Online-Trading Portfolio-Tracker Research Back-Office MF-Tracker
BSE Prices delayed by 5 minutes... << Prices as on Mar 28, 2024 >>   ABB 6363.3 [ 1.33 ]ACC 2490.7 [ 1.39 ]AMBUJA CEM 612.3 [ 1.76 ]ASIAN PAINTS 2846 [ 0.56 ]AXIS BANK 1048.3 [ -0.50 ]BAJAJ AUTO 9144.9 [ -0.29 ]BANKOFBARODA 264.2 [ 2.07 ]BHARTI AIRTE 1229.05 [ 0.36 ]BHEL 247.2 [ 1.77 ]BPCL 602.3 [ 1.23 ]BRITANIAINDS 4912.95 [ -0.14 ]CIPLA 1494.65 [ 1.94 ]COAL INDIA 433.75 [ 0.70 ]COLGATEPALMO 2710.9 [ 2.02 ]DABUR INDIA 523.15 [ 0.33 ]DLF 898.3 [ 1.99 ]DRREDDYSLAB 6155.15 [ 1.78 ]GAIL 181.15 [ 0.50 ]GRASIM INDS 2288.5 [ 3.74 ]HCLTECHNOLOG 1543.3 [ -0.26 ]HDFC 2729.95 [ -0.62 ]HDFC BANK 1448.2 [ 0.52 ]HEROMOTOCORP 4717.2 [ 3.21 ]HIND.UNILEV 2268.25 [ 1.26 ]HINDALCO 560.45 [ 0.52 ]ICICI BANK 1095.85 [ 1.09 ]IDFC 110.65 [ -0.58 ]INDIANHOTELS 591.35 [ 0.96 ]INDUSINDBANK 1555.7 [ 1.47 ]INFOSYS 1498.8 [ 0.99 ]ITC LTD 428.55 [ 0.13 ]JINDALSTLPOW 849.45 [ 1.88 ]KOTAK BANK 1785.8 [ 0.57 ]L&T 3774.1 [ 1.83 ]LUPIN 1617.85 [ 1.23 ]MAH&MAH 1921.35 [ 2.26 ]MARUTI SUZUK 12613.1 [ 0.74 ]MTNL 32.92 [ -3.01 ]NESTLE 2623.3 [ 2.18 ]NIIT 105.55 [ -2.72 ]NMDC 201.7 [ 1.33 ]NTPC 335.95 [ 1.60 ]ONGC 267.85 [ 2.29 ]PNB 124.35 [ 1.30 ]POWER GRID 277.05 [ 2.21 ]RIL 2976.8 [ -0.37 ]SBI 752.6 [ 2.53 ]SESA GOA 271.65 [ 0.02 ]SHIPPINGCORP 208.75 [ 3.42 ]SUNPHRMINDS 1620.5 [ 0.77 ]TATA CHEM 1080.6 [ -2.72 ]TATA GLOBAL 1095.4 [ 0.56 ]TATA MOTORS 993 [ 1.45 ]TATA STEEL 155.9 [ 2.00 ]TATAPOWERCOM 394.15 [ 1.49 ]TCS 3883.55 [ 1.20 ]TECH MAHINDR 1250.4 [ -0.26 ]ULTRATECHCEM 9745.05 [ 1.24 ]UNITED SPIRI 1134.3 [ -0.34 ]WIPRO 480.05 [ 1.66 ]ZEETELEFILMS 138.7 [ -1.87 ] BSE NSE
You can view the entire text of Notes to accounts of the company for the latest year

BSE: 532500ISIN: INE585B01010INDUSTRY: Auto - Cars & Jeeps

BSE   ` 12613.10   Open: 12589.05   Today's Range 12386.15
12723.00
+92.80 (+ 0.74 %) Prev Close: 12520.30 52 Week Range 8190.00
12724.95
Year End :2023-03 

30 SEGMENT INFORMATION

The Company is primarily in the business of manufacturing, purchase and sale of motor vehicles, components and spare parts (“automobiles”). The other activities of the Company comprise facilitation of pre-owned car sales, fleet management and car financing. The income from these activities is not material in financial terms but such activities contribute significantly in generating demand for the products of the Company.

The Board of Directors of the Company, which has been identified as being the Chief Operating Decision Maker (CODM), evaluates the Company’s performance, allocate resources based on the analysis of the various performance indicator of the Company as a single unit. Therefore there is no reportable segment for the Company.

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

The probability or likelihood of lower returns as compared to the expected return on any particular investment.

Interest risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability.

Longevity risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk

The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

The fair value of the above ULIP schemes are determined based on the Net Asset Value (NAV). Moreover, for other investments the fair value is taken as per the account statements of the insurance companies.

The weighted average duration of the defined benefit obligation of gratuity fund at 31.03.23 is 14 years (as at 31.03.22: 14 years).

The Company expects to make a contribution of ' 874 million (as at 31.03.22: ' 308 million) to the defined benefit plans during the next financial year.

Sensitivity analysis

Significant actuarial assumption for the determination of defined obligation are discount rate, expected salary growth rate, attrition rate and mortality rate. The sensitivity analysis below have been determined based on reasonably possible changes in respective assumption occurring at the end of reporting period, while holding all other assumptions constant.

If the discount rate increases (decreases) by 1%, the defined benefit obligation would decrease by ' 1,103 million (increase by ' 1,297 million) (As at 31.03.22: decrease by ' 996 million (increase by ' 1,177 million)).

If the expected salary growth rate increases (decreases) by 1%, the defined benefit obligation would increase by ' 1,162 million (decrease by ' 1,003 million) (As at 31.03.22: increase by ' 1,074 million (decrease by ' 931 million)).

The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and post employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

Level 1: Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market. This category consists of quoted equity shares and debt based open ended mutual funds.

Level 2: Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly. This level of hierarchy consists of debt based close ended mutual fund investments and over the counter (OTC) derivative contracts.

Level 3: Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main item in this category are unquoted equity instruments.

The fair value of the financial assets are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in debt mutual funds: Fair value is determined by reference to quotes from the financial institutions, i.e. net asset value (NAV) for investments in mutual funds declared by mutual fund house.

Derivative contracts: The Company has entered into variety of foreign currency and commodity forward contracts and swaps to manage its exposure to fluctuations in foreign exchange rates and commodity price risk. These financial exposures are managed in accordance with the Company’s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data.

Quoted equity investments: Fair value is derived from quoted market prices in active markets.

Unquoted equity investments: Fair value is derived on the basis of income approach, in this approach the discounted cash flow method is used to capture the present value of the expected future economic benefits to be derived from the ownership of these investments.

33.2 Financial risk management

The Company’s activities expose it to market risk, liquidity risk and credit risk. In order to minimise any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts, foreign currency option contracts are entered to hedge certain foreign currency risk exposures and interest rate swaps to hedge variable interest rate exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

Other than financial assets mentioned above, none of the financial assets were impaired and there were no indications that defaults in payment obligations would occur.

(B) Liquidity risk

Liquidity risk refers to the risk that the Company can not meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and to ensure funds are available for use as per the requirements.

The Company operates with a low Debt Equity ratio. The Company raises short term rupee borrowings for cash flow mismatches and hence carries no significant liquidity risk. The Company has access to the borrowing facilities of ' 49,700 million as at 31.03.2023 (' 49,700 million as at 31.03.2022) to honour any liquidity requirements arising for business needs. The Company has large investments in debt mutual funds which can be redeemed on a very short notice and hence carries negligible liquidity risk.

The financial risk management of the Company is carried out under the policies approved by the Board of Directors. Within these policies, the Board provides written principles for overall risk management including policies covering specific areas, such as foreign exchange risk management, commodity risk management and investment of funds.

(A) Credit risk

Credit risk arises from the possibility that the counter party may not be able to settle their obligations. To manage trade receivable, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and aging of such receivables.

Financial instruments that are subject to such risk, principally consist of investments, trade receivables, loans and advances and derivative instruments. None of the financial instruments of the Company results in material concentration of credit risks.

(C) Market risk

(i) Foreign currency risk

The Company has exposure to foreign currency risk on account of its payables and receivables in foreign currency which are mitigated through the guidelines under the foreign currency risk management policy approved by the Board of Directors. The Company enters into derivative financial instruments to mitigate the foreign currency risk.

- forward foreign exchange and options contracts for foreign currency risk mitigation

Foreign currency sensitivity analysis

The Company is mainly exposed to JPY, USD and EURO.

The following table details the Company’s sensitivity to a 10% increase and decrease in the ' against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as tabulated above and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans. A positive number below indicates an increase in profit or equity and vice-versa.

(ii) Security price risk Exposure in equity

The Company is exposed to equity price risks arising from equity investments held by the Company and classified in the balance sheet as fair value through OCI.

Equity price sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to equity price risks at the end of the year.

If the equity prices had been 5% higher / lower:

Other comprehensive income for the year ended March 31, 2023 would increase / decrease by ' 762 million (for the year ended March 31,2022: increase / decrease by ' 665 million) as a result of the change in fair value of equity investment measured at FVTOCI.

Exposure in mutual funds

The Company manages the surplus funds majorly through investments in debt based mutual fund schemes. The price of investment in these mutual fund schemes is reflected though Net Asset Value (NAV) declared by the Asset Management Company on daily basis as reflected by the movement in the NAV of invested schemes. The Company is exposed to price risk on such Investments.

Mutual fund price sensitivity analysis

The sensitivity analysis below have been determined based on Mutual Fund Investment at the end of the reporting period.

If NAV has been 1% higher / lower:

Profit for year ended 31.03.2023 would increase / decrease by ' 4,585 million (for the year ended 31.03.2022 by ' 3,905 million) as a result of the changes in fair value of mutual fund investments.

33.3 Capital management

The Company’s Objectives when managing capital are to:

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- maintain an optimal capital structure to reduce the cost of capital

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The Company has large investments in debt mutual fund schemes wherein underlying portfolio is spread across securities issued by different issuers having different credit ratings. The credit risk of investments in debt mutual fund schemes is managed through investment policies and guidelines requiring adherence to stringent credit control norms based on external credit ratings. The credit quality of the entire portfolio investments is monitored on a quarterly basis. The Company’s overall strategy remains unchanged from previous year.

35 Leases

The Company as a Lessee

The Company’s leases primarily consists of leases for land and buildings. Generally, the contracts are made for fixed periods and does not have a purchase option at the end of the lease term. In a case where the Company has purchase option, the option is exercisable at nominal value and the Company’s obligations are secured by the lessor’s title to the leased assets for such leases.

As at 31.03.2023

As at 31.03.2022

(iv)

Income Tax

(a)

Cases decided in the Company’s favour by Appellate authorities and for which the department has filed further appeals

12,255

12,255

(b)

Cases pertaining to issues decided in favour of the Company for an earlier year but the Income Tax Department have raised a demand for a similar issue for subsequent years and are pending before Appellate authorities / Dispute Resolution Panel pursuant to appeals filed by the Company

81,493

65,457

(c)

Other cases pending before Appellate authorities / Dispute Resolution Panel in appeals filed by the Company

54,877

68,154

Total

148,625

145,866

Amount deposited under protest

9,019

8,287

(v)

Custom Duty

(a)

Cases pending before Appellate authorities in respect of which the Company has filed appeals

1,988

1,987

(b)

Others

103

90

Total

2,091

2,077

Amount deposited under protest

-

-

(vi)

Sales Tax

Cases pending before Appellate authorities in respect of which the Company has filed appeals

31

31

Amount deposited under protest

-

1

(vii)

Claims

Claims against the Company lodged by various parties

1,434

1,372

Others

4,460

3,588

37

CONTINGENT LIABILITIES

A) Claims against the Company disputed and not acknowledged as debts:

As at 31.03.2023

As at 31.03.2022

(i)

Excise Duty

(a)

Cases decided in the Company’s favour by Appellate authorities and for which the department has filed further appeals and show cause notices / orders on the same issues for other periods

1,639

1,635

(b)

Cases pending before Appellate authorities in respect of which the Company has filed appeals and show cause notices for other periods

16,008

15,482

Total

17,647

17,117

Amount deposited under protest

1,766

1,696

(ii)

Goods & Services Tax

(a)

Cases pending before High Court of Rajasthan in respect of which the Company has filed writ

10

10

(iii)

Service Tax

(a)

Cases decided in the Company’s favour by Appellate authorities and for which the department has filed further appeals and show cause notices / orders on the same issues for other periods

2,430

1,769

(b)

Cases pending before Appellate authorities in respect of which the Company has filed appeals and show cause notices for other periods

3,483

3,373

Total

5,913

5,142

Amount deposited under protest

461

93

(viii) In respect of disputed Local Area Development Tax (LADT) (upto April 15, 2008) / Entry Tax, the amounts under dispute are ' 21 million (as at 31.03.2022: ' 21 million) for LADT and ' 20 million (as at 31.03.2022: ' 20 million) for Entry Tax. The State Government of Haryana has repealed the LADT effective from April 16, 2008 and introduced the Haryana Tax on Entry of Goods into Local Area Act, 2008 with effect from the same date. After implementation of Goods & Services Act in 2017, Entry Tax Act in Haryana was repealed.

(ix) (a) The Competition Commission of India (“CCI”) had passed an order dated August 25, 2014 stating that the Company has

violated certain sections of the Competition Act, 2002 for not making diagnostic tools and genuine spare parts freely available in the open market and has imposed a penalty of ' 4,712 million. The Delhi High Court, on 16th May 2019, disposed the Company’s petition stating that the Company had alternative remedies available. Thereafter, Company filed a Special Leave Petition before the Supreme Court of India, wherein an interim stay on the CCI’s order was granted on July 1, 2019 and the stay is continuing.

(b) The Competition Commission of India (“CCI”) had initiated suo-moto proceedings in the month of February 2019 alleging that the Company has violated certain sections of the Competition Act, 2002 relating to resale price maintenance. The Company filed its response to the Director General’s investigation report against the Company before the CCI on 9th April 2021 and placed its final arguments during the virtual hearing on 15th April 2021. The Company has received the order from CCI dated August 23, 2021, whereby the Commission has arrived at a decision against the Company and a penalty of ' 2,000 million was imposed on the Company for imposing a discount control policy. The Company is of the view that the CCI has failed to consider voluminous evidence that it has submitted in its defence. The Company has been legally advised that there are fair and reasonable grounds to contest the case. The Company has filed an appeal before the National Company Law Appellate Tribunal (“NCLAT”) to vigorously defend its position against the CCI order. The NCLAT has stayed the operation of the CCI order including the cease and desist direction and penalty subject to the Company depositing 10% of the penalty imposed i.e. ' 200 million. The Company has deposited the ' 200 million and is contesting the case.

(x) The Hon’ble Supreme Court in a ruling, had passed a judgment on the definition and scope of ‘Basic Wages’ under the Employees’ Provident Funds and Miscellaneous Provision Act, 1952.

Pending issuance of guidelines by the regulatory authorities on the application of this ruling, the impact on the Company for the previous periods, if any, cannot be ascertained. Currently, the Company has started providing for the revised liability w.e.f from 1 April, 2019.

B) The amounts shown in the item (A) represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes.

38 The Company entered into a ‘Contract Manufacturing Agreement’ (CMA) with Suzuki Motor Gujarat Private Limited (SMG), a fellow subsidiary of Suzuki Motor Corporation (SMC) on December 17, 2015. In accordance with the contractual terms, SMG during the term of this agreement, shall manufacture and supply vehicles on an exclusive basis to MSIL. The consideration for the arrangement would be cost incurred by SMG to manufacture the cars which will be charged to the Company on no-profit-no-loss basis.

The Company evaluated the CMA arrangement in accordance with guidance provided in Ind AS 116 and concluded that the specified assets and right to use the same are implied in the agreement. The Company also evaluated the contractual rights and obligations including relating to pricing, termination and renewal and concluded that a reasonable certainty, as defined by Ind AS 116, does not exists across the lease period. Accordingly no right-of-use assets or lease liability has been recognised on account of the given arrangement.

The payments made towards cost of purchase of vehicles recorded during the year includes ' 20,121 million (previous year ' 17,251 million) towards a component of lease payment for specified assets (Written Down value of specified assets as on March 31,2023 is ' 100,590 million (Previous year ' 111,841 million)), as per the information provided by SMG.

47 The figures of previous year have been re-grouped, wherever necessary, to conform to the current year classification.

48 The financial statements were approved by the Board of Directors and authorised for issue on April 26, 2023.