leases for premises (residential, office, godowns, etc). The leasing
arrangements, which are not non-cancellable, range between eleven
months and three years generally, and are usually renewable by mutual
consent on agreed terms. The aggregate lease rentals payable are
charged as rent.
b. Movement in provisions as required by Accounting Standard 29
"Provisions, Contingent Liabilities and Contingent Asset".
c. Provision for Taxation has been made in respect of the income
presently determined for the period 1st April, 2014 to 30th September,
2014 which is subject to appropriate revision/adjustment on final
determination of income for the year to end on 31st March, 2015,
relevant to assessment year 2015-16. Further, provision for the
assessment year 2014-15 has been determined and adjusted considering
the provision already made in the accounts for the year ended 30th
d. Related party disclosures:
(a) Names of related parties and nature of relationship where control
exists are as under:
i) MRF Corp Ltd.
ii) MRF International Ltd.
iii) MRF Lanka (Private) Ltd.
iv) MRF SG Pte Ltd. ( w.e.f. 23rd July, 2014) - Ref Note q
(b) Names of other related parties and nature of relationship:
Key Management Personnel: i) Mr. K M Mammen, Chairman & Managing
ii) Mr. K M Philip, Whole-time Director
iii) Mr. Arun Mammen, Managing Director
iv) Mr. Rahul Mammen Mappillai, Whole-time Director
v) Mr. Ravi Mannath, Company Secretary (w.e.f. 1st April, 2014)
vi) Mr. Madhu P Nainan, Vice President Finance (w.e.f. 1st April, 2014)
Relatives of Key Management Personnel: Mr. Samir Thariyan Mappillai
(Son of Chairman & Managing Director)
e. The Company is engaged mainly in the manufacture of Rubber Products
such as Tyres, Tubes, Flaps, Tread Rubber and Conveyor Belt. These in
the context of Accounting Standard 17 on Segment Reporting are
considered to constitute one single primary segment. The Company''s
operations outside India do not exceed the quantitative threshold for
disclosure envisaged in the Accounting Standard. Non-reportable
segments has not been disclosed as unallocated reconciling item in view
of its materiality. In view of the above, primary and secondary
reporting disclosures for business/geographical segment are not
applicable to the Company.
f. The Micro, Small and Medium Enterprises Development Act, 2006
The information given below and that given in Note 9 ''Trade Payables''
regarding Micro, Small and Medium Enterprises has been determined to
the extent such parties have been identified on the basis of
information available with the company.
g. The total borrowing cost capitalised during the year is Rs. 18.18
crore (Previous year - Rs. 5.29 crore).
h. a) In terms of the guidance on implementing the revised AS 15 issued
by the Accounting Standard Board of the Institute of Chartered
Accountants of India, the Provident Fund Trust set up by the Company is
treated as Defined Benefit Plan since the Company has to meet the
shortfall in the fund assets,and interest based on the Government
specified minimum rate of return, if any. However, as at the year end,
no shortfall remains unprovided for. Further, having regard to the
assets of the Fund and the Return on the Investments, the Company does
not expect any deficiency in the foreseeable future. In terms of the
guidance note issued by the Institute of Actuaries of India, the
actuary has provided a valuation of provident fund liability based on
the assumptions listed below and determined that there is no shortfall
as at 31st March, 2014.
The assumptions used in determining the present value of obligation of
the interest rate guarantee under deterministic approach are:
Projection is restricted to five years or earlier, if retirement
Expected guaranteed interest rate - 8.75%
Discount rate - 8.00%
i) The group gratuity Policy with LIC includes employees of Speciality
Coating division divested effective 1st April, 2011.
(ii) Capital Expenditure on research and development during the year,
as certified by the management is Rs. 5.44 crore (Previous Year - Rs. 4.22
crore). This information complies with the terms of the R&D
recognition granted upto 31st March, 2018 for the Company''s in-house
Research and Development activities by the Department of Scientific and
Industrial Research, Ministry of Science and Technology, Government of
India, vide their Letter No. TU/IV-RD/118/2014 dated 6th June, 2014.
j. Terms of Repayment and Security Description of Long Term Borrowings:
i) ECB from The Bank of Tokyo - Mitsubishi UFJ, Ltd. availed in
December 2011-USD40 Million is secured by a first charge on Plant and
Machinery situated at Puduchery Unit. Interest is payable at a rate
equal to the 6 months BBA LIBOR plus margin of 1.55% payable
half-yearly. The said loan is fully hedged and is repayable in three
equal annual instalments at the end of the fourth, fifth and sixth year
beginning October, 2015.
iii) ECB(Unsecured) from the Bank of Tokyo - Mitsubishi UFJ, Ltd.
availed in October, 2013 amounting to USD 15 Million is for capital
expenditure. Interest is payable at a rate equal to the six months BBA
LIBOR plus margin of 1.50% payable half yearly. The said Loan is fully
hedged and is repayable in three equal annual instalments at the end of
fourth, fifth and sixth year beginning October, 2017.
iv) ECB(Unsecured) from the Mizuho Bank, Ltd. availed in January, 2014,
amounting to USD 15 Million is availed for capital expenditure.
Interest is payable at a rate equal to the six months USD LIBOR plus
margin of 1.50% payable half yearly. The said Loan is fully hedged and
is repayable in three equal annual instalments at the end of fourth,
fifth and sixth year beginning January, 2018.
v) Buyers Line of Credit (Unsecured)of USD 24.09 Million availed from a
Bank for Capital Expenditure is repayable after 2 years and 364 days
beginning in March, 2017 at varied interest rates as applicable on
different drawdown dates. The said Loan is fully hedged.
vi) Interest free Unsecured Loan availed under Sales tax Deferral
Scheme is repayable yearly and to end on 1st April, 2019.
vii) Deferred payment credit is repayable along with interest (at
varying rates) in 240 consecutive monthly instalments ending in March,
viii) Fixed Deposits are Unsecured and are repayable as per the terms
with interest rates ranging from 8.5% to 9.5%
k. Estimated amount of contracts remaining to be executed on Capital
Account, net of advances and not provided for - Rs. 1,460.46 crore
(Previous year Rs. 1,031.68 crore)
l. The Company has during the year incorporated a wholly owned
subsidiary in Singapore under the name MRF SG Pte Ltd and has
subscribed to 10,000 ordinary shares of Singapore Dollar 1 each for Rs.
0.05 crore. An amount of Rs. 6.06 crore was paid as share application
money for subscribing to 12,63,200 ordinary shares of Singapore Dollar
1 each which has been issued on the 1st of October, 2014.
m. Contingent Liabilities not provided for:
(i) Guarantees given by the Banks - Rs. 35.18 crore (Previous year - Rs.
(ii) Corporate Guarantees given to Banks for and on behalf of wholly
owned Subsidiaries - Rs. 310.85 crore (Previous year - Rs. 1.88 crore)
(iii) Letters of Credit issued by the Banks - Rs. 466.05 crore (Previous
year - Rs. 317.38 crore)
(iv) Customs Duty on import of equipments and spare parts under EPCG
Scheme - Rs. 161.36 crore (Previous year - Rs. 97.25 crore)
(v) Bills discounted with a bank - Rs. 22.14 crore (Previous year - Rs.
(vi) Claims not acknowledged as debts:
(a) Disputed Sales Tax demands pending before the Appellate Authorities
- Rs. 18.18 crore (Previous year - Rs. 17.38 crore)
(b) Disputed Excise/Customs Duty demands pending before the Appellate
Authorities/High Court - Rs. 80.31 crore (Previous year - Rs. 79.66 crore)
(c) Disputed Income Tax Demands - Rs. 63.34 crore (Previous year - Rs.
58.13 crore). Against the said demand, the Company has deposited an
amount of Rs. 55.02 crore.
(d) Contested EPF Demands pending before Appellate Tribunal - Rs. 1.10
crore (Previous year - Rs. NIL).
n. Figures are rounded off to nearest lakh.