TVS ELECTRONICS Accounting Policy

26 - Notes to Accounts


1 ACCOUNTING STANDARDS COMPLIANCE


The financial statements have been prepared in accordance with the norms and principles prescribed in the Accounting Standards issued by the Institute of Chartered Accountants of India which are itemized below :


As the net worth of the Company is less than Rs.500 Cr (net worth as on 31st March, 2014, Rs.35.51 Cr), the Company is required to comply with Ind AS for the accounting period beginning on or after 1st April, 2017 as per Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015.


AS - 1 Disclosure of accounting policies


The Company is following accrual basis of accounting on a going concern concept and the policies applied are consistent with those applied in the previous year.


AS - 2 Valuation of inventories


a Raw materials, components, stores and spares and other trading products are valued at cost determined on weighted average basis. Finished goods and traded goods are valued at the aggregate of material cost, applicable duties and overheads or net realizable value whichever is lower. b Excise Duty in respect of finished goods lying within the factory are included in the valuation of inventories.


c Goods-In-Transit, both Raw materials and Traded items sent by supplier on FOB basis are recognized based on Confirmation received from the Vendor regarding the dispatch of goods. Goods-in-Transit available at Bonded Warehouses are recognized based on Bond Statement / Confirmation from authorities.


d As per practice consistently followed, Customs Duty and Countervailing Duty payable on raw materials, components and finished goods lying in customs bonded warehouses is accounted for on deboning. Non-provision of this duty will not affect the profit for the year.


AS - 3 Cash Flow Statement


Cash Flow Statement has been prepared under “Indirect Method”.


AS - 4 Contingencies and Events occurring after the Balance Sheet date


The Board of Directors have recommended a dividend of fifty paise per equity share of face value of ''''10 each for the financial year ended 31.03.2017. The dividend will be paid / dispatched to the shareholders within 30 days from the date of approval in the ensuing Annual General Meeting.


AS - 9 Revenue Recognition


a Income and Expenditure are accounted on a going concern basis.


b The Company’s income consists of


i) sale of manufactured equipments,


ii) traded goods


iii) after sales service


iv) warranty management & repair services


v) information technology (IT) related consultancy services


vi) e-auction services; and


vii) distribution services


c Sale is accounted net of Excise Duty, Service Tax and Sales Tax / Value Added Tax


i) Income from consultancy services and annual maintenance contracts are considered on accrual basis.


ii) Income from services is recognized after rendering services.


iii) Income from Information Technology solutions are recognized depending upon the stage of completion of the project. d Other income includes realised exchange fluctuation gain on Sale of products, Sale of services of Rs63.41 lakhs (Previous year Rs117.99 lakhs).


e Interest income is recognized on a time proportion basis taking into account the amount of outstanding and the rate applicable.


f In respect of domestic sale of manufactured and traded goods, income is recognized once the goods are delivered to the designated transporters of the customer or to transporters usually contracted by the Company. In respect of export sales income is recognized on the basis of “LET Export’ certificate issued by Customs Authorities. g As regards Income from distribution services, the income is recognized on delivery of goods to customers.


AS - 10 Property, Plant and Equipment


Fixed Assets are stated at cost of acquisition or construction cost net of CENVAT and includes expenditure incurred upto the date the asset is put to use, less accumulated depreciation.


Depreciation has been provided on Straight Line Method on the basis of useful life of the assets as prescribed by Schedule II to the Companies Act, 2013.


During the year, cost of certain plant and equipment which were fully depreciated in earlier years and carried at NIL value in the books were removed with corresponding debit to accumulated depreciation reserve.


The useful life of the assets are arrived at by retaining 5% of the cost of asset as residual value except in the following where the residual value is arrived at on the basis of valuation. In respect of some unusable assets, depreciation has been accelerated and such unusable assets were written off retiming 5% of the cost. The accelerated depreciation so written off amounts to Rs. 93.12 Lakhs


On assets whose actual cost does not exceed Rs5,000 individually, depreciation has been provided at 100%.


Useful life of Tools & Moulds and Office Equipments are estimated at 3 years based on technical valuation.


In respect of Software, the useful life is estimated at 2 years.


Computers, Office Equipments, Furniture & Fixtures, Electrical Installations and Improvement to building taken on lease used in walk-in centre’s are depreciated over three years while the same category of assets in factory, branches, etc. are depreciated as per Schedule II of the Companies Act, 2013.


Component Accounting


Useful life of the whole asset and part of the asset :


In respect of all depreciable assets, it was ascertained that useful life of part of the asset is not significantly different from the “whole of assets”. Accordingly, measurement of depreciation is same for component asset and whole of the asset.


Lease hold land represents Rs,199.15 lakhs (Previous year Rs199.15 Lakhs) paid to State Industrial Promotion Corporation of Tamil Nadu Limited (SIPCOT), Chennai for 6.16 acres of land in their Oragadam Special Economic Zone (SEZ), Tamil Nadu. The lease period is 99 years and accordingly the cost is amortized effective 1st April 2013.


AS - 11 Effects of Changes in foreign exchange rates


a Purchase of imported raw materials, components, spare parts and capital goods are accounted based on retirement memos from banks. In respect of liabilities on import of raw materials, components, spare parts and capital goods which are in transit and where invoices / bills are yet to be received, the liability is accounted based on the market exchange rate prevailing on the date of the Balance Sheet.


b Yearend foreign currency denominated liabilities and receivables are translated at exchange rates prevailing as at Balance Sheet date, the difference being charged / credited to respective revenue or capital account. Any difference between the forward rate and the exchange rate on the date of inception of forward contract is recognized as discount or premium over the period of the contract.


c Other income includes realized exchange fluctuation gain on Sale of products, Sale of services of Rs63.41 lakhs (Previous year Rs117.99 lakhs).


d Derivative transactions :


The Company uses forward exchange contracts to hedge its exposure in foreign currency in respect of Imports of Inputs. a) Forward exchange contracts outstanding as at 31st March, 2017


The company has not availed any External Commercial Borrowings.


AS - 12 Government Grants


The Company has not received any Government grants during the year. Investment subsidy received from Karnataka Industrial Area Development Board (KIADB) for its Tumkur factory related investment in the year 1993-94 is now transferred to General Reserve after Statutory retention period.


AS - 13 Accounting for Investments


All Investments are long term investments and are stated at cost.


Cost of investments held in TVS Shriram Growth Fund, Chennai as on 31st March 2017 - Rs30.53 lakhs (3053.52 units at Face Value of Rs1,000/-). The market value (NAV) of these units is Rs1,015/- as on 31st March 2017, as per the account statement provided by the Investee.


Share of expenses apportioned by the investee, amounting to Rs4.2 Lakhs (419.64 units) has been debited to the Statement of Profit & Loss, based on account statement.


As on 31st March 2017, the balance number of units is 2634 amounting to Rs26.34 Lakhs.


AS - 14 Accounting for Amalgamation


This Standard is not applicable to the Company for the year under review.


AS - 15 Employee benefits


As per Accounting Standard 15 on “Employee Benefits”, the disclosures of Employee benefits as defined in the Accounting Standard are furnished below :


(a) Short term Employee Benefits


Short term employee benefits payable within twelve months of rendering the service including accumulated leave encashment, at the Balance Sheet date, are recognized as an expense as per the Company''''s scheme based on expected obligations on undiscounted basis.


(b) Long term Employee Benefits


In case of long term compensated absences i.e. long term leave encashment, the same is provided for based on actuarial valuation as at the Balance Sheet date, using the Projected Unit Credit Method.


Post retirement benefits comprising of employees Provident Fund and Gratuity Fund are accounted for as follows :


(a) Provident Fund : This is a defined contribution plan and contributions paid to the Regional Provident Fund Commissioner, Tambaram, Chennai-600 045, are charged to revenue during the period. The Company has no further obligations for future provident fund benefits other than regular contributions.


(b) Gratuity : This is a defined benefit plan and the Company’s Scheme is administered by Trustees and funds managed by the Life Insurance Corporation of India (LIC). The liability for Gratuity to employees as at the Balance Sheet date is determined based on the actuarial valuation and on the basis of demand from Life Insurance Corporation of India. The contribution paid thereof is charged in the books of accounts.


AS - 16 Borrowing costs


All borrowing costs are charged to revenue except to the extent they are attributable to qualifying assets which are capitalized. During the year under review there was no borrowing attributable to qualifying assets and hence no borrowing cost was capitalized.


AS - 17 Segment Reporting


The Company operates in two segments from 1st April, 2015 namely a) Information Technology related products and technical services and b) Distribution services. (Refer Note 26 (20)).


AS - 18 Related Party disclosure


Disclosure is made as prescribed by the Institute of Chartered Accountants of India. (Refer Note No. 26 (8)).


AS - 19 Accounting for Leases


This Standard is not applicable as the Company does not have any lease transaction during the year.


AS - 20 - Earnings Per Share


Earnings per share (Basic and Diluted) has been calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period and disclosed on the face of statement of Profit and Loss in accordance with the Standard.


AS - 26 Intangible Assets


The Company owns Intellectual Property Rights & Business Rights relating to its service business and the same is amortized over a period of ten years @ 9.5% per annum.


AS - 27 Financial Reporting of Interest in Joint Ventures


This Standard is not applicable to the Company for the year under review.


AS - 28 Impairment of Assets


As on the Balance Sheet date the carrying amounts of the assets net of accumulated depreciation is not less than the recoverable amount of such assets. Hence there is no impairment loss on the assets of the Company.


AS - 29 Provisions, Contingent Liabilities and Contingent Assets


Warranty cost on sale of products has been determined based on management estimates / historical data and provided for - Rs525.89 Lakhs (Previous Year - Rs354.84 Lakhs).


Contingent liabilities are disclosed in Note No.4 and Contested liabilities are disclosed in Note No. 5.


Contingent assets are neither recognised nor disclosed.


AS - 30 Financial Instruments : Recognition and Measurement


This Standard is not applicable.


AS - 31 Financial Instruments: Presentation


This Standard is not applicable.


AS - 32 Financial Instruments : Disclosures


This Standard is not applicable.


7 Employee Stock Option Scheme 2011 (ESOP - 2011)


In accordance with Board resolution dated 23rd July, 2011 and Shareholders’ special resolution dated 21st September,


2011 the ESOP-2011 was instituted and following are the details


i) During the year, 60,000 options granted earlier to the then Managing Director of the Company on 6th May, 2015 have been allotted on 6th May 2016. ESOP reserve of Rs1.7 Lakhs has been created during the year. Cumulative ESOP Reserve in the books of Rs17.25 Lakhs has been transferred to Securities premium on allotment of shares.


ii) Further, 3,00,000 options has been granted on 14th October, 2015 to the Chief Operating Officer of the Company, redesignated as Chief Executive Officer effective 04th May 2016 and ESOP Reserve of Rs76.00 Lakhs has been created during the year (Cumulative provision created Rs111.39 Lakhs).


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.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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