Statutory Reports
Corporate Overview
69th Annual Report 2013-14
134
Financial Statements
(Standalone)
1.
Significant accounting policies
(a)
Basis of preparation
The financial statements are prepared under the historical cost convention on an accrual basis of accounting in accordance with the generally
accepted accounting principles, Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956, (the “Act”) and the relevant
provisions thereof which continue to be applicable in respect of Section 133 of Companies Act, 2013 in terms of General Circular 15/2013 dated
September 13, 2013 of the Ministry of Corporate Affairs.
(b)
Use of estimates
The preparation of financial statements requires management to make judgments, estimates and assumptions, that affect the application of
accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent liabilities at the date of these
financial statements. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed at each balance sheet date.
Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
(c)
Revenue recognition
The Company recognises revenues on the sale of products, net of discounts and sales incentives, when the products are delivered to the dealer /
customer or when delivered to the carrier for export sales, which is when risks and rewards of ownership pass to the dealer / customer.
Sales include income from services, and exchange fluctuations relating to export receivables. Sales include export and other recurring and non-
recurring incentives from the Government at the national and state levels. Sale of products is presented gross of excise duty where applicable, and
net of other indirect taxes.
Revenues are recognised when collectability of the resulting receivables is reasonably assured.
Dividend from investments is recognized when the right to receive the payment is established and when no significant uncertainty as to
measurability or collectability exists.
Interest income is recognized on the time basis determined by the amount outstanding and the rate applicable and where no significant uncertainty
as to measurability or collectability exists.
(d)
Depreciation and amortisation
(i)
Depreciation is provided on Straight Line Method (SLM), at the rates and in the manner prescribed in Schedule XIV to the Companies
Act, 1956 except in the case of :
•
Leasehold Land – amortised over the period of the lease
•
Technical Know-how – at 16.67% (SLM)
•
Laptops – at 23.75% (SLM)
•
Cars – at 23.75% (SLM)
•
Assets acquired prior to April 1, 1975 – on Written Down Value basis at rates specified in Schedule XIV to the Companies Act,
1956.
•
Software in excess of
`
25,000 is amortised over a period of 60 months or on the basis of estimated useful life whichever is
lower.
•
Assets taken on lease are amortised over the period of lease.
(ii)
Product development costs are amortised over a period of 36 months to 120 months or on the basis of actual production to planned
production volume over such period.
(iii) In respect of assets whose useful life has been revised, the unamortised depreciable amount has been charged over the revised
remaining useful life.
(iv) Depreciation is not recorded on capital work-in-progress until construction and installation are complete and asset is ready for its
intended use.
(v)
Capital assets, the ownership of which does not vest with the Company, other than leased assets, are depreciated over the estimated
period of their utility or five years, whichever is less.
(e)
Fixed assets
(i)
Fixed assets are stated at cost of acquisition or construction less accumulated depreciation / amortization and accumulated
impairment, if any.
(ii)
Product development cost incurred on new vehicle platform, engines, transmission and new products are recognised as fixed assets,
when feasibility has been established, the Company has committed technical, financial and other resources to complete the
development and it is probable that asset will generate future benefits.
(iii) Cost includes purchase price, taxes and duties, labour cost and directly attributable overhead expenditure for self constructed assets
incurred up to the date the asset is ready for its intended use. Borrowing cost incurred for qualifying assets is capitalised up to the date
the asset is ready for intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate
of all other borrowings, if no specific borrowings have been incurred for the asset. The cost of acquisition is further adjusted for
exchange differences relating to long term foreign currency borrowings attributable to the acquisition of depreciable asset w.e.f. April
1, 2007.
(iv) Software not exceeding
`
25,000 and product development costs relating to minor product enhancements, facelifts and upgrades are
charged off to the Statement of Profit and Loss as and when incurred.
(f)
Impairment
At each Balance Sheet date, the Company assesses whether there is any indication that the fixed assets with finite lives may be impaired. If any such
NOTES FORMING PART OF FINANCIAL STATEMENTS
