The accounting policies mentioned herein are relating
to the standalone financial statements of the Company.
a) Brief description of the Company
TVS Motor Company Limited ('the Company') is a public
limited company incorporated and domiciled in India
whose shares are publicly traded. The registered
office is located at "Chaitanya", No. 12, Khader Nawaz
Khan Road, Nungambakkam, Chennai 600 006, Tamil
Nadu, India.
The Company manufactures two wheelers, three
wheelers, parts and accessories thereof. The
Company has manufacturing plants located at Hosur
in Tamil Nadu, Mysuru in Karnataka and Nalagarh in
Himachal Pradesh.
b) Basis of preparation
The financial statements comply in all material aspects
with Indian Accounting Standards (Ind AS) notified
under Companies (Indian Accounting Standards)
Rules, 2015 (as amended) read with Section 133 of the
Companies Act, 2013 ("the Act"), and other relevant
provisions of the Act.
The financial statements have been prepared on
the historical cost convention under accrual basis of
accounting except for certain financial assets and
liabilities (as per the accounting policy below), which
have been measured at fair value.
These financial statements for the year ended 31st
March 2026 have been approved and authorized for
issue by the board of directors at its meeting on 13th
May 2026.
c) Use of estimates
The preparation of financial statements requires
management to make certain estimates and
assumptions that affect the amounts reported in
the financial statements and notes thereto. The
management believes that these estimates and
assumptions are reasonable and prudent. However,
actual results could differ from these estimates.
Any revision to accounting estimates is recognised
prospectively in the current and future period. The
estimates and underlying assumptions are reviewed
on an ongoing basis.
This note provides an overview of the areas that
involved a higher degree of judgment or complexity,
and of items which are more likely to be materially
adjusted due to estimates and assumptions turning
out to be different than those originally assessed.
Detailed information about each of these estimates
and judgments are included in the relevant notes
together with information about the basis of calculation
for each affected line item in the financial statements.
d) Significant Estimates and judgments
The areas involving critical estimates or judgments are:
i) Estimation of fair value of unlisted securities - Refer
Note 29
ii) Defined benefit obligation - Refer Note 33
iii) Estimation of useful life of Property, Plant and
Equipment - Refer Note 1(f) and 1(g)
iv) Estimation and evaluation of provisions and
contingencies relating to tax litigations - Refer
Note 40(a).
e) Revenue recognition
Performance obligation: The revenue is recognized on
fulfilment of performance obligation. Revenue excludes
taxes or duties collected on behalf of the government.
Sale of products
The Company earns revenue primarily from sale of
automotive vehicles, parts and accessories.
Payment for the sale is made as per the credit terms in
the agreements with the customers. The credit period
is generally short term, thus there is no significant
financing component.
The Company's contracts with customers do not
provide for any right to returns, refunds or similar
obligations. The Company's obligation to repair or
replace faulty products under standard warranty
terms is recognised as a provision. (Refer Note 37)
Revenue is recognised when the performance
obligations are satisfied and the control of the goods
is transferred, being when the goods are delivered as
per the relevant terms of the contract at which point
in time the Company has a right to payment for the
goods, customer has possession and legal title to the
goods, customer bears significant risk and rewards of
ownership and the customer has accepted the goods
or the Company has objective evidence that all criteria
for acceptance have been satisfied.
Sale of services
The Company also earns revenue from providing
Technical, IT services and Royalty on usage of
Company's technical knowhow.
I n respect of Technical, IT services, the revenue is
recognised on a time proportion basis as the customer
simultaneously receives and consumes the benefits
as the obligations are performed. Payment for the
services provided are received as per the credit
terms agreed with the customers. The credit period is
generally short term, and thus there is no significant
financing component.
In respect of Royalty, the performance obligation is,
to provide the right-to-use the Company's technical
knowhow by the customers, for which usage-based
royalty is charged. Payment for the services provided
is received as per the credit terms as agreed with the
customers. The credit period is generally short term,
and thus there is no significant financing component.
Warranty Obligations
The Company provides warranties for products sold
as per terms of the contract with ultimate customers.
These warranties are considered as assurance type
warranties and are accounted for under Ind AS 37-
Provisions, Contingent Liabilities and Contingent Assets.
Significant judgements
There are no significant judgements made by the
Company in determining the timing of satisfaction of
performance obligation. It is determined as per the
terms of the contract.
f) Property, Plant and Equipment
Property, plant and equipment (including land,
building, furniture and fixtures, office equipment,
vehicles, etc.) held for use in the production or supply
of goods or services, or for administrative purposes.
Freehold Land is carried at historical cost. All other
items of Property, Plant and Equipment are stated at
cost of acquisition or construction less accumulated
depreciation /amortisation, and impairment if any.
Cost includes purchase price, taxes and duties, labour
cost and directly attributable overheads incurred
up to the date the asset is ready for its intended use
net of cost reimbursed if any. However, cost excludes
Goods and Services Tax to the extent credit of the tax is
availed of.
Such assets are classified to the appropriate categories
of property, plant and equipment when completed
and ready for its intended use. Property, plant and
equipment not ready for the intended use, on the date
of Balance sheet, are disclosed as "Capital work-in
progress".
Subsequent costs are included in the asset's
carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the Company and the cost of the item can
be measured reliably. The carrying amount of any
component accounted for as separate asset is
derecognised when replaced. All other repairs and
maintenance are charged to Profit and Loss during the
reporting period in which they are incurred.
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising
on the disposal or retirement of an item of property,
plant and equipment is determined as the difference
between the sales proceeds and the carrying amount
of the asset and is recognised as profit or loss with in
other income /expenses.
g) Depreciation and amortisation
i) Depreciation on property, plant and equipment
is charged over the estimated useful life of the
asset or part of the asset (after considering the
required number of shifts in use) as evaluated by
a Chartered Engineer, on straight line method,
in accordance with Part A of Schedule II to the
Companies Act 2013. The useful life of the Property,
plant and equipment are reviewed annually with
respect to estimates and changes if any are,
being accounted for on a prospective basis.
i i) Keeping in mind the rigorous and periodic
maintenance program followed by the Company,
the estimated useful life of the tangible fixed
assets as assessed by the Chartered Engineer
and followed by the Company is given below:
iii) Tools and dies are generally depreciated based on
quantity of components manufactured, subject to
a maximum of 5 years. Tools and dies used for low
volume models are depreciated over a period of
9 years.
iv) Residual values and useful lives are reviewed, and
adjusted, if appropriate, for each reporting period.
v) On property, plant and equipment added /
disposed of during the year, depreciation is
charged on pro-rata basis from the date of
addition / till the date of disposal.
vi) Depreciation in respect of tangible assets costing
less than H 10,000/- is provided at 100%.
h) Intangible assets
Intangible assets acquired separately
I ntangible assets with finite useful lives that are
acquired separately and the estimated useful life is
more than one year, is capitalised and carried at cost
less accumulated amortisation and accumulated
impairment losses.
Internally-generated intangible assets
Expenditure on research activities is recognised as an
expense in the period in which it is incurred. An internally
generated intangible asset arising from development
phase of internal project is recognised, if and only if,
the conditions under the Ind AS 38 - Intangible Asset,
are fulfilled. If the conditions are not fulfilled the same
is recognised in profit and loss in the period in which it
is incurred.
The intangible assets are amortised on straight line
basis over its useful life, viz., 2-3 years in the case of
software and 6 to 10 years in the case of Design,
Development and Technical knowhow. The useful life
of the Intangible assets are reviewed annually with
respect to estimates and changes if any are, being
accounted for on a prospective basis.
An intangible asset is derecognised on disposal, or
when no future economic benefits are expected
from use or disposal. Gains or losses arising from
derecognition of an intangible asset, measured as
the difference between the net disposal proceeds and
the carrying amount of the asset, and is recognised as
profit or loss with in other income /expenses.
i) Impairment of Non-financial Assets
Assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss
is recognised for, the amount by which the asset's
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's
fair value less costs of disposal and value in use. In
assessing value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset for which the estimates of future
cash flows have not been adjusted. For the purposes
of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable
cash inflows which are largely independent of the cash
inflows from other assets or groups of assets (cash¬
generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at the end of each
reporting period.
j) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements are
measured using the currency of the primary
economic environment in which the Company
operates ('the functional currency'). i.e., in Indian
rupee (INR) and all values are rounded off to
nearest crores except otherwise indicated.
(ii) Transactions and balances
Transactions in foreign currencies are recorded
at the exchange rates prevailing on the date
of transaction.
a) Foreign currency monetary assets and
liabilities such as cash, receivables,
payables, etc., are translated at year end
exchange rates.
b) Non-monetary items denominated in foreign
currency such as investments, Property,
Plant and Equipment, etc., are valued at
the exchange rate prevailing on the date
of transaction. Non-monetary investments
measured at fair value in a foreign currency
are translated using the exchange rates at
the date when the fair value is determined.
The gain or loss arising on account of such
translation is recognized in OCI or Profit
and Loss in line with the designation of the
respective item.
c) Exchange differences arising on settlement
of transactions and translation of monetary
items are recognised as income or expense
in the year in which they arise.
k) Hedge accounting
Derivatives are initially recognised at fair value on the
date when a derivative contract is entered into and
are subsequently remeasured to their fair value at
the end of each reporting period. The accounting for
subsequent changes in fair value depends on whether
the derivative is designated as a hedging instrument,
and if so, the nature of the item being hedged. The
Company designates certain derivatives as either:
^ hedges of the fair value of recognised assets
or liabilities or a firm commitment (fair value
hedges)
^ hedges of a particular risk associated with the
cash flows of recognised assets and liabilities
and highly probable forecast transactions (cash
flow hedges), or
^ hedges of a net investment in a foreign operation
(net investment hedges).
The Company documents at the inception of the
hedging transaction the relationship between hedging
instruments and hedged items, as well as its risk
management objective and strategy for undertaking
various hedge transactions. The Company also
documents its assessment, both at hedge inception
and on an ongoing basis, of whether the derivatives
that are used in hedging transactions have been and
will continue to be highly effective in offsetting changes
in fair values or cash flows of hedged items.
The fair values of various derivative financial
instruments used for hedging purposes are disclosed
in Note 29. Movements in the hedging reserve in
shareholders' equity are shown in Note 30 (d). The full
fair value of a hedging derivative is classified as a non¬
current asset or liability when the remaining maturity of
the hedged item is more than 12 months; it is classified
as a current asset or liability when the remaining
maturity of the hedged item is less than 12 months.
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow hedges is recognised in the other comprehensive
income in cash flow hedging reserve within equity,
limited to the cumulative change in fair value of
the hedged item on a present value basis from the
inception of the hedge. The gain or loss relating to the
ineffective portion is recognised immediately in profit
and loss.
When forward contracts are used to hedge forecast
transactions, the Company generally designates only
the change in fair value of the forward contract related
to the spot component as the hedging instrument.
Gains or losses relating to the effective portion of the
change in the spot component of the forward contracts
are recognised in other comprehensive income in
cash flow hedging reserve within equity. In some cases,
the entity may designate the full change in fair value
of the forward contract (including forward points) as
the hedging instrument. In such cases, the gains and
losses relating to the effective portion of the change in
fair value of the entire forward contract are recognised
in the cash flow hedging reserve within equity.
Amounts accumulated in equity are reclassified to
profit and loss in the periods when the hedged item
affects profit and loss (for example, when the forecast
sale that is hedged takes place).
When a hedging instrument expires, or is sold or
terminated, or when a hedge no longer meets the
criteria for hedge accounting, any cumulative deferred
gain or loss and deferred costs of hedging in equity
at that time remains in equity until the forecast
transaction occurs. When the forecast transaction is
no longer expected to occur, the cumulative gain or
loss and deferred costs of hedging that were reported
in equity are immediately reclassified to profit and loss.
l) Inventories
I nventories are valued at the lower of cost and net
realisable value.
i) Cost of raw materials, components, stores and spares
are ascertained on a moving average basis.
ii) Cost of finished goods and work-in-progress
comprise of direct materials, direct labour and
an appropriate proportion of variable and fixed
overhead, the latter being allocated on the basis
of normal operating capacity. Costs are assigned
to individual items of inventory on the basis of
weighted average costs. Costs of purchased
inventory includes cost of purchase and other
cost incurred in bringing the inventories to the
current location after deducting rebates and
discounts. Net realisable value is the estimated
selling price in the ordinary course of business
less the estimated costs of completion and the
estimated costs necessary to make the sale.
Materials and supplies held for use in production
of inventories are not written down if the finished
products in which they will be used are expected
to be sold at or above cost.
iii) Provision for slow and Obsolete inventory:
The company has a policy for identifying slow/
nonmoving inventory. Based on the policy value
inventory is provided for obsolescence based
on ageing.
m) Employee benefits
i) Short term obligations
Liabilities for wages and salaries, including
non-monetary benefits that are expected to be
settled wholly within 12 months after the end of the
period in which the employees render the related
service are recognized in respect of employees'
services upto the end of the reporting period and
are measured at the amounts expected to be
paid when the liabilities are settled. The liabilities
are presented as current employee benefit
obligations in the balance sheet.
ii) Other long term employee benefit
The liabilities for earned leave are not expected
to be settled wholly within 12 months after
the end of the period in which the employees
render the related service. They are, therefore,
measured at the present value of the expected
future payments to be made in respect of
services provided by employee upto the end of
reporting period using the projected unit credit
method. The benefits are discounted using the
market yields at the end of the reporting period
that have terms approximating to the terms of
the related obligation. Remeasurements as a
result of experience adjustments and changes in
actuarial assumptions are charged to Profit and
Loss account.
The obligations are presented as current liabilities
in the balance sheet if the entity does not have
an unconditional right to defer settlement for at
least twelve months after the reporting period,
regardless of when the actual settlement is
expected to occur.
iii) Post-employment obligation
The Company operates the following post¬
employment schemes:
a) Defined benefit plans such as gratuity for
its eligible employees, pension plan for its
eligible senior managers; and
b) Defined contribution plans such as
provident fund.
Pension and gratuity obligation
The liability or asset recognised in the balance
sheet in respect of defined benefit pension and
gratuity plan is the present value of the defined
benefit obligation at the end of the reporting
period less the fair value of plan assets. The
defined benefit obligation is calculated- at the
end of each reporting period by Actuaries using
the projected unit credit method.
The present value of the defined benefit
obligation denominated in INR is determined by
discounting the estimated future cash outflows
by reference to market yields at the end of the
reporting period on the Government Bonds that
have terms approximating to the terms of the
related obligation.
The net interest cost is calculated by applying the
discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets.
This cost is included in employee benefit expense
in the statement of profit and loss.
Remeasurement gains and losses arising from
experience adjustments and changes in actuarial
assumptions are recognised in the period in
which they occur, directly in other comprehensive
income (net-off deferred tax). They are included in
retained earnings in the statement of changes in
equity and in the balance sheet.
Changes in the present value of the defined benefit
obligation resulting from plan amendments or
curtailments are recognised immediately in profit
and loss as past service cost.
Provident fund
The eligible employees of the Company are
entitled to receive benefits in respect of provident
fund, a defined contribution plan, in which both
employees and the Company make monthly
contributions at a specified percentage of the
covered employees' salary. The provident fund
contributions are made to an irrevocable trust
set up by the Company. The Company is generally
liable for annual contributions and any shortfall
in the fund assets based on the Government
specified minimum rates of return and recognises
such contributions and shortfall, if any, as an
expense in the year in which it is incurred.
iv) Bonus plans
The Company recognises a liability and an
expense for bonus. The Company recognises a
provision where contractually obliged or where
there is a past practice that has created a
constructive obligation.
n) Taxes on income
Tax expense comprises of current and deferred taxes.
The income tax expense or credit for the period is the
tax payable on the current period's taxable income
based on the applicable income tax rate for each
jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences
and to unused tax losses.
The current income tax charge is calculated on the
basis of the tax laws enacted or substantively enacted
at the end of the reporting period. Management
periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the
balance sheet method, on temporary differences
arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements.
However, deferred tax liabilities are not recognised if
they arise from the initial recognition of goodwill.
Deferred income tax is also not accounted for if it
arises from initial recognition of an asset or liability in a
transaction other than a business combination that at
the time of the transaction affects neither accounting
profit nor taxable profit and loss. Deferred income tax
is determined using tax rates (and laws) that have
been enacted or substantively enacted by the end of
the reporting period and are expected to apply when
the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable
that future taxable amounts will be available to utilise
those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount
and tax bases of investments in foreign operations
where the Company is able to control the timing of
the reversal of the temporary differences and it is
probable that the differences will not reverse in the
foreseeable future.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances
relate to income taxes levied by the same taxation
authority. Current tax assets and tax liabilities are
offset where the entity has a legally enforceable right
to offset and intends either to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit and loss,
except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
Where the Company is entitled to claim special tax
deductions for investments in qualifying assets or in
relation to qualifying expenditure (the Research and
Development or other investment allowances), the
Company accounts for such allowances as tax credits,
which means that the allowance reduce income tax
payable and current tax expense. A deferred tax asset
is recognised for unclaimed tax credits that are carried
forward as deferred tax assets.
o) Government Grants
Grants from the government are recognised at their fair
value where there is a reasonable assurance that the
grant will be received, and the Company will comply
with all attached conditions.
Government grants receivable as compensation for
expenses or financial support are recognized in profit
and loss of the period in which it becomes available.
Government grants relating to the purchase of
property, plant and equipment are included in current
/ non-current liabilities as deferred income and are
credited to profit and loss on a straight-line basis over
the expected lives of the related assets.
I n case of waiver of duty under EPCG license, such
grant is considered as revenue grant and recognized
in statement of profit and loss on positive evidence of
completion of export obligation as approved by the
Regulatory Authorities.
The benefit of a government loan at a below market-
rate of interest is treated as government grant and
is measured as the difference between proceeds
received and fair value of the loan.
p) Dividends
Dividends are recognised in profit and loss only
when the right to receive payment is established, it is
probable that the economic benefits associated with
the dividend will flow to the Company, and the amount
of dividend can be reliably measured.
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