MINDA INDUSTRIES Notes to Accounts

# Included in other current assets - Qualified Institutions Placement expenses


** As per section 135 of the Companies Act, 2013, CSR committee was formed by the Company. The area for CSR activities is promoting education and self employment enhancement. A sum of Rs, 1.41 Crore (which is at par with the provision @ 2% of average net profit of preceding 3 years of Rs, 1.32 Crore) was contributed to Corpus Fund of S.L.Minda Charitable Trust and Moga Devi Charitable Trust for utilization on CSR activities.


Contingent liabilities relating to other cases RS,0.71 Crore (previous year RS,0.74 Crore).


Future cash outflows in respect of the above would be determinable on finalization of judgments /decisions pending with various forums / authorities.


(b) Corporate guarantees given by the Company and outstanding as at 31 March 2017 amounting to RS,59.21 Crore (previous year RS,48.82 Crore) in respect of loans borrowed by related parties. Further, the Company has also provided ‘letter of comfort’ amounting to RS,183.91 Crore (previous year RS,155.77 Crore) in respect of loans taken by related parties from banks.


(c) Liability of Customs duty towards export obligation undertaken by the Company under “Export Promotion Capital Goods Scheme (EPCG)” amounting to RS,1.95 Crore (Previous year RS,1.35 Crore).


During the current year the Company had imported Capital goods under EPCG and saved duty to the tune of RS,1.95 Crore (previous year H1.35 Crore). As per the EPCG terms and conditions, Company needs to export RS,11.70 Crore (previous year RS,8.07 Crore) i.e. 6 times of duty saved on import of Capital goods on FOB basis within a period of 6 years. If the Company does not export goods in prescribed time, then the Company may have to pay duty on imported capital goods, including interest and penalty thereon.


(d) The Company has availed sales tax incentives for its unit at Pune, Maharashtra, from the Government of Maharashtra amounting to RS,0.34 Crore (previous year RS,3.35 Crore). In accordance with Scheme of Government of Maharashtra for Development of Industries, the amount may be refundable to the Government, if specified conditions are not fulfilled, within the prescribed time.


Note . capital and other commitments (net of advance)


Estimated amount of contracts remaining to be executed on capital account and not provided for as at 31 March 2017 aggregates to RS,6.52 Crore (previous year RS,6.59 Crore).


As per Accounting Standard- 4 (Revised), the Company cannot create provision for dividend proposed after the balance sheet date unless a statute requires otherwise. Rather, Company will need to disclose the same in notes to the financial statements. Accordingly, the Company has disclosed dividend proposed by board of directors after the balance sheet date in the notes to the financial statements. Refer note 3.


note 2. Additional investments


The Company has made following additional investments during the current year:


1. 40,924,800 equity shares of ROKI Minda Co. Private Limited (face value of H10/- each) for a total consideration of RS,43.08 Crore.


2. Additional 5,927,730 equity shares of Minda TG Rubber Private Limited (face value of H10/- each) for a total consideration of RS,5.93 Crore.


3. Additional 32,732,000 equity shares of Minda Kosei Aluminum Wheel Private Limited (face value of H10/- each) for a total consideration of RS,32.73 Crore.


4. Additional 2,100,000 equity shares of Global Mazinkert, S.L. (face value of Euro1 each) for a total consideration of RS,15.98 Crore.


5. 84,996 equity shares of H100/- each fully paid up of Rinder India Private Limited for a total consideration of RS,39.68 Crore.


6. 188,600,000 equity shares of RS,10/- each of Minda Storage Batteries Private Limited for a total consideration of RS,9.05 Crore.


7. Additional 4,178,571 equity shares of Kosei Minda Aluminum Company Private Limited (face value of RS,10/- each) for a total consideration of RS,4.18 Crore.


note 3.


During the year 2002-03, the Director, Town and Country Planning, Chandigarh issued a demand notice on the Company amounting to RS,0.39 crore towards revised CLU (change of land use) charges for the land situated at Village Nawada Fatehpur, P.O. Sikanderpur Badda, Gurgaon, and Haryana. The Company paid RS,0.02 crore and had also filed a Special Leave Petition (SLP) with the Hon’ble Supreme Court of India, basis which a leave had been granted. Further, the Company had deposited RS,0.09 crore as under protest with the authorities. During the previous years, the Company had filed a writ petition with the High Court of Punjab and Haryana in order to cancel the demand notice and obtain a stay on the balance demand. Further, the Company had withdrawn the petition and accordingly had agreed to pay the total liability of RS,0.28 crore and the interest thereon amounting to RS,0.44 crore (previous year RS,0.41 crore) towards revised CLU charges after adjusting the amount of H0.11 crore paid earlier.


During the year 2013-14, the Company had applied for grant of license under ‘Affordable Housing Policy- 2013’ on the land measuring 9.9625 acres in revenue estate of Village Nawada, Fatehpur Sector-81, Gurgaon and paid scrutiny fee (non-refundable) amounting to RS,0.15 crore in this respect.


On issue of license either under ‘Residential Group Housing Colony scheme’ or under ‘Affordable Housing Policy 2013’, CLU charges would be payable as per terms and conditions of the scheme.


note 4. Segment information


Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.


As the Company’s business activity primarily falls within a single business segment i.e. Auto Components including Electrical Parts and its Accessories as primary segment, thus there are no additional disclosures to be provided under Accounting Standard 17 - ‘Segment Reporting’. The management considers that the various goods and services provided by the Company constitutes single business segment, since the risk and rewards from these services are not different from one another.


* on the basis of location of customers.


** on the basis of location of the assets.


Assets used in the Company’s business and liabilities contracted in respect of its business activities, are not identifiable in line with the above reportable segments as the assets and liabilities contracted are used interchangeably between the segments. Accordingly, except for trade receivables, no separate identification relating to other segment assets and liabilities has been made.


note 5. Related Party Disclosures (i) Related parties where control exists:


Subsidiaries (including step down subsidiaries) Minda Auto Components Limited


Minda Kosei Aluminum Wheel Private Limited Minda TG Rubber Private Limited (w.e.f. 30 March 2016)


Minda Kyoraku Limited M J Casting Limited (w.e.f. 1 August 2015)


Minda Distribution and Services Limited


PT Minda Asean Automotive (stepdown subsidiary) (w.e.f. 1 July 2015) PT Minda Trading (Indirect Subsidiary) (w.e.f. 1 July 2015)


SAM Global Pte. Ltd (w.e.f. 1 July 2015)


Minda Industries Vietman Company Limited (stepdown subsidiary) (w.e.f. 1 July 2015)


Global Mazinkert S.L.


Clarton Horn, Spain (Indirect subsidiary)


Clarton Horn Maroc SARL (Indirect subsidiary)


Clarton Horn, Signalakustic GmbH (Indirect subsidiary)


Clarton Horn, Mexico S. De R. L. De C.V. (Indirect subsidiary)


Rinder India Private Limited (w.e.f 3 June 2016)


Minda Storage Batteries Private Limited (w.e.f 23 September 2016)


Light & Systems Technical Centre S.L. Spain (Indirect subsidiary) (w.e.f 26 June 2016)


Partnership firm YA Auto Industries (w.e.f. 8 August 2016)


(ii) Other related parties with whom transactions have taken place during the year/ previous year and the nature of related party relationship:


Associates Mindarika Private Limited


Minda NexGenTech Limited


Kosei Minda Aluminum Company Private Limited (w.e.f 29 March 2016)


Partnership firms Auto Component (Firm)


Yogendra Engineering (Firm)


Joint ventures (jointly controlled entities) Minda Emer Techonologies Limited


M J Casting Limited (upto 31 July 2015)


Roki Minda Co. Private Limited (w.e.f 1 October 2016)


Rinder Riduco, S.A.S. Columbia (Indirect Joint Venture w.e.f 10 June 2016)


Key management personnel Mr. Nirmal K. Minda


(ii) Other related parties with whom transactions have taken place during the year/ previous year and the nature of related party relationship:


{Chairman and Managing Director(‘CMD’)}


Mr. Sudhir Jain (CFO)


Mr. H.C. Dhamija ( Company Secretary)


Relatives of key management personnel Mrs. Suman Minda (wife of CMD)


Mrs. Paridhi Minda Jindal (daughter of CMD)


Mrs. Palak Minda (daughter of CMD)


Mr. Vivek Jindal (son-in-law of CMD)


Other entities over which key management personnel and their rela- Minda Investments Limited tives are able to exercise significant influence Minda International Limited


Minda Corporation Limited Nirmal K. Minda (HUF)


Minda Industries (Firm)


Minda Spectrum Advisory Limited Samaira Engineering (Firm)


S.M.Auto Industries (Firm)


Shankar Moulding Ltd.


Maa Rukmani Devi Auto Limited


MI Torica India Private Limited


Minda F Ten Private Limited


Fujitsu Ten Minda Private Limited


Minda Mindpro Limited


Minda Nabtesco Automotive Private Limited


# Nil in previous year column represent H Nil or transaction less than 10% of the class of transaction.


* Excluding taxes.


Note 6. Disclosure pursuant to Accounting Standard-15 on “Employee Benefits”


a) Defined contribution plan


An amount of RS,9.69 Crore (previous year RS,8.36 Crore) for the year, has been recognized as an expense in respect of the Company’s contribution towards Provident Fund, deposited with the Government authorities and has been included under employee benefit expense in the Statement of Profit and Loss. An amount of RS,0.49 Crore (previous year RS,0.42 Crore) for the year, has been recognized as an expense in respect of the Company’s contribution towards Superannuation Fund, and has been included under employee benefit expense in the Statement of Profit and Loss. Further an amount of RS,1.35 Crore (previous year RS,1.19 Crore) for the year, has been recognized as an expense in respect of the Company’s contribution towards ESI Fund, and has been included under employee benefit expense in the Statement of Profit and Loss.


b) Defined benefit plans


Gratuity is payable to all eligible employees of the Company on retirement/exit, death or permanent disablement in terms of the provisions of the Payment of Gratuity Act, 1972.


The members of the Company had approved ‘Minda Employee Stock Option Scheme 2016’ at the Annual General Meeting held on 11 August 2016. The plan envisaged grant of stock options to eligible employees at market price in accordance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.


This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Compensation Committee of the Board of Directors from time to time. The performance measures under this scheme include group achieving the target market capitalization.


The maximum number of equity shares to be allotted under the scheme are 1,500,000. The number of options granted under the 2016 Performance Share Schemes are 888,000 equity shares at an exercise price of RS,180/- each and 98,750 equity shares at an exercise price of RS,392/- each. The scheme is monitored and supervised by the Nomination and Remuneration Committee of the Board of Directors in compliance with the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and amendments thereof from time to time.


The Company has adopted the intrinsic value method as permitted by the SEBI Guidelines and the Guidance Note on Accounting for Employee Share Based Payment issued by the Institute of Chartered Accountants of India in respect of stock options granted.


The Employee Stock Option Plan includes employees of Minda Industries Limited and its subsidiaries. The cost reimbursed by subsidiaries for the year is RS,0.85 crore.


The Company’s profit for the year and earnings per share would have been as under, had the compensation cost for employees’ stock options been recognized based on the fair value at the date of grant in accordance with Black Scholes model. The fair value of the underlying shares has been determined by an independent valuer.


The risk free interest rates are determined based on the zero-coupon yield curve for Government Securities or Government bonds with maturity equal to the expected term of the option. Volatility calculation is based on annualized standard deviation of the continuously compounded rate of return of the stock over a period of time. The historical period taken into account to match the expected life of the option. Dividend yield has been arrived by dividing the dividend for the period with the current market price.


* The term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated 8 November 2016.


**Other denomination notes represents other than ‘Specified Bank Notes’ referred above.


During the year, the Company came out with issue of equity shares to qualified institutional buyers (‘QIB’) aggregating to Rs, 300.00 Crore. The Company approved the issue of 7,092,125 equity shares of Rs, 2 each, at an issue price of Rs,423.00 per equity share (Rs,421.00 per share towards share premium). The shares were fully subscribed and were allotted on 3 April 2017. The issue is within the authorized capital of the Company. The Company incurred expenses amounting to Rs,5.23 Crore in relation to the aforesaid placement. These expenses have been adjusted against the balance of securities premium subsequent to the year end at the time of allotment of shares.


note 7.


The Company has established a comprehensive system of maintenance of information and documents are required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by due date as required under the law. The management is of the opinion that its transactions with the associated enterprises are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.


note 8.


Previous year figures have been reclassified / regrouped, wherever required, to confirm to current year classification


CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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