is decreased to Rs NIL as on 31.03.2013(Previous Year Rs
1,837,837).
Details on derivatives instruments and un-hedged foreign currency
exposures
I. The following derivative positions are open as at 31 March, 2013.
These transactions have been undertaken to act as economic hedges for
the Company''s exposures to various risks in foreign exchange markets
and may / may not qualify or be designated as hedging instruments.
(a) Forward exchange contracts and options [being derivative
instruments], which are not intended for trading or speculative
purposes but for hedge purposes to establish the amount of reporting
currency required or available at the settlement date of certain
payables and receivables.
(i) Outstanding forward exchange contracts entered into by the Company
as on 31 March, 2013 : NIL (Previous Year Nil)
NOTE ''5''
In the opinion of the Board of Directors, the Current Assets, Loans and
Advances are having the value at which they are stated in the Balance
Sheet, if realized in the ordinary course of business.
NOTE ''6''
Claims received against shortage / damage of materials which are not of
significant values are not being shown separately. The same are
accounted for on receipt basis.
NOTE ''7''
The figures have been rounded off to the nearest rupee.
NOTE ''8'' Â PREVIOUS YEAR FIGURES:
Previous year figures have been regrouped and rearranged wherever found
necessary.
NOTE ''9'' Â PRIOR PERIOD EXPENSES:
Other Expenses includes Prior Period Expenses of Rs. 255,841 (Refer
Note:- 24), details of which are as under:-
Mar 31, 2012
NOTE '1' - CONTINGENT LIABILITIES & PROVISIONS
A. Contingent Liabilities not provided for:
1) Estimated amount of contracts remaining to be executed on capital
accounts Rs. 23,232,458 after adjusting advances (Previous year Rs.
106,830,418)
2) Bank Guarantees issued in favour of Asst./Dy. Commissioners of
Customs for Export Obligation isRs. 5,654,224 (Previous year Rs.
5,554,000)
NOTE '2'- FINANCIAL INSTRUMENTS: RECOGNITION & MEASUREMENT:
Company is following the principles of Accounting Standard ('AS') 30
"Financial Instruments: Recognition and Measurement" in respect of its
derivative financial instruments.
Derivative financial instruments, which qualify for cash flow hedge
accounting and where the Company has met all the conditions of
effective Cash Flow hedge accounting, are fairvalued at March 31,2012
Consequently Hedging Reserve/ Fair Valuation Loss on Derivative
balances is increased to Rs 1,837,837.(Previous Year Rs 1,444,208)
Details on derivatives instruments and un-hedged foreign currency
exposures
I. The following derivative positions are open as at 31 March, 2012.
These transactions have been undertaken to act as economic hedges for
the Company's exposures to various risks in foreign exchange markets
and may / may not qualify or be designated as hedging instruments.
(a) Forward exchange contracts and options [being derivative
instruments], which are not intended for trading or speculative
purposes but for hedge purposes to establish the amount of reporting
currency required or available at the settlement date of certain
payables and receivables.
(i) Outstanding forward exchange contracts entered into bythe Company
as on 31 March, 2012 : NIL
NOTE '3'- LEASEHOLD PROPERTY:
The company owns 9 flats on leasehold basis allotted by Ashiana Group
in Bhiwadi. Flats are not registered in name of company in view of
applicability of local laws.
NOTE '4'
In the opinion of the Board of Directors, the Current Assets, Loans and
Advances are having the value at which they are stated in the Balance
Sheet, if realized in the ordinary course of business.
NOTE '5'
Claims received against shortage/damage of materials which are not of
significant values are not being shown separately. The same are
accounted for on receipt basis.
NOTE '6'
The figures have been rounded off to the nearest rupee.
NOTE '7' - PREVIOUS YEAR FIGURES:
During the year 31 March 2012 the revised Schedule VI notified under
the Company Act 1956, has become applicable to the Company. The Company
has reclassified previous year figures to conform to this year's
classification. The Revised Schedule VI does not require presentation
of a reconciliation explaining the impact of the reclassification of
the previous year figures in the financial statements.
Mar 31, 2011
1. Contingent Liabilities
Depending on the facts of each case and after due evaluation of
relevant legal aspects, claims against the Company not acknowledged as
debts are disclosed as contingent liabilities. In respect of the
statutory matters, contingent liabilities are disclosed only for those
demand(s) that are contested by the Company.
Contingent Liabilities not provided for :
A. Estimated amount of contracts remaining to be executed on capital
accounts Rs. 106,830,418 after adjusting advances (Previous year Rs.
117,700,000)
B. Bank Guarantees issued in favour of Asst./ Dy. Commissioners of
Customs, Mumbai & New Delhi for Export Obligation is Rs. 5,554,000
(Previous year Rs. 12,132,980)
Opening Released during Year Fresh Guarantees Closing
during the Year
Rs. 12,131,980 Rs. 6,578,980 Nil Rs.5,554,000
C. Disputed statutory demands in appeals before Rajasthan High Court:
Rajasthan Tax on Entry of Goods into Local Area Act 1999 ,
Rs1,716,840/- & Rs1,351,717/- for FY 2007-08 & 2008-09 respectively.
3. In the opinion of the Board of Directors, the Current Assets, Loans
and Advances are having the value at which they are stated in the
Balance Sheet, if realized in the ordinary course of business.
4. Claims received against shortage / damage of materials which are
not of significant value are not being shown separately. The same are
accounted for on receipt basis.
5. In pursuance of Micro, Small & Medium Enterprises Development Act,
2006, the names of the Enterprises to whom the Company owes any sum
which is outstanding at the year end are as follows:-
b) We have make payment to MSME within permissible time limit under
Micro, Small & Medium Enterprises Development Act, 2006 during FY
2010-2011 so there is no interest due on MSME.
c) There is no interest due & payable to MSME as on 31.03.2011.
6. Title of HSIDC plot no. 24, 25, 26, sector 7 IMT Manesar Gurgaon
has not been registered in the name of the Company. HSIDC had allotted
the land in the name of the Company vide its letter of allotment no.
HSIIDC 1441 dated 10.07.2003.
7. Company opted for the option to follow principles of notification
of the Companies (Accounting Standards) Amendment Rules 2006 on 31st
March 2009. Thereby exchange differences relating to long-term monetary
items, arising during the year, in so far as they relate to the
acquisition of a depreciable capital asset are added to/ deducted from
the cost of the asset under the head ÃAdditionà of Schedule 4 and
depreciated over the balance life of the asset.
Accordingly, Rs. 197,661 have been deducted from the cost of fixed
assets and the profit for the year is lower by Rs. 197,661.
8. The Company is primarily engaged in the business of gears and
transmission components. Inherent nature of both the activities is
governed by the same set of risk and returns, these have been grouped
as a single segment in the above disclosures. Hi-Tech (E-Soft) is a
division of the Company engaged in the business of engineering software
solutions. Since this business is not required to be reported as per
AS-17 on Segment Reporting, separate figures of the software division
are not reported.
9. During the year the company has allotted 9,384,000 Bonus equity
shares of Rs.10/- each fully paid up in the ratio of 1:1, out of
General Reserve.
10. A part of Land owned by Company situated at Village Sihi, Gurgaon
was acquired during the year by the Government of Haryana and amount of
Rs. 35,20,396 was received as compensation against 3 Kanal and 8 Marla
land. Revaluation Reserve amounting to Rs. 1,56,57,846 pertaining to
the acquired part of the land has been reversed.
11. Company is following the principles of Accounting Standard ('AS')
30 ÃFinancial Instruments: Recognition and Measurementà in respect of
its derivative financial instruments.
Derivative financial instruments, which qualify for cash flow hedge
accounting and where the Company has met all the conditions of
effective Cash Flow hedge accounting, are fair valued at March 31, 2011
Consequently Hedging Reserve/Fair Valuation Loss on Derivative balances
is reduced to Rs 1,444,208.(Previous Year Rs 6,715,728 )
12. Related Party Disclosures (AS-18)
(a) Enterprise in which company has control-Nil
(b) Key Management Personnel
1 Sh. Deep Kapuria Chairman&Whole Time Director
2 Sh. Pranav Kapuria Managing Director
3 Sh. Anuj Kapuria Whole Time Director
(c) Transactions with the related parties during the year are as per
Annexure attached.
13. Funded status of Gratuity Plan & Leave Encashment
The following tables set out the funded and unfunded status of the
gratuity plan and leave encashment amounts recognized in the Company's
financial statements as at 31March, 2011:
Mar 31, 2010
1. Contingent Liabilities
Depending on the facts of each case and after due evaluation of
relevant legal aspects, claims against the Company not acknowledged as
debts are disclosed as contingent liabilities. In respect of the
statutory matters, contin gent liabilities are disclosed only for those
demand(s) that are contested by the Company.
Contingent Liabilities not provided for:
(Amount Rs. in Lacs)
A As on 31sMarch 2009 As on 31sMarch 2010
Rs 623.46 Rs 1,173.00
(Amount Rs. in Lacs)
Opening Released during the Year Fresh Guarantees
During the Year Closing
B. Rs 68.87 Rs4.58 Rs 57.04 Rs. 121.32
2. In the opinion of the Board of Directors, the Current Assets, Loans
and Advances are having the value at which they are stated in the
Balance Sheet, if realized in the ordinary course of business.
3. Claims received against shortage/ damage of materials which are not
of significant value are not being shown separately. The same are
accounted for on receipt basis.
4. Title of HSIDC plot no. 24,25,26, sector 7 IMTManesarGurgaon has
not been registered in the name of the Company. HSIDC had allotted the
land in the name of the Company vide its letter of allotment no. HSIIDC
1441 dated 10.07.2003.
5. Last year Company opted for the option to follow principles of
notification of the Companies (Accounting Standards) Amendment Rules
2006 on 31st March 2009. Thereby exchange differences relating to
long-term monetary items, arising during the year, in so far as they
relate to the acquisition of a depreciable capital asset are added to/
deducted from the cost of the asset under the head "Addition"of
Schedule 4 and depreciated over the balance life of the asset.
Accordingly, Rs.106.56 Lacs have been deducted from the cost of fixed
assets and the profit for the year is lower by Rs.106.56 Lacs.
6. The Company is primarily engaged in the business of gears and
transmissioncomponents. Inherent nature of both the activities is governed
by the same set of risk and returns, these have been grouped as a single
segment in the above disclosures. Hi-Tech (E-Soft) is a division of the
Company engaged in the business of engineering software solutions.
Since this business is not required to be reported as per AS-17 on
Segment Reporting, separate figures of the software division are not
reported.
7. Company is following the principles of Accounting Standard (AS)
30 "Financial Instruments: Recognition and Measure- ment" in respect of
its derivative financial instruments.
Derivative financial instruments, which qualify for cash flow hedge
accounting and where the Company has met all the condi- tions of
effective Cash Flow hedge accounting, are fair valued at March 31, 2010
.Consequently Hedging Reserve/Fair Valua-
tion Loss on Derivative balances is reduced to Rs67.15
lacs.(PreviousYear Rs920.71 lacs)
8 The figures have been rounded off to the nearest rupee.
9 Previous year figures have been regrouped and rearranged wherever
found necessary.
10 Schedule 1 to 17 form an integral part of Balance Sheet and Profit
and Loss Account.
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