1 General Information
Jullundur Motor Agency (Delhi) Limited is a public limited company incorporated and domiciled in India, listed on the National Stock Exchange (NSE). The address of its registered office is 458-1/16, Sohna Road, Opposite New Court, Gurugram -122001. The Company is engaged in trading and distribution of automobile parts, accessories and petroleum products in India.
2 Material accounting policies
A Basis of Preparation of financial statements
The financial statements have been prepared to comply, in all material respects with the notified accounting standards under Section 133 of the Companies Act, 2013 ('the Act'). The financial statements are prepared in accordance with Indian Accounting Standards (referred to as "Ind AS") as applicable for the relevant year, under the historical cost convention on an accrual basis, except for certain financial instruments which are measured at fair values at the end of each reporting year as explained in the accounting policies below:
The material accounting policies are consistently applied by the Company except where a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
B Use of Estimates:
The preparation of financial statements in conformity with Ind AS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Difference between the actual results and estimates are recognised in the year in which the results materialise.
C Property Plant and Equipment (PPE):
(i) Tangible Assets
Property,Plant and Equipment (PPE) are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of PPE which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Improvement to PPE which has the effect of increasing the future benefits from the existing assets beyond their previously assessed standard of performance is included in the gross block.
Tangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as " capital work in progress".
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as at 1 April, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
(ii) Investment property
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
Though the company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined on the basis of circle rates.
(iii) Intangible assets
Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the assets can be measured reliably.
Intangible assets are stated at original cost less accumulated amortization and impairment losses, if any D Depreciation and amortization
Depreciation on PPE except buildings and plant and equipments is provided on the written down value basis at the rates derived, based on the useful life of the assets as specified in Schedule II to the Companies Act, 2013.
Depreciation on buildings and plant and equipment is provided on straight line basis at the rates as derived, based the useful life of the assets as specified in Schedule II to the Companies Act, 2013.
Leasehold land is amortised on a straight line basis over the unexpired period of the respective lease.
Intangible assets being software licenses are amortized on straight line basis over their estimated useful life.
E Financial Instruments
(i) Initial recognition
Financial assets and financial liabilities are recognised in the Company's statement of financial position when the Company becomes a party to the contractual provisions of the instrument. The Company determines the classification of its financial assets and liabilities at initial recognition. All financial assets and liabilities carried at fair value through statement of profit and loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets and liabilities are initially recognised at fair value plus directly attributable transaction costs, in case of financial assets and liabilities not at fair value through statement of profit and loss. However, trade recivables that do not contain significant financing component are measured at transaction price.
(ii) Subsequent Measurement
a) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
b) Financial assets carried at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding. Further, in cases where the company has made an irrevocable election, based, on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognised in other comprehensive income.
c) Financial assets carried at fair value through profit and loss
A financial asset which is not classified in any of the above categories is subsequently fair valued through profit and loss.
d) Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the Balance sheet date, the carrying amount approximates fair value due to the short maturity of these instruments.
e) Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received.
f) Investment in subsidiaries
Investment in subsidiaries is carried at cost in the financial statements.
(iii) Derecognition of financial instruments
The company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of financial liability) is derecognized from the Company's Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
(iv) Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The method used to determine fair value include available quoted market prices and discounted cash flow analysis. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized.
For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximates fair value due to the short maturity of these instruments.
F Inventories
Stock in Trade and Goods in transit are valued at cost or estimated realizable value whichever is lower. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs necessary to make the sale.
Slow moving, damaged, unsalable or obsolete inventories are identified at the each reporting date on the basis of technical evaluation by the management and valued at estimated realizable value.
G Revenue from contract with customers
(i) Sale of products
Revenue from contract with customers is recognised when the Company satisfies performance obligation by transferring promised goods and services to the customer. Performance obligations are said to be satisfied at a point of time when the customer obtains control of the goods.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of variable discounts and schemes offered by the Company as part of the contract.
(ii) Other operating revenue
Other operational revenue represents income earned from activities incidental to the business and is recognised when right to receive the income is established.
(iii) Other Income
Interest income from a financial asset is recognized using the effective interest rate.
Dividend income is recognised in the year in which the right to receive the same is established.
H Trade Receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Trade receivables are measured at their transaction price on initial recognition and are subsequently measured at amortised cost less loss/ allowance.
I Purchases
Purchases are recognised net of incentive and commission received from suppliers and adjusted for claims rejected. Incentive and commission from suppliers are recognised when no significant uncertainty exists regarding their collectability.
J Trade and other payables
These amounts represent undischarged liabilities for goods and services provided to the Company prior to the end of financial year. The amounts are unsecured and are usually paid in accordance with the terms with the vendors. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the end of the reporting period. They are recognised initially at their fair value and subsequently measured at amortized cost using the effective interest method.
K Functional currency
The functional currency of the Company is the Indian Rupee and these financial statements are presented in Indian rupees (rounded off to lakhs ).
L Employee benefits
(i) Short term employee benefits :
All employee benefits due wholly within twelve months of rendering of services are classified as short term employee benefits. Benefits like salaries, wages, leave salary, contribution to Provident Fund/ Employee State Insurance contributions etc. paid or payable during the reporting year and the expected bonus expense are recognised as an expense on an undiscounted basis in the year in which the employee renders the related service.
(ii) Post -employment benefits
a) Defined Contribution Plan
The State governed Provident Fund Scheme, Employees' State Insurance Scheme and Employees Pension Scheme are defined contribution plans. The Company has no obligation, other than the contribution payable to the Provident Fund Scheme, Employees' State Insurance Scheme and Employees Pension Scheme. The contribution paid /payable under the schemes is recognised during the year in which employee renders the related service.
b) Defined Benefit Plan
The liability is provided based on actuarial valuation certified by consulting actuary. The Company recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Remeasurements comprising of actuarial gains and losses, the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability) and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability) relating to retirement benefit plans are recognised in Other Comprehensive Income which are not reclassified to profit and loss in subsequent years.
The Company's Gratuity is Defined Benefit Retirement Plan. The Company 's liability towards Gratuity is determined using the Projected Unit Credit Method which recognises each year of service as giving rise to additional unit of employee benefit entitlement.
In respect of eligible employees including Key Mangement Personnel, the Gratuity scheme is operated through Group Gratuity Trust Scheme of Life Insurance Corporation of India.
M Income taxes
The accounting treatment followed for taxes on income is to provide for Current Income Tax and Deferred Income Tax. Income tax expense is recognized in the Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in other comprehensive income. Current income tax for current and prior period is the aggregate amount of income tax determined as payable using the tax rates and tax laws that have been enacted or substantially enacted by the Balance Sheet date. Deferred Income Tax asset and liability are recognized for all temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit and loss at the time of the transaction. Deferred Income tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A deferred tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized. Deferred tax is not provided on the undistributed earnings of subsidiaries where it is expected that the earnings of the subsidiary will not be distributed in the foreseeable future. The company offsets current tax asset and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
N Provision and Contingencies
i) Provision is recognised (for liabilities that can be measured by using a substantial degree of estimation) when:
a) the company has a present obligation as a result of a past events.
b) a probable outflow of resources embodying economic benefits is expected to settle the obligation ; and
c) the amount of the obligation can be reliably estimated.
ii) Contingent liability is disclosed in case there is ;
a) possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company : or
b) a present obligation arising from past events but is not recognised because :
(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation : or
(ii) a reliable estimate of the amount of the obligation cannot be made.
O Impairment
(i) Financial assets
The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit and loss. Loss allowance for trade receivables with no significant financing components is measured at an amount equal to lifetime ECL. For all other financial assets, ECLs are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of ECL (or reversal) that is required to adjust loss allowance at the reporting date to the amount that is required to be recognized, is recognized as an impairment gain or loss in statement of profit and loss.
(ii) Non-financial assets
Property, plant and equipment and intangible assets
Property, plant and equipment and intangible assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in the Statement of Profit and Loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the Statement of Profit and Loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
P Earning per share (EPS)
Basic EPS are computed by dividing the net profit and loss for the year attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding the during the year. Diluted earning per equity share are computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the year, unless issued at a later date. Dilutive potential equity shares are determined independently for each year presented.
Items of ""Other Comprehensive Income"" are not considered for calculation of EPS (Basic or Diluted)."
Q Dividends
The final dividend on shares is recorded as a liability on the date of approval by the shareholders, and interim dividends are recorded as a liability on the date of declaration by the Company's Board of Directors.
R Leases
The Company has adopted Ind AS 116-Leases effective 1st April, 2019, using the modified retrospective method The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116.
The Company uses significant judgment in assessing the lease, lease term and the applicable discount rate
The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.For short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the lease term.
S Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to know amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
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