ii. Provisions for liabilities and charges
The value of provisions recognized in the Financial Statements represent the best estimate to date made by management for a range
of issues. This estimate entails the adoption of assumptions which depend on factors that may change over time and which could
therefore have a significant impact on the current estimates made by management in preparing the Financial Statements.
iii. Useful life of Property, Plant & Equipment (PPE)
The Company reviews the estimated useful lives of PPE at the end of each reporting period.
g) Financial Instruments1) Financial Assets -a) Investment in subsidiaries and associates
The Company records the investments in subsidiaries and associates at cost less impairment loss, if any.
b) Other than investment in subsidiaries and associates
Financial assets comprise investments in equity securities, trade receivables, cash and cash equivalents, loans and other financial
assets.
Initial recognition:
All financial assets are recognized initially at Fair value plus transaction costs that are attributable to the Acquisition of the financial
asset (In case of financial assets recorded at FVTPL, transaction costs are recognized immediately in statement of profit and loss).
Purchase or sales of financial assets within a time frame established by regulation or convention in the market place (regular way
trades) are recognized on the trade date. However, trade receivables that do not contain a significant financing component are
measured at transaction price.
Subsequent measurement:i) Financial assets measured at amortized cost:
Financial assets held within a business model whose objective is to hold financial assets 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 are measured at amortized cost using Effective Interest Rate (EIR) method. The EIR amortization
is recognized as finance income in the statement of profit and loss.
The Company while applying above criteria has classified the following at amortized cost
a) Trade receivable
b) Loans
c) Other financial assets
ii) Financial asset at FVTOCI
Financial assets that are held within a business model whose objective is achieved by both collecting contractual cash flow and selling
financial asset and the contractual terms of financial assets give rise on specified dates to cash flow that are solely payments of
principal and interest on the principal amount outstanding are subsequently measured at FVTOCI. Fair value movements in financial
assets at FVTOCI are recognized in other comprehensive income
Equity instruments held for trading are classified as FVTPL. For other equity instruments the Company classifies the same as FVTOCI.
The classification is made on initial recognition and is irrevocable. Fair value changes on equity instruments at FVTOCI excluding
dividends, are recognized in other comprehensive income (OCI).
iii) Financial asset at FVTPL
All fair value changes are recognized in the Statement of Profit and loss.
Derecognition of financial asset
Financial assets are derecognized when the contractual right to cash flows from the financial asset expires or the financial asset is
transferred, and the transfer qualifies for Derecognition. On derecognition of a financial asset in its entirety, the difference between the
carrying amount (measured at the date of Derecognition) and the consideration received (including any new asset obtained less any
new liability Assumed) shall be recognized in the statement of profit and loss (except for equity instruments designated as FVTOCI).
Impairment of financial asset
Trade receivables, investments in subsidiaries and associates, loans and other financial assets are tested for impairment based on the
expected credit losses for their respective financial asset.
i) Trade receivable -
An impairment analysis is performed at each reporting date. The expected credit losses over lifetime of the asset are estimated by
adopting the simplified approach using a provision matrix which is based on historical loss rate reflecting future economic conditions.
In this approach, assets are grouped on the basis of similar credit characteristics such as industry, customer segment, past due
status and other factors which are relevant to estimate the expected cash loss from these assets.
ii) Investments in subsidiaries and associates -
Where an indication of impairment exists, the carrying amount of investment is assessed and written down immediately to its
recoverable amount
iii) Loans and other financial assets
Other financial assets are tested for impairment and expected credit losses are measured at an amount equal to 12 month expected
credit loss. If the credit risk on the financial asset has increased significantly since initial recognition, then the expected credit losses
are measured at an amount equal to life-time expected credit loss.
2) Financial liabilitiesInitial recognition and measurement
Financial liabilities are initially recognized at fair value net of any transaction cost that are attributable to the acquisition of financial
liability except financial liabilities at fair value through profit and loss which are initially measured at fair value.
Subsequent measurement
The financial liabilities are classified for subsequent measurement into following categories
- at amortized cost
- at fair value through the statement of profit and loss
Financial liabilities at amortized cost
The Company is classifying the following under amortized cost;
a) Borrowings from banks
b) Borrowings from others
c) Trade payables
d) Other Financial Liabilities
Amortized cost for financial liabilities represents amount at which financial liability is measured at initial recognition minus the principal
repayments, plus or minus the cumulative amortization using the effective interest method of any difference between that initial
amount and the maturity amount.
Financial liability at Fair Value through statement of profit and loss
Financial liabilities held for trading are measured at FVTPL.
Financial guarantee contracts (FGC)
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and are subsequently measured (if not
designated as at Fair value though profit or loss) at the higher of:
• the amount of impairment loss allowance determined in accordance with requirements of Ind AS 109; and
• the amount initially recognised less, when appropriate, the cumulative amount of income recognised.
De-recognition of financial liabilities
A financial liability is de-recognized when and only when, it is extinguished i.e. when the obligation specified in the contract is
discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is
recognised in the Statement of Profit and Loss.
3) Derivative financial instruments
The Company holds derivative financial instruments such as foreign exchange forward and currency swap contracts to mitigate the
risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank. This
category includes derivative financial assets or liabilities which are not designated as hedges.
Any derivative that is either not designated as a hedge or is so designated but is ineffective as per Ind AS 109, is categorised as a
financial asset or financial liability, at fair value through profit or loss.
Derivatives not designated as hedges are recognised initially at fair value and attributable transaction costs are recognised in the net
profit in the Statement of Profit and Loss when incurred. Subsequent to initial recognition, these derivatives re-measured at fair value
through profit or loss and the resulting exchange gains or losses are included in other income / other expenses. Assets / liabilities in
this category are presented as current assets / current liabilities if they are either held for trading or are expected to be realised within
12 months after the Balance Sheet Date.
Cash flow hedges
The Company designates certain foreign exchange forward contracts / other derivative instruments as cash flow hedges to mitigate
the risks of foreign exchanges exposure on highly probable forecast cash transactions.
When a derivative is designated as a cash flow hedge instrument, the effective portion of changes in the fair value of the derivative is
recognized in other comprehensive income and accumulated in the cash flow hedge reserve. Any ineffective portion of changes in the
fair value of the derivative is recognized immediately in the net profit in the Statement of Profit and Loss. If the hedging instrument no
longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires
or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in cash flow hedge reserve till
the period the hedge was effective remains in cash flow hedge reserve until the forecasted transaction occurs. The cumulative gain
or loss previously recognized in the cash flow hedge reserve is transferred to the net profit in the Statement of Profit and Loss upon
the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, then the amount
accumulated in cash flow hedge reserve is reclassified to net profit in the Statement of Profit and Loss.
4) Offsetting of financial assets and liabilities
Financial assets and liabilities are offset, and the net amount is presented in Balance Sheet when, and only when, the Company has
a legal right to offset the recognized amounts and intends either to settle on a net basis or to realize the assets and settle the liability
simultaneously.
5) Reclassification of financial assets
The Company does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.
h) Property, Plant and Equipment
Property, plant and equipment is stated at cost less accumulated depreciation (except in case of freehold land which is not depreciated)
and where applicable, accumulated impairment losses. Cost includes expenditure that is directly attributable to acquisition of the asset.
The cost of self-constructed assets includes the cost of materials, direct labour and any other costs directly attributable to bringing the
asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they
are located. For qualifying assets, borrowing costs are capitalised in accordance with Ind AS 23 - Borrowing costs.
When parts of an item of Property, Plant and equipment have different useful lives, they are accounted for as separate items (major
components) of property, plant and equipment.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as “Capital
work-in-progress”. Gains and losses on disposal of an item of property plant and equipment are determined by comparing the proceeds
from disposal with the carrying amount of Property, Plant and equipment and are recognized net within "other income/other expenses"
in the statement of profit and loss.
Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that
the future economic benefit embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount
of the replaced part is de-recognized. The cost of day to day servicing of property, plant and equipment are recognized in statement of
profit or loss.
Depreciation
Depreciation is recognized in the Statement of profit and loss under straight line basis over the estimated useful lives of each part of an
item of property, plant and equipment. Leased asset are depreciated over the shorter of the lease term and their useful lives unless it is
reasonably certain that the company will obtain ownership by the end of the lease term. Assets costing ?5000 or below acquired during
the year considered not material are depreciated in full retaining Re.1 per asset. The Useful life has been considered in line with schedule
II except where based on technical estimates.
i) Intangible assets
Intangible assets that are acquired by the Company, which have finite useful lives are measured at cost less accumulated amortization
and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the intangible asset.
Research costs are expensed as incurred. Development expenditures on an individual project / New Product Development are
recognised as an intangible asset when the Company can demonstrate:
a) The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
b) Its intention to complete and its ability and intention to use or sell the asset
c) How the asset will generate future economic benefits
d) The availability of resources to complete the asset
e) The ability to measure reliably the expenditure during development
Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it
relates. All other expenditure, including expenditure on internally generated goodwill and brands, are recognized in the statement of profit
and loss.
Amortization of intangible asset with finite useful lives
Amortization is recognized in the statement of profit and loss on a straight line basis over the estimated useful lives of intangible assets
from the date that they are available to use based on the estimates made by the management w.r.t the useful life and residual value.
Estimated useful life:
a) Software License is amortised over 5 years
b) New Product Development is amortised over 6 years
Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted prospectively, if appropriate.
j) Leases
At the inception of a contract, the Company assesses whether the contract is a lease or not. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a time in exchange for a consideration.
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.
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently
depreciated using the straight-line method from the commencement date to the end of the lease term.
The lease liability is initially measured at the present value of remaining lease payments at the commencement date, discounted using
the Company's incremental borrowing rate.
Right of use 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 the 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 (CGU) to
which the asset belongs.
The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12
months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an
expense over the lease term.
k) Inventories
Inventories consisting of stores and spares, raw materials, work in progress, and finished goods are valued at the lower of cost
(determined using Weighted average method) and net realizable value. Cost comprises the fair value of consideration for the purchase
and all directly attributable costs incurred in bringing the inventories to their present location and condition. Net realizable value is the
estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated cost necessary to make
the sale.
Cost includes direct material cost, direct labour cost, taxes, and duties (other than duties and taxes for which input credit is available),
freight, other direct expenses, and an appropriate proportion of variable and fixed overhead expenditure.
Cost of the purchased inventory is determined after deducting rebates and discounts. Provision is made for obsolete, non-moving &
defective stocks, wherever necessary.
l) Revenue recognition
Revenue is recognized on their accrual and when no significant uncertainty on measurability or collectability exists.
Revenue from the sale of goods is recognized when the performance obligations towards customers have been met at an amount that
reflects the consideration to which the Company believes it is entitled to in exchange for the transfer of goods to customers i.e.,
Transaction price, net of any sales returns and GST. Variable consideration in the form of trade discounts and volume rebates are netted
off from revenue. Performance obligations are deemed to have been met when the control of goods has been transferred to the
customer, depending on the individual terms of the contract with customers.
Considering the general terms of sales, there is no significant financing element included in the sales consideration.
Subsidies on export and other incentives
Government Subsidies and incentives, in the nature of Business Support Subsidy and RODTEP (Remission of Duties or Taxes on Export
Products) are recognized when there is a reasonable assurance that the condition attaching to the incentive would be complied with and
incentives will be recognized. Government grant received relating to assets are treated as Deferred Revenue and are recognized over
the period in which the economic benefit is expected from such assets.
m) Employee benefits
Employee benefits are accrued in the period in which the associated services are rendered by employees of the Company, as detailed
below:
i. Defined contribution plan (including Provident fund)
In accordance with Indian law, eligible employees receive benefit from various defined contribution plans. The employee and / or
employer make periodic contributions to these plans. The Company has no further obligations under the plan beyond its contributions.
Obligations for contributions to these plans are recognized as employee benefit expenses in the statement of profit and loss when
incurred.
ii. Defined benefit plan (gratuity)
In accordance with applicable Indian laws, the Company provides for gratuity, which is a defined benefit retirement plan covering
eligible employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment,
an amount based on the respective employee's last drawn salary and the years of employment with the Company. The Company's
net obligation in respect of the gratuity plan is calculated by estimating the amount of future benefits that the employees have earned
in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized
past service cost and the fair value of plan assets are deducted. The discount rate is the yield at the reporting date on risk free
government bonds that have maturity dates approximating the terms of the Company's obligations. The calculation is performed
annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the
recognized asset is limited to the total of any unrecognized past service costs and the present value of economic benefit available in
the form of any future refunds from the plan or reductions in the future contributions to the plan.
The Company recognizes all re-measurements of net defined benefit liability / asset directly in other comprehensive income and
presented within retained earning under equity. The Company has an employees' gratuity fund managed by the ICICI Prudential Life
Insurance Company Limited.
iii. Short term benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid under short term cash bonus or profit sharing plans if the Company has a
present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can
be estimated reliably.
iv. Compensated absences
The employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized
accrued absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the
unutilized accrued compensated absence. The Company recognizes an obligation for compensated absences in the period in which
the employee renders the services. The Company provides for the expected cost of compensated absence in statement of profit or
loss as additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated based on
actuarial valuations carried out by an independent actuary at the balance sheet date.
v. Termination benefits
Termination benefits, in the nature of voluntary retirement benefits or termination benefits are recognized in the Statement of Profit
and Loss. The Company recognises termination benefits at the earlier of the following dates:
i) When the Company can no longer withdraw the offer of those benefits; or
ii) When the Company recognises costs for a restructuring that is within the scope of Ind AS 37: Provisions, Contingent Liabilities and
Contingent Assets and involves the payment of termination benefits.
n) Finance Income and expense
Finance income comprises interest income on funds invested, dividend income, fair value gains on financial assets at fair value through
profit or loss. Interest income is recognized using effective interest method. Dividend income is recognized in statement of profit and loss
on the date when the Company's right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
Finance expense comprises interest expense on loans and borrowings, bank charges, unwinding of discount on provision, fair value
losses on financial asset through FVTPL (if any) that are recognized in the statement of profit and loss.
o) Income taxes
Income tax expense comprises current and deferred tax. Income tax expense is recognized in the statement of profit and loss except to
the extent it relates to items recognized directly in equity or in other comprehensive income. Current tax is the expected tax payable on
the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date.
Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amount of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following
temporary differences:
(i) 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
(ii) Differences relating to investments in subsidiaries and associates to the extent that it is probable that they will not reverse in the
foreseeable future.
(iii) Arising due to taxable temporary differences arising on the initial recognition of goodwill, as the same is not deductible for tax
purposes.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws
that have been enacted or substantively enacted by the reporting date. 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.
A deferred tax asset is recognized to the extent it is probable that future taxable profits will be available against which the temporary
difference can be utilized. Deferred 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 taxation arising on investments in subsidiaries and associates is recognized except where the Company is able to control the
reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred
taxation on temporary differences arising out of undistributed earnings of the equity-method accounted investee is recorded based on
the management's intention. If the intention is to realize the undistributed earnings through sale, deferred tax is measured at the capital
gains tax rates that are expected to be applied to temporary differences when they reverse. However, when the intention is to realize the
undistributed earnings through dividend, the Company's share of the income and expenses of the equity-method accounted investee is
recorded in the statement of profit and loss after considering any taxes on dividend payable by equity-method accounted investee or
deferred tax is set up in the books if the tax liability is with the Company.
p) Foreign Currency Transactions and balances
Transactions in foreign currencies are initially recognized in the financial statements using exchange rate prevailing on the date of
transaction. Monetary assets and liabilities denominated in foreign currencies are translated to the relevant functional currency at the
exchange rates prevailing at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured
at fair value are re-translated to the functional currency at the exchange rate prevailing on the date that the fair value was determined.
Non-monetary assets and liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange
rate prevalent at the date of transaction. Foreign currency differences arising on translation are recognized in statement of profit and loss
for determination of net profit or loss during the period.
q) Fair value measurements
Ind AS requires the determination of fair value for both financial and non-financial assets and liabilities. Fair value is the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market
for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal
market or the most advantageous market must be accessible to the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using
the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure
fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value
hierarchy based on the lowest level input that is significant to the fair value measurement as a whole. The fair value hierarchy is described
as below:
Level 1 - Unadjusted quoted prices in active market for identical assets and liabilities
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 - Unobservable outputs for the assets and liabilities
For assets and liabilities that are recognized in the financial statement at fair value on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy by reassessing categorization at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability and the level of fair value hierarchy.
Fair values have been determined for measurement and/or disclosures purposes based on the following methods. When applicable,
further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
(i) Investments in equity securities
The fair value is determined by reference to their quoted price at the reporting period. In the absence of quoted price, the fair value
of the financial asset is measured using valuation techniques.
(ii) Trade and other receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of
interest at the reporting date except trade receivables which do not contain a significant financing component (determined in
accordance with Ind AS 115 Revenue from Contracts with Customers) are measured at undiscounted invoice price (i.e., transaction
price) and not at fair value. However, in respect of such financial instruments , fair value generally approximates the carrying amount
due to the short-term nature of such assets.
(iii) Security Deposits
Any Security deposits paid by the Company are discounted to their fair value and thereafter accounted on amortised cost method over
the tenure of the deposits.
(iv) Derivatives
The fair value of forward exchange contracts is based on quoted price. Fair value reflects the credit risk of the instrument and includes
adjustments to take account of the credit risk of the Company and the counter party when appropriate.
(v) Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash
flow discounted at the market rate of interest at the reporting date.
r) Current and non-current classification
An asset is classified as current if:
(a) it is expected to be realized or sold or consumed in the Company's normal operating cycle;
(b) it is held primarily for the purpose of trading;
(c) it is expected to be realized within twelve months after the reporting period; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period.
All other assets are classified as non-current.
A liability is classified as current if:
(a) it is expected to be settled in normal operating cycle;
(b) it is held primarily for the purpose of trading;
(c) it is expected to be settled within twelve months after the reporting period;
(d) it has no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
s) Segment Reporting
Operating segments are identified and reported considering the different risks and returns, the organization structure and the internal
reporting system to the chief operating decision maker. The Company's business activity falls within a single reportable business
segment, viz, Automotive Tyres, Tubes and Flaps. Geographical segments are considered as India and rest of the world.
t) Warranty
Provision is made for estimated warranty claims in respect of products sold which are still under warranty at the end of the reporting
period. Management estimates the provision based on historical warranty claim information and any recent trends that may suggest
future claims could differ from historical amounts.
15.4 Rights, preferences and restrictions attached to shares -
Equity shares - The Company has one class of equity shares having a par value of ?10/- each. Each share holder is eligible for one vote
per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual
General Meeting, except in case of interim dividend. Each shareholder also has a residual interest in the assets of the Company in
proportion to their shareholding.
15.5 The Company does not have any outstanding shares issued under options.
15.6 The Company does not have any bonus share issued, share issued for consideration other than cash and shares bought back during
the period of five years immediately preceding the reporting date (31st March, 2026).
Nature and purpose of other reserves
Securities Premium represents premium received on equity shares issued, which can be utilised only in accordance with the provisions of
the Companies Act 2013 for specified purposes.
General Reserve is created out of the profits earned by the Company by way of transfer from surplus in the statement of profit and loss.
Mandatory transfer to general reserve is not required under the Companies Act 2013.
Capital reserve represents reserve of capital nature taken to this head under the erstwhile GAAP.
Reserve on amalgamation represents reserve created as a result of amalgamation
Retained Earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other
distributions paid to shareholders.
Additional Information :
Details of Security for Secured Loans:
a) Term Loan availed from HDFC Bank - This is repayable over 5 years with an interest rate of 6.4% p.a., cross currency swap and interest
rate swap at interest rate of 1.4% p.a. Loan is secured by exclusive first charge on the Specific Fixed Assets/ Immovable property.
b) Term Loan Availed from Axis Bank: This is repayable over 8 years including 36 Months of Moratorium with an interest rate of 7.8% p.a,
cross currency swap and interest rate swap at interest rate of 1.44% p.a. Loan is secured by first charge over specific plant and
machinery or unencumbered land and building.
c) Term Loan Availed from ICICI Bank: This is repayable over 6 years including 14 Months of Moratorium with an interest rate of 8.75% p.a,
cross currency swap and interest rate swap at interest rate of 4.50% p.a. Loan is secured by first charge over specific assets identified
for this purpose
d) Term Loan Availed from Axis Bank: This is repayable over 7 years including 18 Months of Moratorium with an interest rate of 8.19% p.a,
cross currency swap and interest rate swap at interest rate of 4.44% p.a Loan is secured by Exclusive charge on Plant & Machinery.
e) Term Loans from Axis/ICICI/HDFC Banks are covered by Cross Currency Swaps.
Additional Information :
a. Details of Security for Secured Loans
Working Capital facilities availed from State Bank of India are secured by a first charge on the entire Current Assets of the Company viz
Raw Materials, Semi-finished Goods, Finished Goods, Stores, Spares, Trade Receivables, and Other Current Assets both present and
future. Interest rate charged is the half-yearly MCLR 0.15%, with a half-yearly reset.
b. Details of Unsecured loans
Cash credit facility availed from HDFC bank at average interest rate of 7.86% p.a.
Cash credit facility availed from Axis bank at Interest rate charged is half-yearly MCLR, with a half-yearly reset.
23A. Supplier Finance Arrangements
The Company participates in a supply chain financing arrangement (SCF) which is disclosed under trade payables under which its suppliers
may elect to receive early payment of their invoice from a bank by factoring their receivable from the Company. Under the arrangement, a
bank agrees to pay amounts to a participating supplier in respect of invoices owed by the Company and receives settlement from the
Company at a later date.
The Company has not derecognised the original liabilities to which the arrangement applies because neither a legal release was obtained
nor the original liability was substantially modified on entering into the arrangement. From the Company's perspective, the arrangement
does not extend payment terms beyond the normal terms agreed and therefore discloses the amounts factored by suppliers within trade
payables because the nature and function of the financial liability remain the same as those of other trade payables.
Mortality - Indian Assured Lives Mortality (2012-14) Ultimate
(i) Discount rate - based on prevailing market yields of Indian government securities as at the balance sheet date for estimated term of
obligations.
(ii) Expected rate of return on plan assets - expectation of the average long term rate of return expected on investment of the funds during
the estimated terms of the obligations.
(iii) Salary Escalation rate - estimates of future salary increases considered taken into account the inflation, seniority, promotion and other
relevant factors contributions.
The Company's best estimate of contribution during the next year is ?3.51 crores.
Interest Rates Risk:
The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation
will tend to increase. Thus the plan exposes the Company to the risk of fall in interest rates. Some times, the fall can be permanent, due to
a paradigm shift in interest rate scenarios because of economic or fiscal reasons. 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 (as shown in financial statements).
Even for funded schemes, a paradigm downward shift in bond yields may affect the reinvestment yields and may increase ultimate costs.
Investment Risk:
For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of
instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in
wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
Salary Risk:
The present value of the defined benefit plan is calculated with the assumption of salary escalation rate (SER), which is applied to find the
salary of plan participants in future, at the time of separation higher than expected increases in salary will increase the defined benefit
obligation and will have an exponential effect.
Demographic Risk:
Demographic assumptions are required to assess the timing and probability of a payment taking place. This is the risk of volatility of results
due to unexpected nature of decrements that include mortality, attrition, disability and retirement. The effects of this decrement on the DBO
depend upon the combination salary increase, discount rate, and vesting criteria and therefore not very straight forward. It is important not
to overstate withdrawal rate because the cost of retirement benefit of a short serving employees will be less compared to long service
employees.
Interest Rates Risk:
The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation
will tend to increase. Thus the plan exposes the Company to the risk of fall in interest rates. Some times, the fall can be permanent, due to
a paradigm shift in interest rate scenarios because of economic or fiscal reasons. 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 (as shown in financial statements).
Even for funded schemes, a paradigm downward shift in bond yields may affect the reinvestment yields and may increase ultimate costs.
Investment Risk:
For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of
instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in
wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
Salary Risk:
The present value of the defined benefit plan is calculated with the assumption of salary escalation rate (SER), which is applied to find the
salary of plan participants in future, at the time of separation higher than expected increases in salary will increase the defined benefit
obligation and will have an exponential effect.
Demographic Risk:
Demographic assumptions are required to assess the timing and probability of a payment taking place. This is the risk of volatility of results
due to unexpected nature of decrements that include mortality, attrition, disability and retirement. The effects of this decrement on the DBO
depend upon the combination salary increase, discount rate, and vesting criteria and therefore not very straight forward. It is important not
to overstate withdrawal rate because the cost of retirement benefit of a short serving employees will be less compared to long service
employees.
36. Segment reporting
The Company has identified manufacture and sale of tyres as the only reportable segment taking into account the different risks and returns,
the organization structure and the internal reporting systems. Accordingly disclosure of segment-wise information is not applicable under
Ind AS 108 - Operating Segments.
38. Related party and transactionsa) Names of related parties and related party relationship
The related party where control/joint control/significant influence exists are subsidiaries, joint ventures and associates. Key managerial
personnel are those persons having authority and responsibility in planning, directing and controlling the activities of the entity, directly or
indirectly, including any director whether executive or otherwise. Key management personnel include the board of directors and other senior
management executives.
a. Derivative financial instruments(i) Forward and cross currency swap contract
Foreign exchange forward contracts and cross currency swap are purchased to mitigate the risk of changes in foreign exchange rates
associated with certain payables, receivables and forecasted transactions denominated in certain foreign currencies. The Company's
exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense
is denominated in a foreign currency).The Company manages its foreign currency risk by using foreign currency forward contracts and
currency swaps. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives
to match the terms of the hedged exposure. For hedges of forecast transactions, the derivatives cover the period of exposure from the point
the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in
the foreign currency. The counterparties for these contracts are generally banks or financial institutions. The details of outstanding forward
contracts as at March 31,2026 and March 31,2025 are given below:
The Company has exposure to the following risks from its use of financial instruments:
40.1 Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The
Company has adopted a policy of dealing only with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a
means of mitigating the risk of financial loss from defaults.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit
evaluation is performed on the financial condition of accounts receivable.
The management believes that the probability of any outflow on account of financial guarantees issued by the Company being called on is
remote and hence the same is not considered in the above assessment. Refer Note 38(b) for details of the financial guarantee issued as at
March 31,2026.
Credit risk is managed by the entity. Considering the credit risk assessment made by the management and based on past history, provision
for receivables amounting to ?2.75 crores (PY - ?1.55 crores) has been made under the simplified approach.
40.2 Liquidity risk
The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously
monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The following table detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment
periods. The information included in the table have been drawn up based on the undiscounted cash flows of financial liabilities based on the
earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual
maturity is based on the earliest date on which the Company may be required to pay.
40.3 Market risk
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of a business.
The major components of market risk are commodity price risk, foreign currency exchange risk and interest rate risk
40.3.1 Commodity Price Risk - The primary commodity price risks that the Company is exposed to include rubber prices that could
adversely affect the value of the Company's financial assets or expected future cash flows.
40.3.2 Foreign currency risk management - The Company imports raw materials from outside India as well as make export sales to
countries outside India. The Company is, therefore, exposed to foreign currency risk principally arsing out of foreign currency movement
against the Indian Currency. Foreign currency exchange risks are managed by entering into forward contracts against firm purchase
commitment and receivables.
40.3.2.1 The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the end of the
reporting period are as follows:
40.3.2.2 Foreign currency sensitivity analysis
The Company is principally exposed to foreign currency risk against USD & EURO. Sensitivity of profit or loss arises mainly from USD &
EURO denominated receivables and payables.
As per management's assessment of reasonable possible changes in the exchange rate of /- 5% between USD-INR and EURO-INR
currency pair, sensitivity of profit/(loss) only on outstanding foreign currency denominated monetary items at the period end is presented
below.
40.3.2.3 Forward foreign exchange contracts
It is the policy of the Company to enter into forward exchange contracts based on the net exposures for the future periods evaluated on a
monthly basis, considering both existing exposures and potential forecast transactions.
40.3.3 Interest rate risk management
The Company is exposed to interest rate risk because of borrowal of short term funds at floating interest rates.
Interest rate sensitivity analysis
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company's Profit for the year ended
March 31,2026 would decrease/increase by ?4.98 Crores; as against ?4.25 Crores for the year ended March 31,2025.
41. Capital Management
For the purpose of the Company's capital management, capital includes issued equity capital, securities premium, general reserve and all
other equity reserves attributable to the equity holders of the company. The primary objective of the Company's capital management is to
maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of
borrowings and related covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to sharehold¬
ers, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by
fund attributable to Equity Shareholders. The Company includes within net debt, interest bearing loans and borrowings less cash and cash
equivalents, excluding discontinued operations.
47. Exceptional Item -
(i) The Company had a Voluntary Retirement Scheme for its employees. Under this scheme, the Company has received and approved
applications for a sum of ?5.36 crores in the current year (PY ?5.30 crores).
(ii) The Government of India had notified four Labour Codes which became effective from 21st November 2025. Final central rules were
notified on 8th May 2026, while notification of state rules including those for Tamil Nadu is awaited.
To comply with the above, the Company had taken an actuarial valuation in accordance with Ind AS 19 - Employee Benefits, read with
relevant guidance issued by the Institute of Chartered Accountants of India, and had recognized an incremental obligation of ?10.61
crores as past-service cost during the year. Considering the non-recurring nature of the impact arising on first-time application of the
Labour Codes, the same has been disclosed as an exceptional item.
The Company is in the process of evaluating and implementing the necessary changes in the employee benefit policies and will continue
to monitor further regulatory developments including notifications of state rules and additional clarifications to assess the consequential
financial impact, if any.
(iii) The Company has received interim eligibility certificate from State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT) for
a structured package of assistance in the form of an Investment Promotion Capital Subsidy (the "Grant"), which was sanctioned by the
State Government of Tamil Nadu in November 2021. The Grant will be received over 12 years, in equal annual instalments, subject to
fulfilment of Grant related conditions as laid down by the Government.
The Company has adopted Income Approach as laid down in Ind AS 20 "Accounting for Government Grants and Disclosure of Govern¬
ment Assistance" for accounting the aforementioned Grant. Accordingly grant income of ?18.81 crores attributable towards completed
useful life of eligible assets upto March 31,2025 recognised under exceptional item.
(iv) The Company has received eligibility certificate from State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT) for a
structured package of assistance in the form of an Green Industry Incentive (the "Grant"), which was sanctioned by the State Govern¬
ment of Tamil Nadu in November 2021. This is a one-time Grant.
The Company has adopted Income Approach as laid down in Ind AS 20 "Accounting for Government Grants and Disclosure of Govern¬
ment Assistance" for accounting the aforementioned Grant. Accordingly grant income of ?0.08 crores attributable to the financial year
2024-25 recognised under exceptional item.
(v) During 2024-25, The Regional Provident Fund Commissioner, Madurai issued final orders under Section 7-A of the Employees'
Provident Funds and Miscellaneous Provisions Act, 1952, for provident fund applicability on certain salary/wages components for the
period April 2012 to July 2017. Potential additional liability arising out of the aforesaid orders has been estimated and accounted for as
exceptional item amounting to ?6.10 crores during the year ended March 31,2025.
48. Previous year figures: Previous year's figures have been regrouped/ reclassified wherever necessary, to conform to current year's
classification.
49. Quarterly returns filed with Banks and Financial Institutions: The amounts as per the quarterly return of inventories and book debts
submitted to the banks were lower than the amounts as per the books of account and accordingly did not affect the drawing power and the
required security cover computed in accordance with the sanctioned terms.
51. The Government of Tamil Nadu (GoTN) has sanctioned a structured package of assistance to the Company under the Tamil Nadu
Industrial Policy 2021. The Company is entitled to a Fixed Capital Subsidy (referred to as “Phase I”) at the rate of 15% of Eligible Fixed
Assets, subject to a maximum of ?75.00 crores, payable over a period of 12 years in equal annual instalments upon fulfilment and continued
compliance with the prescribed investment and employment conditions.
Based on the Interim Eligibility Certificate received during the year and fulfilment of the stipulated conditions for Phase I, the Company has
recognised grant receivable at its fair value amounting to ?44.53 crores under non-current financial assets and ?6.25 crores under current
financial assets. The grant receivable is measured at present value in accordance with Ind AS 109, and the difference between the gross
entitlement and fair value is recognised and amortised over the tenure of the grant. Deferred grant income has been recognised, of which
?42.55 crores is classified under other non-current liabilities and ?7.02 crores under other current liabilities. The deferred grant income will
be recognised in the Statement of Profit and Loss on a systematic basis over the useful life of the related assets.
52. Utilisation of borrowings from Banks and Financial Institutions: During the year, the Company has not availed any new term loans.
53. The Board of Directors of the Company recommended a dividend of ?37.80 (PY - ?16.89) per equity share of ?10/each (i.e.) for the
year ended March 31,2026, subject to the approval of shareholders at the ensuing Annual General Meeting of the company.
54. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of
funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”) with the understanding, wheth¬
er recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate
Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall
whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”)
or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
55. The Company does not have any transaction which is not recorded in the Books of accounts that has been surrendered, disclosed as
income during the year in tax assessments under the income tax act,1961 (such as search or survey or any relevant provisions of Income
Tax Act,1961.
56. The Company uses an ERP as books of accounts and the same was configured to maintain audit trail and audit logs at transaction level
and database level with the application layer from 9th July 2023. Post publication of ICAI implementation guide in February 2024, direct
database level changes was also included in the audit trial scope, except for the periods where audit trail was not enabled in the prior years.
The Company shall evaluate the impact on performance by enabling the database level audit trail and incorporate the recommendation as
suggested by the ERP vendor. However, access to direct database level changes is available only to the default System user provided by
the ERP vendor.
For accounting software for which audit trail feature is enabled, the audit trail facility has been operating throughout the year for all relevant
transactions recorded in the software and audit trail feature has not been tampered with during the year.
Additionally, other than the periods where audit trail was not enabled in the prior year, the audit trail has been preserved as per the statutory
requirements for record retention.
57.Other notes
Additional information and disclosures as required under Schedule III to the act to the extent applicable to the company has been disclosed
i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding
any benami property.
ii) The Company has not traded or invested in crypto currency or virtual currency during the financial year.
iii) The Company has in respect of the investments made, complied with no. of layers as defined under section 2(87) of the Companies Act,
2013.
iv) The Company has nothing to report on compliance with approved Scheme(s) of Arrangements
v) The Company has not taken loans and borrowings from lenders other than banks and Financial Institutions.
vi) Details of Loans or advances to specified persons as defined under Companies Act, 2013 are as follows :
vii) Disclosure as required under section 186(4) of the Companies Act, 2013 -
a) Details of investments are disclosed in note 6 to the financial statements.
b) There are no loans / guarantees given by the Company (other than on behalf of wholly owned subsidiary) in accordance with Section
186 of the Act read with rules issued thereunder. Refer note 38 for details of loans/guarantees provided to wholly owned subsidiary.
viii) The Company has complied with the requirements of section 123 of the Companies Act 2013 in respect of the final dividend for previous
year paid during the year.
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