3.8 Provisions (other than for employee benefits)
A provision is recognised if, as a result of a past event,
the Company has a present legal or constructive
obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are
determined by discounting the expected future cash
flows (representing the best estimate of the expenditure
required to settle the present obligation at the balance
sheet date) at a pre-tax rate that reflects current market
assessments of the time value of money and the risks
specific to the liability. The unwinding of the discount is
recognised as finance cost. Expected future operating
losses are not provided for.
3.9 Revenue recognition
i. Sale of goods
Revenue is recognised when a promise in a
customer contract (performance obligation) has
been satisfied by transferring control over the
promised goods to the customer. Control over a
promised good refers to the ability to direct the use
of, and obtain substantially all of the remaining
benefits from, those goods. Control is usually
transferred upon shipment, delivery to, upon
receipt of goods by the customer, in accordance
with the individual delivery and acceptance
terms agreed with the customers. The amount
of revenue to be recognized (transaction price)
is based on the consideration expected to be
received in exchange for goods, excluding
amounts collected on behalf of third parties such
as goods and services tax or other taxes directly
linked to sales. If a contract contains more than
one performance obligation, the transaction
price is allocated to each performance obligation
based on their relative stand-alone selling prices.
Revenue from product sales are recorded net of
allowances for estimated rebates, cash discounts
and estimates of product returns, all of which are
established at the time of sale.
For contracts that permit the customer to return
an item, revenue is recognised to the extent that
it is highly probable that a significant reversal in
the amount of cumulative revenue recognized
will not occur. Therefore, the amount of revenue
recognized is adjusted for expected returns,
which are estimated based on the historical
data. In these circumstances, a refund liability
and a right to recover returned goods asset
are recognised.
The right to recover returned goods asset is
measured at the former carrying amount of the
inventory less any expected costs to recover
goods. The refund liability is included in other
current liabilities and the right to recover
returned goods is included in the other assets.
The Company reviews its estimate of expected
returns at each reporting date and updates the
amounts of the asset and liability accordingly.
The Company recognises government grants
only when there is reasonable assurance that the
conditions attached to them will be complied with,
and the grants will be received.
3.10 Leases
The Company's lease asset classes primarily consist
of leases for land. The Company assesses whether a
contract 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
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.
At the date of commencement of the lease, the
Company recognizes a right-of-use asset (“ROU”) and a
corresponding lease liability for all lease arrangements
in which it is a lessee, except for leases with a term
of twelve months or less (short-term leases) and low
value leases. For these short-term and low value
leases, the Company recognizes the lease payments
as an operating expense on a straight-line basis over
the term of the lease.
The right-of-use assets are initially recognized at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation.
Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset. Right of use assets are evaluated
for recoverability whenever events or changes in
circumstances indicate that their carrying amounts may
not be recoverable.
The lease liability is initially measured at amortized
cost at the present value of the future lease payments.
The lease payments are discounted using the interest
rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates in the country
of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the
related right of use asset if the Company changes its
assessment if whether it will exercise an extension or a
termination option.
Lease liability and ROU asset have been separately
presented in Balance sheet and lease payments have
been classified as financing activities in the Cash
Flow Statement.
3.11 Recognition of dividend income, interest
income or expense
Dividend income is recognised in profit or loss on the
date on which the Company's right to receive payment
is established.
Interest income or expense is recognised using the
effective interest method.
The 'effective interest rate' is the rate that exactly
discounts estimated future cash payments or receipts
through the expected life of the financial instrument to:
- the gross carrying amount of the financial asset; or
- the amortized cost of the financial liability.
In calculating interest income and expense, the effective
interest rate is applied to the gross carrying amount of
the asset (when the asset is not credit-impaired) or to
the amortized cost of the liability. However, for financial
assets that have become credit-impaired subsequent
to initial recognition, interest income is calculated by
applying the effective interest rate to the amortized
cost of the financial asset. If the asset is no longer
credit-impaired, then the calculation of interest income
reverts to the gross basis.
3.12 Income tax
Income tax expense comprises current and deferred
tax. It is recognised in profit or loss except to the extent
that it relates to an item recognised directly in equity or
in other comprehensive income.
i. Current tax
Current tax comprises the expected tax payable
or receivable on the taxable income or loss for
the year and any adjustment to the tax payable
or receivable in respect of previous years.
The amount of current tax reflects the best
estimate of the tax amount expected to be paid or
received after considering the uncertainty, if any,
related to income taxes. It is measured using
tax rates (and tax laws) enacted or substantively
enacted by the reporting date. Interest expenses
and penalties, if any, related to income tax are
included in finance cost and other expenses
respectively. Interest Income, if any, related to
Income tax is included in Other Income.
Current tax assets and current tax liabilities are
offset only if there is a legally enforceable right to
set off the recognised amounts, and it is intended
to realise the asset and settle the liability on a net
basis or simultaneously.
ii. Deferred tax
Deferred tax is recognised in respect of temporary
differences between the carrying amounts
of assets and liabilities for financial reporting
purposes and the corresponding amounts
used for taxation purposes. Deferred tax is not
recognised for:
- temporary differences arising on the initial
recognition of assets or liabilities in a transaction
that is not a business combination and that affects
neither accounting nor taxable profit or loss at the
time of the transaction;
- temporary differences related to
investments in subsidiaries, associates and joint
arrangements to the extent that the Company is
able to control the timing of the reversal of the
temporary differences and it is probable that they
will not reverse in the foreseeable future
Deferred tax assets are recognised to the extent
that it is probable that future taxable profits
will be available against which they can be
used. Deferred tax assets - unrecognised or
recognised, are reviewed at each reporting date
and are recognised/ reduced to the extent that it
is probable/ no longer probable respectively that
the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are
expected to apply to the period when the asset
is realised or the liability is settled, based on the
laws that have been enacted or substantively
enacted by the reporting date.
The measurement of deferred tax reflects the tax
consequences that would follow from the manner
in which the Company expects, at the reporting
date, to recover or settle the carrying amount of
its assets and liabilities.
Deferred tax assets and liabilities are offset if there
is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income
taxes levied by the same tax authority on the
same taxable entity, or on different tax entities,
but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and
liabilities will be realised simultaneously.
3.13 Borrowing cost
Borrowing costs are interest and other costs (including
exchange differences relating to foreign currency
borrowings to the extent that they are regarded as an
adjustment to interest costs) incurred in connection
with the borrowing of funds. Borrowing costs directly
attributable to acquisition or construction of an asset
which necessarily take a substantial period of time
to get ready for their intended use are capitalised as
part of the cost of that asset. Other borrowing costs
are recognised as an expense in the period in which
they are incurred.
3.14 Earnings per share
Basic earnings per share is computed using the
weighted average number of equity shares outstanding
during the year adjusted for treasury shares held.
Diluted earnings per share is computed using the
weighted-average number of equity and dilutive
equivalent shares outstanding during the year, using
the treasury stock method for options and warrants,
except where the results would be anti-dilutive.
3.15 Contingent liability
Contingent liability is a possible obligation arising from
past events and whose existence will be confirmed only
by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of
the entity or a present obligation that arises from past
events but is not recognized because it is not probable
that an outflow of resources embodying economic
benefits will be required to settle the obligation or the
amount of the obligation cannot be measured with
sufficient reliability. The Company does not recognize
a contingent liability but discloses its existence in the
financial statements.
4 Recent accounting pronouncements
As on date of these financial statements, Ministry
of Corporate Affairs has not issued any standards/
amendments to the accounting standards which are
effective from 1 April 2025.
As at 31 March 2025, the actual performance of the cash generating unit (CGU) is lower than the budgets, the Company has
assessed the recoverable amount of the carrying value of the non-automotive segment, which represents a single CGU.
Based on such assessment, no impairment loss exists as at 31 March 2025. In order to carry out the above assessment,
the Company has considered projections of future cash flows of the CGU based on the most recent long-term forecasts.
The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the
key assumptions represent management's assessment of future trends in the relevant industries and have been based
on historical data from both external and internal sources.
b Rights, preferences and restrictions attached to equity shares
The Company has a single class of equity shares of par value of '10/- per share. Each holder of equity shares is
entitled to one vote per share. The Company declares and pays dividends in Indian Rupees and all shares issued carry
equal rights for dividend declared. The dividend proposed by the Board of Directors is subject to the approval of the
shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the residual assets of
the Company, remaining after distribution of all preferential amounts. The distribution will be in proportion to the number
of equity shares held by the shareholders.
a Effective portion of cash flow hedges
This comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
related to hedged transactions that have not yet occurred.
b Remeasurement of defined benefit liability
Remeasurements of defined benefit liability (asset) comprises actuarial gains and losses and return on plan assets
(excluding interest income).
E Capital management
The Company's policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to
sustain future development of the business. Management monitors the return on capital, as well as the level of dividends
to equity shareholders.
18 Earnings per share
Basic and diluted earnings per share
The calculations of profit attributable to equity shareholders and weighted average number of equity shares outstanding
for purposes of basic and diluted earnings per share calculation are as follows:
Note 1
The Company participates in a supply chain financing (SCF) arrangement, which is disclosed under borrowings as
“Supply Chain Financing Arrangements.” Under this arrangement, a financial institution (factor) agrees to pay participating
suppliers the amounts due from the Company on the original due dates of the invoices. The Company subsequently
settles these amounts with the factor based on extended payment terms, which exceed the normal credit terms originally
agreed with the suppliers.
The principal objective of this arrangement is to extend payment terms beyond the standard terms agreed with suppliers.
Based on the substance of the arrangement and the applicable facts and circumstances, the Company has presented
the related cash flows on a gross basis in the statement of cash flows. Accordingly, when the factor makes a payment to
the supplier, it is presented as an operating cash outflow, and the corresponding settlement by the Company to the factor
is presented as a financing cash outflow.
25 Operating segments
A Basis for segmentation
An operating segment is a component of the Company that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's
other components, and for which discrete financial information is available. All operating segments' operating results are
reviewed regularly by the Company's Managing Director (MD) to make decisions about resources to be allocated to the
segments and assess their performance.
The Company has determined two reporting segments viz. automotive and non-automotive based on the nature of
products, risk and returns and information reviewed by the Company's Chief Operating Decision Maker. The Company's
operations are entirely domiciled in India and as such all its non-current assets are located in India.
B Information about reportable segments
Information regarding the results of each reportable segment is included below. Performance is measured based on
segment profit (before tax), as included in the internal management reports that are reviewed by the Company's MD.
Segment profit is used to measure performance as managament believes that such information is most relevant in
evaluating the results of certain segments relative to other entities that operate within these industries. Inter-segment
pricing is determined on an arm's length basis.
C. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- credit risk (see C (ii));
- liquidity risk (see C (iii)); and
- market risk (see C (iv))
i. Risk management framework
The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk
management framework. The board of directors along with the top management are responsible for developing and
monitoring the Company's risk management policies.
The Company's risk management policies are established to identify and analyse the risks faced by the Company, to
set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and
systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company,
through its training and management standards and procedures, aims to maintain a disciplined and constructive control
environment in which all employees understand their roles and obligations.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the Company's receivables from customers; loans and investments.
The carrying amounts of financial assets represent the maximum credit risk exposure.
Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness
of customers to which the Company grants credit terms in the normal course of business. The Company establishes an
allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of the Company's
trade receivables, certain loans and advances and other financial assets.
a. Trade receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer.
The demographics of the customer, including the default risk of the industry and country in which the customer operates,
also has an influence on credit risk assessment.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine
incurred and expected credit losses. Given that the macro economic indicators affecting customers of the Company have
not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue.
Further, management believes that the unimpaired amounts that are past due by more than 90 days are still collectible in
full except to the extent already provided, based on historical payment behavior and extensive analysis of customer credit
risk. The impairment loss at the reporting dates related to several customers that have defaulted on their payments to
the Company and are not expected to be able to pay their outstanding balances, mainly due to economic circumstances.
The Company determines credit risk based on a variety of factors including but not limited to the age of the receivables,
cash flow projections and available press information about customers. In order to calculate the loss allowance, loss rates
are calculated using a 'roll rate' method based on the probability of a receivable progressing through successive stages
of delinquency through write-off. Roll rates are calculated separately for exposures in different stages of delinquency
primarily determined based on the time period for which they are past due.
More than 40% of the Company's customers are related parties who have been transacting with the Company for over
five years, and none of these customers' balances have been credit-impaired in the past. In monitoring customer credit
risk, customers are grouped according to their credit characteristics, and their geographic location and existence of
previous financial difficulties.
b. Cash and bank balances (includes amounts classified under other bank balances)
The Company holds cash and bank balances of INR 316.90 lakhs as at 31 March 2025 (31 March 2024: INR 456.34
lakhs). The credit worthiness of such banks and financial institutions are evaluated by the management on an ongoing
basis and is considered to be good.
c. Security deposits and other financial assets
These balance are primarily constituted by investment in mutual funds and deposit given in relation to leasehold
premises occupied by the Company for carrying out its operations. The Company does not expect any losses from
non-performance by these counter-parties.
iii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity
is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both
normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The Company uses activity-based costing to cost its products and services, which assists it in monitoring cash flow
requirements and optimising its cash return on investments.
The Company aims to maintain the level of its cash and cash equivalents and other highly marketable debt investments
at an amount in excess of expected cash outflows on financial liabilities (excluding trade payables).
As disclosed in Note 20, the Company has borrowings that contains loan covenants. A future breach of covenant may
require the Company to repay the loan earlier than indicated in the above table.
iv. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates will affect the
Companies income or the value of holdings of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters and optimising the return.
The above disclosures are provided based on the information available with the Company in respect of the registration
status of its vendors/suppliers. (Also refer Note 22)
40 Transfer pricing
The Company has international / domestic transactions with related parties during the year ended 31 March 2025.
For the year ended March 31, 2024, the Company has obtained an Accountant's report from a Chartered Accountant in
respect of transactions with related parties as required by the relevant provisions of the Income tax act, 1961 and the
same has been filed with the tax authorities.
For the current year, the Company confirms that it has maintained documents as prescribed by the Income-tax Act, 1961
to prove that these transactions are at arm's length and the aforesaid legislation will not have any impact on the financial
statements, particularly on the amount of tax expense and that of provision for taxation.
a) Impact considered through cumulative information provided for the financial year during quarterly returns/ statements submission
except as at March 31,2025.
b) The above information is based on the revised returns/ statements filed.
(ii) The Company has not been declared wilful defaulter by any bank or financial institution or government or any
government authority.
(iii) The Company does not have any transactions with the companies struck off under Companies Act, 2013.
(iv) The Company has no investment in subsidiaries. Accordingly, the number of layers prescribedunder clause (87) of
section 2 of the Companies Act read with Companies (Restrictionon number of Layers) Rules, 2017 is not applicable
to the Company.
(v) The Company does not have any Benami property, where any proceeding has been initiated or pending against the
Company for holding any Benami property.
(vi) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies
beyond the statutory period.
(vii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(viii) The Company do not have any such transaction which is not recorded in the books of accounts that has been surrendered
or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or
survey or any other relevant provisions of the Income Tax Act, 1961).
(ix) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign
entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever (“Ultimate
Beneficiaries”) by or on behalf of the Company.
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(x) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with
the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever (“Ultimate
Beneficiaries”) by or on behalf of the Funding Party
(b) provide any guarantee, security or the like from or on behalf of the Ultimate Beneficiaries.
(xi) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or
both during the current or previous year.
(xii) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous
financial year.
42 Subsequent events
There are no subsequent events that have occurred after the reporting period till the date of approval of these financial
statements other than dividend recommended by the Board. (Refer Note 17)
The notes referred to above form an integral part of financial statements
As per our report of even date attached
For B S R & Co. LLP for and on behalf of the board of directors of
Chartered Accountants Igarashi Motors India Limited
Firm's Registration No. 101248W/W-100022 (CIN: L29142TN1992PLC021997)
Praveen Kumar Jain R Chandrasekaran L Ramkumar
Partner Managing Director Independent Director
Membership No. 079893 DIN: 00012643 DIN: 00090089
S Vivekchandranath P Dinakara Babu
Chief Financial Officer Company Secretary
Membership No. A14812
Place: Chennai Place: Chennai
Date: 22 May 2025 Date: 22 May 2025
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