135
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. Where it is not possible
to estimate the recoverable amount of individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the
asset belongs.
As of March 31, 2014 none of the fixed assets were considered impaired.
(g)
Leases
(i)
Finance lease
Assets acquired under finance leases are recognised as an asset and a liability at the commencement of the lease, at the lower of the fair
value of the assets and the present value of minimum lease payments. The finance expense is allocated to each period during the
lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Assets given under finance
leases are recognised as receivables at an amount equal to the net investment in the lease and the finance income is based on a
constant rate of return on the outstanding net investment.
(ii)
Operating lease
Leases other than finance lease, are operating leases, and the leased assets are not recognised on the Company’s Balance Sheet.
Payments under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the term of the lease.
(h)
Transactions in foreign currencies and accounting of derivatives
(i)
Exchange differences
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities are translated at year end exchange rates.
(1)
Exchange differences arising on settlement of transactions and translation of monetary items other than those covered by
(2) below are recognized as income or expense in the year in which they arise. Exchange differences considered as borrowing
cost are capitalized to the extent these relate to the acquisition / construction of qualifying assets and the balance amount is
recognized in the Statement of Profit and Loss.
(2)
Exchange differences relating to long term foreign currency monetary assets / liabilities are accounted for with effect from April
1, 2007 in the following manner:
- Differences relating to borrowings attributable to the acquisition of the depreciable capital asset are added to / deducted from
the cost of such capital assets.
- Other differences are accumulated in Foreign Currency Monetary Item Translation Difference Account, to be amortized over
the period, beginning April 1, 2007 or date of inception of such item, as applicable, and ending on March 31, 2011 or the date
of its maturity, whichever is earlier.
- Pursuant to notification issued by the Ministry of Corporate Affairs on December 29, 2011, the exchange differences on long
term foreign currency monetary items (other than those relating to acquisition of depreciable assets) are amortised over the
period till the date of maturity or March 31, 2020, whichever is earlier.
(ii)
Hedge accounting
The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to
highly probable forecast transactions. With effect from April 1, 2008, the Company designates such forward contracts in a cash flow
hedging relationship by applying the hedge accounting principles set out in Accounting Standard 30- Financial Instruments:
Recognition and Measurement.
These forward contracts are stated at fair value at each reporting date. Changes in the fair value of these forward and option contracts
that are designated and effective as hedges of future cash flows are recognized directly in Hedging Reserve Account under
Reserves and Surplus, net of applicable deferred income taxes and the ineffective portion is recognised immediately in the Statement of Profit
and Loss.
Amounts accumulated in Hedging Reserve Account are reclassified to Profit and Loss in the periods during which the forecasted
transaction occurs.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies
for hedge accounting. For forecasted transactions, any cumulative gain or loss on the hedging instrument recognised in Hedging
Reserve Account is retained there until the forecasted transaction occurs.
If the forecasted transaction is no longer expected to occur, the net cumulative gain or loss recognised in Hedging Reserve Account
is immediately transferred to the Statement of Profit and Loss. Foreign currency options and other derivatives are stated at fair value as
at the year end with changes in fair value recognized in the Statement of Profit and Loss.
(iii) Premium or discount on forward contracts other than those covered in (ii) above is amortised over the life of such contracts and is
recognised as income or expense.
(i)
Product warranty expenses
The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on
the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective
actions on product failures. The timing of outflows will vary as and when warranty claim will arise - being typically up to 3 to 4 years.
(j)
Income on vehicle loan
Interest income from loan contracts are accounted for by using the Internal Rate of Return method. Consequently, a constant rate of return on the
NOTES FORMING PART OF FINANCIAL STATEMENTS
Independent Auditors’Report
Balance Sheet
(134-169)
Statement of Profit and Loss
Cash Flow Statement
Notes to Accounts
