1.1 The Company has issued only one class of shares i.e. equity shares of Rs. 10/- per share. All equity shares rank pari passu and carry equal rights with respect to voting and dividend. The dividend proposed by the board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in the case of interim dividend.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in pro portion to the number of equity shares held by the shareholders.
1.2 The details of Shareholders holding more than 5% shares.
1.3 Share Reserved for Issue under Options outstanding as at the end of the year on unissued share capital
As on 31st March 2017, 35175 (Previous Year 100,000), Employee Stock Options were outstanding under the “Steel Strips wheels Limited Employee Stock Option Scheme 2014” of the Company. Each option would entitle the holder thereof to subscribe one equity share of Rs. 10/- each at an exercise price of Rs. 100/- per share of the company.
During the year 2016-17, Shareholders of the Company , in their Annual General Meeting held on 30.09.2016, authorized the Company to create, offer, issue and grant, in one or more tranches, upto 1,00,000 options to the employees of the Company under “Steel Strips Wheels Limited-Employee Stock Option Scheme,2016 (“ESOS 2016”).Each option would entitle the holder thereof to subscribe one equity shares of Rs. 10/- each at an exercise price of Rs. 200/- per share of the Company. The said options are yet to be granted till 31st march 2017.
Steel Strips Wheels Limited , Employee Stock Option Scheme 2014
The Company has established an Employee Stock Option Scheme (ESOS) as” Steel Strips Wheels Limited Employee Stock Option Scheme 2014(ESOS 2014)” in accordance withthe Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 which was approved by the board of Directors and subsequently by shareholders of the Company in their Extra ordinary General meeting dated 27.02.2015. The Company had granted 1,50,000 options to employees. The exercise price was Rs.100 per share. Date of grant was 02.03.2015 and vesting period was one year from the date of grant.
Exercise period for the option was within 4 years from the date of grant of the options. However during the financial year 2015-16, 50,000 options were forfeited under this “ESOS 2014” and 64825 options have been exercised by the option holders and consequently equivalent number of shares have been issued in 2016-17. As on 31st March 2017, 35,175 Employee Stock Option were outstanding under “ESOS 2014”.
Steel Strips Wheels Limited- Employee Stock Option Scheme, 2016 (ESOS 2016)
During the year 2016-17, shareholders of the company, in their Annual General Meeting held on 30.09.2016, authorized the company to create, offer, issue and grant, in one or more tranches, up to 1,00,000 options to the employees of the company under “Steel Strips Wheels Limited- Employee Stock Option Scheme, 2016 (“ESOS 2016”). Each option would entitle the holder thereof to subscribe one equity share of Rs. 10/- each at an exercise price of Rs. 200/- per share of the company. All the options granted on any date shall vest not earlier than 1 (one) year and not later than a maximum of 4 (four) years from the respective date of grant of options as may be determined by Employee Compensation Committee (ECC). Exercise period would commence from the date of vesting and will expire on completion of 5 years from the respective date of grant of options or such other shorter period as may be decided by the ECC from time to time The said options are not yet granted till 31st March, 2017.
1. Impact of Fair Valuation Method on Net Profit under EPS
In March 2005, the Institute of Chartered Accountants of India has issued a guidance note on “ Accounting for Employees Share based payments” applicable to Employee based share plan, the grant date in respect of which falls on or after April 1, 2005. The said guidance notes requires the Pro-forma Disclosers of the impact of fair value method of accounting of Employee Stock Compensation accounting in the financial statements. Applying the fair value based method defined in the said guidance note the impact on the reported net profit and earning per share would be as follows:
2 Weighted Average fair value of options granted during the year is NIL. (Previous year NIL) per option.
3 The fair Value of the Options, is estimated on the date of grant using the black- scholes model with the following significant assumptions
1.5 No Shares out of the issued , subscribed and paid up Share Capital were allotted as Bonus Shares in the last five years by capitalization of Securities Premium Reserves
1.6 No Shares out of the issued , subscribed and paid up Share Capital were allotted in the last five years pursuant to the various scheme of amalgamation without payment being received in cash.
Securities and Terms of Repayments for Secured Long Term Borrowings
1) Nature of Securities
a) Rupee Term Loans/ Foreign Currency Term Loan/ NBFC
Term Loans from banks, financial institutions and others are secured / to be secured by equitable mortgage created/ to be created by deposit of title deeds of the Company’s immovable properties for Dappar( In Punjab),Oragadam( In Chennai) & Seraikella(In Jharkhand) in addition to the deed of hypothecation charging Company’s moveable properties, both present and future and second charge created / to be created on raw materials, semi-finished goods, consumable stores, finished goods and book debts etc on paripassu basis. However in regard to loan taken from HDFC Bank for Mehsana (Gujarat) project, the said loan will be secured (first charge) through equitable mortgage by deposit of title deeds of the Company’s immovable properties situated at Mehsana (in Gujarat) and Second pari passu charge on all other immovable properties , movable properties and current assets situated at Dappar( In Punjab),Oragadam( In Chennai) unit, & Seraikella (In Jharkhand).
All secured loans are further secured by personal guarantee of Chairman & Director and/ or Managing Director of the Company.
b) Vehicle loans are secured against the Hypothecation of vehicle to lender
2) Terms of Repayments
Maturity Profile of Secured Term Loans are as below :
In compliance with AS 22 on Accounting for the Taxes on Income, a sum of r1 111.66 lacs (previous Year r 1424.83 lacs) has been considered as Net deferred tax liabilities in respect of timing difference for the year under consideration.
Deferred tax Assets will likely to be recovered from future taxable income.
During the year Company has made a provision for accrued liability on account of Gratuity and leave encashment on the basis of actuarial valuation based on projected unit method as required by AS 15 (Revised 2005).
Nature of Securities Loan payable on Demand
1st pari passu charge by way of hypothecation of entire current asset constituted of raw materials, stock in process, finished goods, consumable stores, book debts, bills whether documentary or clean outstanding monies, receivables both present and future of the Company. 2nd pari-passu charge on entire moveable assets forming part of fixed/block assets of the Company both present and future situated at Village Dappar, Tehsil Derabassi, Distt. Mohali (Punjab), Orgadam, Chennai (Tamil Nadu) and Jamshedpur (Jharkhand)
Foreign Currency Loan
Buyer credit loans are secured by way of lien on non-funds based working capital limits and counter indemnity of the Company. All secured loans are further secured by personal guarantee of Chairman and Managing Director of the Company.
- Land for Oragadam plant in Chennai is obtained on 99 years of lease basis from State Industrial Promotion corporation of Tamilnadu Limited(SIPCOT), a Government of Tamilnadu enterprises. The total cost of Lease hold land is amortised over a period of 99 years.
Accordingly a sum of Rs. 12.06 Lacs ( Previous year Rs. 12.09 Lacs) is amortised during the period.
Note 2 (2)
Preoperative Expenses/ Interest pending capitalization consist of expenses incurred /being incurred during implementation of project under installation of new fixed Assets. These will be capitalized with other fixed assets when project /fixed assets shall commence commercial production. Interest on term Loan of Rs. 1119.95 Lacs (Previous year 33.69 Lacs) has been captalised during the year.
Note 2 (3)
No Assets of the Company is given on lease hold basis to outsiders.
Note 2 (4)
Addition in assets during the year also includes the reinstatement of Foreign currency term Loans.
Note 5 (5)
Addition in Intangible Assets mainly represents installation of SAP software in the Company & Others softwares.
Note 5 (6)
(i) Pursuant to applicability of Schedule II, of Companies Act 2013, with effect from 1st April 2014, Management has reassessed the useful life of tangible assets based on the internal and external technical evaluation. The Depreciation on fixed assets is provided on straight line method in accordance with applicable Schedule of the Companies Act, 2013.
(ii) Residual values of assets have been considered at 5% of the original cost of the assets.
iii) Depreciation on assets carried at carrying amount as on 01.04.2014 and is depreciated as per Straight line method over the remaining useful life of the assets. Further the assets whose remaining useful life are nil, has been recognized in the opening balance of retained earnings. Refer the same as transitional provision of the Companies Act.
(iv) The depreciation calculation is based on the balance useful lives of assets and shift working. Depreciation on assets used on double shift basis have been increase by 50% for that period and Depreciation on assets used in triple shift basis have been calculated on the basis of 100% for that period, Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C of the schedule).
v) Management has reassessed the useful life of plant and machineries based on the internal and external technical evaluation which is different from useful life prescribed under the act. The reassessed useful life is tabulated as:
The Income Tax Assessment of the Company has been completed upto the Assessment year 2014-15 .There is no demand on Company. Therefore no provision has been made by the Company.
The Company has entered into an agreement for purchase of land admeasuring 304 kanals approx at village Bir Farozari, Distt. Panchkula, at cost of Rs.133.00 Lacs for setting up an auto component unit. The Land has not yet been registered in the name of Company . Pending the same , the advance of Rs. 35.00 Lacs paid by the Company has been shown as advances recoverable and being under legal suit, a provision for the same has been made.
150000 No. of options exercisable into equivalent nos of equity shares of the face value of Rs 10 /- per share was granted under ESOS Scheme in FY 2014-15. The date of grant was 02.03.2015. Out of these options, 50000 options have been forfeited during FY 2015-16. Accordingly proportionate shares expenses have been booked for the period as Expenses.
The Company has a defined benefit gratuity and Earned Leave plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service and accumulation of EL for Staff is upto 60days and for Workers is 90 Days.
The Employee’s gratuity fund scheme managed by a Trust (Life insurance corporation of India) is defined benefit plan. The Present Value of obligation is determined based on acturial valuation using the projected unit credit method which recognises each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognised in the same manner as gratuity.
Net employee benefit expenses (recognised in Employee Cost).
The following tables summarize the components of net benefit expense recognised in the Profit and Loss Account and the amounts recognised in the balance sheet.
The retirement age has been uniformly taken as 60 years( PY 60years).
The discount rates have been determined by reference to market yields as on 31st march 2016 on CG-Secs of currency and term consistent with those of liability obligations.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Level of price neutralization likely to be affected through periodic wages increase over the next 5 to 10 years.
A) PRIMARY SEGMENT (BUSINESS SEGMENT)
A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments. The Company’s Operation predominantly comprise of only one segment i.e Automotive Wheels. In view of the same, separate segmental information is not required to be given as per the requirements of Accounting Standard 17.
B) SECONDARY SEGMENT (GEOGRAPHICAL SEGMENT)
The analysis of geographical segment is based on the geographical location of the customers. The Company operates primarily in India and has presence in international markets as well. Its business is accordingly aligned geographically, catering to two markets. The Company has considered domestic and exports markets as geographical segments and accordingly disclosed these as separate segments.
NOTE 4 (1) & (2). Significant Accounting Policies
1) CORPORATE INFORMATION
Steel Strips Wheels Limited (the Company) is a public limited Company registered in India under the Companies Act 2013 (Erstwhile Companies Act 1956). Its Shares are listed on both BSE Limited and National Stock Exchange of India Limited. The Company is a leading manufacturer of Automotive Wheel rims.
2) BASIS OF PREPARATION
The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) and mandatory Accounting Standards of Companies Act, 2013 as amended from time to time. Further, the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also considered wherever applicable except to the extent where compliance with other statutory promulgations overrides the same requiring a different treatment. The financial statements have been prepared under the historical cost convention on accrual basis.
The accounting policies have been consistently applied by the Company and except for the changes in accounting policy discussed more fully below, are consistent with those used in the previous year.