Notes forming part of the Accounts for the Year ended 31st March, 2006
1. Significant Accounting Policies: -
(i) Method of Accounting
The financial
statements are prepared under the historical cost convention as a going concern
and on accrual basis.
(ii)
Fixed Assets and Depreciation
(a) All Fixed Assets are stated at cost less accumulated depreciation. Cost
of acquisition is inclusive of purchase price, levies and any directly
attributable cost of bringing the assets to its working condition for the
intended use. In case of borrowed funds and liabilities in foreign currencies
for the acquisition of fixed assets from a country outside India, the exchange
differences are adjusted to the cost of such asset.
(b) When an asset is scrapped or otherwise disposed off, the cost and
related depreciation are removed from the books of account and resultant profit
(including capital profit) or loss, if any, is reflected in the Profit and Loss
Account.
(c) Free hold land is stated at cost. Cost of leasehold land is amortized
over the period of lease.
(d) Depreciation on assets is calculated on Straight Line Method at the
rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.
(iii) Investments
Investments held as long-term investments are stated at cost comprising
of acquisition and incidental expenses less permanent diminution in value, if
any.
Investments other than long-term investments are classified as current
investments and valued at cost or fair value whichever is less.
(iv) Inventories
Inventories are stated at cost
or net realizable value, whichever is lower.
A. Cost is arrived at
(a) In case of Raw Material & Die Steel on actual basis.
(b) In case of stores & spares on a weighted average method.
(c) In case of WIP & FGs it includes material cost, labour, where
appropriate, manufacturing overheads & excise duty.
B. Cost of Dies includes cost
of die steel and appropriate labour and manufacturing overheads and cost of
renewal. The cost of dies is amortised over a period of two years.
(v)
Foreign Currency Transactions
(a) Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Realised gains and losses and also
exchange differences arising on translation at year end exchange rates of
current assets and current liabilities outstanding at the end of the year are
recognized in the Profit and Loss Account.
(b) In the case of monetary items incurred for the acquisition of fixed
assets from a country outside India, the exchange differences are adjusted to
the cost of such assets.
(vi) Intangible Assets :
All Intangible Assets are initially measured at cost and amortised so as
to reflect the pattern in which the asset’s economic benefits are
consumed.
(vii) Revenue recognition
Sales of products and services are recognised when
the products are despatched or services rendered. Sales are exclusive of sales
tax and net of sales return and trade discounts.
(viii) Export Benefits
Export
Incentives in respect of exports made are recognized at a point of reasonable
certainty of ultimate collection.
(ix) Retirement Benefits
Retirement Benefits in respect of gratuity and leave encashable at
retirement/cessation are provided for based on valuations, as at the Balance
Sheet date, made by independent actuaries.
(x) Taxation
Current
tax is determined as the amount of tax payable in respect of taxable income for
the year. Deferred tax is recognised, subject to consideration of prudence, on
timing differences, being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets are recognised only to the extent that
there is virtual certainty supported by convincing evidence that sufficient
future tax income will be available against which such deferred tax assets can
be realised.
2. In
accordance with the Scheme of Arrangement and Demerger which was approved by
the Hon’ble Bombay High Court on March 21, 2006, the business undertaking of
Chakan unit of Amforge Industries Ltd., herein after referred to as demerged
undertaking has been demerged and vested in the Company with effect from the
appointed date i.e. April 1, 2005. The Scheme has accordingly been given effect
to in these accounts.
This demerged undertaking is engaged in
carrying on the business of manufacture and sale of forging components and
related activities.
In terms of the scheme, all the assets and
liabilities of the demerged undertaking have been accounted for at their
carrying amounts on April 1, 2005. As per the Scheme and in consideration of
the above, the Company will issue 1,48,20,206 equity shares of Rs.10 each
aggregating to Rs.1,482.02 lakhs and 1,48,20,206 4% Non Cumulative Redeemable
Non Convertible Preference Shares of Rs.31 each aggregating to Rs.4,594.26
lakhs. These shares will be issued in the ratio of one equity share & one
preference share for every one equity share held by the shareholders of Amforge
Industries Limited. Pending allotment of these shares, have been disclosed
under the head “Share Capital Suspense” in the Balance Sheet.
Consequent upon giving effect to the Scheme of
Demerger, an amount of Rs.8,692.65 lakhs arising as Goodwill, being the
difference between the aggregate value of equity shares and preference shares
to be allotted and net book value of assets and liabilities of the Chakan
undertaking as on April 1, 2005, has been disclosed under “Goodwill”.
In view of the aforesaid demerger with effect
from April 1, 2005 the figures for the current year are not comparable with
those of the previous year.
3. Goodwill
arising on demerger has not been amortised in the current financial year as the
economic benefits there from are expected to accrue over a period of five years
from the next financial year.
4. During the year, company has made rights
issue of 82,11,866 equity shares of face value of Rs.10 each at a premium of
Rs.87.42 per equity shares in the ratio of 816 equity shares for every one
equity share held as on June 2, 2005.
5. Borrowings And Securities
|
Name of the Lender |
Type of Loan |
Repayment Schedule |
|
Industrial
Investment Bank of India (IIBI) |
Long Term Loan (LTL) |
14 equal quarterly installments till September, 2009 |
|
Industrial Investment Bank of India (IIBI) |
Funded Interest Term Loan (FITL) (0% coupon bonds) |
12 equal quarterly installments till March, 2010. |
|
Life Insurance Corporation of India (LIC) |
Long Term Loan (LTL) |
14 equal quarterly installments till September, 2009 |
|
Life Insurance Corporation of India (LIC) |
Funded Interest Term Loan (FITL) |
14 equal quarterly installments till September, 2009 |
|
Life Insurance Corporation of India (LIC) |
Funded Interest Term Loan (FITL) |
Single bullet payment in December, 2010 |
|
State Bank of India (SBI) |
Working Capital Term Loan (WCTL) |
56 equal monthly installments from October, 2007 |
|
State Bank of India (SBI) |
Funded Interest Term Loan (FITL) |
64 equal monthly installments from April, 2006 |
|
South Indian Bank Ltd. (SIBL) |
Term Loan (TL) |
Within one year. |
All the term lenders
have 1st charge on immovable assets & 2nd charge on
movable assets as on 01-04-2005. Whereas Working Capital lenders have 1st
charge on movable assets & 2nd charge on Immovable assets of the
company. The Documentation for creation of
security, in respect of some of the Borrowings is pending.
6. Contingent Liabilities not provided for
(Rs. in Lakhs)
|
|
Particulars
|
As at 31st March’2006 |
|
|
(i)
Bank
Guarantees outstanding in favour of the Government and other parties |
161.08 |
|
|
(ii)
Letters
of Credit issued by banks on behalf of the Company and outstanding |
1222.37 |
|
|
(iii)(a)Towards Excise
Duty demands in respect of which the Company has preferred an appeal (b)Towards SCN issued by Excise
Department |
53.62 66.98 |
|
|
(iv) Claims against
the Company not acknowledged as debts |
12.07
|
In addition to the above,
the Company has availed Bill Discounting Facilities under Bill Marketing
Scheme, during the year from its customers in the amount of Rs. 2341.23 lakhs.
7. The
company has imported capital goods under the Export Promotion Capital Goods
(EPCG) scheme, of the Government of India, at concessional rates of duty on an
understanding to fulfill quantified exports against which future obligation
aggregates to USD 104.79 lakhs, over a period of next eight years. Non-fulfillment of such future obligations,
if any, entails options/rights to the Government to confiscate capital goods
under the said licenses and other penalties under the above referred scheme.
8. Estimated value of contracts remaining to
be executed on capital account (net of advances) and not provided for Rs.
1406.95 lakhs.
9. The
Company has furnished a guarantee in respect of certain liabilities amounting
to Rs. 919.23 lakhs for which a provision has been made in the books of
account, in view of the likely default by the principal debtor.
10. Auditors’ Remuneration
(Rs.
in Lakhs)
|
|
Auditors
Remuneration |
Current Year |
Previous Year |
|
(i) |
Audit
Fees |
5.00 |
0.09 |
|
(ii) |
Tax
Audit Fees |
1.00 |
|
|
(iii) |
Certifications/Limited
Review Reports |
0.00 |
0.02 |
|
(iv) |
Service Tax |
0.00* |
0.01 |
|
|
Total |
6.61 |
0.12 |
* Exclusive of service tax Rs.0.61.
11. Capacities and Production (Previous
Year Nil)
|
|
|
Unit |
Installed Capacity (3 shifts basis) |
Production |
|||||||||
|
|
Forging |
M.T. |
40992 |
23761 |
|||||||||
|
|
|
|
|
|
|||||||||
|
12 |
Turnover, Opening
and Closing Stocks :- (Previous Year Nil) |
|||||||||||
|
|
|
|
|
(Value in Rs. Lakhs) |
||||||||
|
|
|
Unit |
Turnover |
Opening Stock |
Closing Stock |
|||||||
|
|
|
|
Qty |
Value |
Qty |
Value |
Qty |
Value |
||||
|
|
Forging |
M.T. |
23500 |
23160.43 |
436 |
604.40 |
697 |
528.72 |
||||
13. Raw Materials & Components Consumed (Previous
Year Nil)
|
|
|
M.T. |
Rs. in Lakhs
|
|
|
Steel |
33995 |
12237.21 |
|
|
|
|
|
14. Value of Raw Material and Components
Consumed (Previous Year Nil)
|
|
|
Rs. in Lakhs |
% |
|
|
Indigenous |
12230.07 |
100 |
|
|
Imported |
7.14 |
Negligible |
|
|
Total |
12237.21 |
100 |
15. Value of Stores & Spares Consumed
|
|
|
Rs. in Lakhs |
% |
|
|
Indigenous |
257.15 |
95.82 |
|
|
Imported |
11.21 |
4.18 |
|
|
Total |
268.36 |
100 |
16. |
Value of Imports (C.I.F.) (Previous Year Nil) |
|||
|
Sr |
Particulars |
Rs. in Lakhs |
||
|
|
i) |
Stores and Spares |
11.21 |
|
|
|
ii) |
Capital Goods |
2032.44 |
|
|
|
iii) |
Raw Material |
7.14 |
|
|
|
|
|
|
|
|
|
|
TOTAL |
2050.79 |
|
|
17. |
Earnings in Foreign Exchange (Previous Year
Nil
|
Rs. In Lakhs
|
|
|
|
|
Exports (F.O.B.
Value) |
443.54 |
|
18 |
Expenditure
in Foreign Currency (Previous Year Nil)
|
|
|
|
|
Sr. |
Particulars |
Rs. In Lakhs |
|
|
i) |
Foreign Travel |
8.51 |
|
|
ii) |
Technical
Consultancy |
33.79 |
|
|
|
|
|
|
|
|
TOTAL |
42.30 |
19. Assets acquired on hire purchase – CNC
Machines :
(i)
The
total minimum lease payments as at March 31, 2006 is Rs.15.00 lakhs (Previous
Year Rs.Nil) maturing within one year and
(ii)
Present
value of minimum lease payments as at March 31, 2006 is Rs.14.52 lakhs (Previous
Year Rs.Nil).
20. The company has recognized deferred tax
assets only to the extent that there are timing differences the reversal of
which will absorb the aforesaid deferred tax assets. In line with Accounting
Standard – 22 issued by the Institute of Chartered Accountants of India,
(Accounting for Taxes on Income), on principles of prudence, the company has
not recognized in the accounts, deferred tax assets aggregating Rs.557.94 lakhs
as at 31st March, 2006.
The major components of the Deferred
Tax Assets as on 31st March, 2006 based on the tax effects of the timing
differences, are as follows.
|
Sr. |
Particulars |
Current year (Rs. In lakhs) |
|
A |
Timing Difference of
Depreciation between Taxation & Books of Accounts |
375.66 |
|
B |
Unabsorbed
Depreciation |
4.71 |
|
C |
Carried Forward
Business Losses |
370.95 |
|
|
Total |
375.66 |
21. The Company has an outstanding of
Rs.29,68,140 (Previous Year Nil) payable to the small scale and ancillary
undertakings (SSI).
The list of SSI units, where
outstanding is more than 30 days and amount of outstanding is more than Rs.1.00
lakh is given below:
Shreeram
Engineers
Jaybee
Steel Treaters Pvt Ltd
Shakun
Auto Parts Pvt. Ltd
Stride
Engineers
United
Engineering Works
S.R
Engineers
J.K.Engineers
Laxmi
Engineering
Radiant
Industries
Vijaya
Engg. Company
Forebros
Tools (P) Ltd
Sant
Kruppa Engineering & Cutting Works
22. In
terms of Accounting Standard – 17 (Segment Reporting) issued by the Institute
of Chartered Accountants of India, the Company operates in only one segment
i.e. Forgings.
23. Related
Party Disclosures as required by Accounting Standard – 18 issued by the
Institute of Chartered Accountants of India, are given below:
a) Enterprise controlling the Company:
Mahindra & Mahindra Ltd.
b) Are under common control including fellow
subsidiaries:
|
Sr. |
Name of subsidiary company |
|
1 |
Automartindia Limited |
|
2 |
Tech Mahindra (R&D) Services Pte. Ltd.
( with effect from 28th November, 2005) |
|
3 |
Tech Mahindra (R&D) Services Inc.(
with effect from 28th November, 2005) |
|
4 |
Bristlecone Limited , Cayman Islands |
|
5 |
Bristlecone (Singapore) Pte. Limited |
|
6 |
Bristlecone (UK) Limited |
|
7 |
Bristlecone GmbH |
|
8 |
Bristlecone Inc. |
|
9 |
Bristlecone India Limited |
|
10 |
Jensand Limited (3rd January,
2006) |
|
11 |
Mahindra & Mahindra Financial Services
Limited |
|
12 |
Mahindra & Mahindra South Africa
(Proprietary) Limited |
|
13 |
Mahindra (China) Tractor Company Limited (
with effect from 13th May, 2005) |
|
14 |
Mahindra Acres Consulting Engineers
Limited |
|
15 |
Mahindra Ashtech Limited |
|
16 |
Mahindra Holdings & Finance Ltd. |
|
17 |
Mahindra Engineering & Chemical
Products Ltd. |
|
18 |
Mahindra Engineering Design &
Development Co. Ltd |
|
19 |
Mahindra Europe s.r.l. ( with effect from
30th May, 2005) |
|
20 |
Mahindra Gesco Developers Ltd. |
|
21 |
Mahindra Gujarat Tractor Limited |
|
22 |
Mahindra Holidays & Resorts (India)
Limited |
|
23 |
Mahindra Holidays & Resorts USA, Inc. |
|
24 |
Mahindra Infrastructure Developers Limited |
|
25 |
Mahindra Insurance Brokers Limited |
|
26 |
Mahindra International Limited ( with effect from 1st November, 2005) |
|
27 |
Mahindra Intertrade Limited |
|
28 |
Mahindra Logisoft Business Solutions
Limited |
|
29 |
Mahindra Middleeast Electrical Steel
Service Centre (FZC) |
|
30 |
Mahindra Overseas Investment Company
(Mauritius) Ltd |
|
31 |
Mahindra Realty Limited ( with effect from
21st September, 2005) |
|
32 |
Mahindra Renault Private Limited ( with
effect from 5th August, 2005) |
|
33 |
Mahindra Sar Transmission Pvt. Ltd |
|
34 |
Mahindra Shubhlabh Services Limited |
|
35 |
Mahindra Steel Service Centre Limited |
|
36 |
Mahindra Ugine Steel Company Limited (
with effect from 21st
June, 2005) |
|
37 |
Mahindra USA, Inc |
|
38 |
Mahindra World City (Jaipur) Limited (
with effect from 26th August, 2005) |
|
39 |
Mahindra World City Developers Limited |
|
40 |
Mahindra-BT Investment Company (Mauritius)
Limited (with effect from 9th May, 2005) |
|
41 |
NBS International Limited |
|
42 |
Plexion Technologies (UK) Ltd (with effect
from 15th February, 2006) |
|
43 |
Plexion Technologies GmbH, Germany (with
effect from 15th February, 2006) |
|
44 |
Plexion Technologies Incorporated, USA
(with effect from 15th February, 2006) |
|
45 |
Plexion Technologies (India) Private
Limited (with effect from 15th February, 2006) |
|
46 |
Stokes Forgings Dudley Limited ( with
effect from 3rd January,
2006) |
|
47 |
Stokes Forgings Limited ( with effect from
3rd January, 2006) |
|
48 |
Stokes Group Limited ( with effect from 3rd January, 2006) |
|
49 |
Tech
Mahindra (R&D Services) Limited ( with effect from 28th
November, 2005) |
|
50 |
Tech Mahindra (Americas) Inc |
|
51 |
Tech Mahindra (Gmbh) |
|
52 |
Tech Mahindra (Singapore) Pte. Limited |
|
53 |
Tech Mahindra Limited |
|
54 |
Tech
Mahindra (Thailand) Limited (with effect from 21st February, 2006) |
|
55 |
Tech
Mahindra Foundation (with effect from 22nd March, 2006) |
c) Transactions with related parties
|
Sr. |
Nature of
Transactions |
Enterprises
controlling the Company |
Companies under common
control including Fellow subsidiaries |
|
1 |
Sales |
|
|
|
|
-Goods |
3654.80 |
- |
|
|
-Scrap |
- |
1327.90 |
|
2 |
Purchases |
|
|
|
|
-Raw material |
- |
5762.80 |
|
|
-Capital goods |
1782.04 |
- |
|
|
-Services |
58.86 |
- |
|
3 |
Payment of Rent |
- |
22.00 |
|
4 |
Advance for expenses
received |
- |
0.50 |
|
5 |
Intercorporate
Deposit accepted and refunded |
- |
600.00 |
|
6 |
Interest on ICD paid |
- |
6.51 |
|
7 |
Interest on delayed
payments |
17.14 |
- |
|
8 |
Outstandings |
|
|
|
|
-Receivables |
661.51 |
- |
|
|
-Payables |
38.50 |
1298.24 |
|
9 |
Advance for expenses
payable |
- |
21.65 |
24. Earnings per Share:
|
|
|
|
Profit/(Loss) as per
the P&L Account (Rs. in Lakhs) |
(1194.73) |
|
Weighted Average
Number of equity shares outstanding during the year |
61,68,970 |
|
Potential ordinary
(equity) shares |
2,59,67,620 |
|
Basic Earnings per
share (Rs.) |
(19.37) |
|
Diluted Earnings per
share (Rs.) |
(4.60) |
25. Balances of Sundry Debtors and Creditors
are subject to confirmation.
26. In the opinion of the Board, current
assets, loans and advances have a value not less than the amount at which they
are stated.
27. Figures
for the previous year have been regrouped and rearranged wherever necessary and
are not comparable with those of the current year.
|
For & on behalf of Board of Directors |
sd/- sd/- sd/-
Hemant Luthra V.K. Chanana Manoj
Jain
Chief
Financial Officer
sd/- sd/- sd/-
R.R.Krishnan Romesh Kaul Payal Vyas
Company
secretary
sd/- sd/-
Nikhilesh Panchal Fali Mama
Mumbai: 28th April, 2006.