WABCO-TVS (INDIA) LIMITED INFORMATION MEMORANDUM ...

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WABCO-TVS (INDIA) LIMITED INFORMATION MEMORANDUM Significant Accounting Policies and Notes on Accounts: Page 48 of 95 Annexure D 1. Background: WABCO-TVS (INDIA) Limited (hereinafter referred to as ‘‘the Company’ or ‘WABCO-TVS’) was incorporated on 18 th November 2004 to engage in the business of manufacture, sale and supply of air assist and full air actuation systems and components and accessories, design and development of software and testing facilities thereof for automotive and non-automotive applications. These financial statements are prepared for the period from 1 st April 2007 to 31 st March 2008 in connection with the submission of the Company’s application to the Institutions / Governing Bodies for the filing with the Stock Exchanges in India. 2. Scheme: Pursuant to the Scheme, the Company has taken over the brakes business undertaking of the Demerged Company with effect from the Appointed Date. The Scheme has been given effect to in these financial statements. The assets and liabilities of Brakes Business transferred to and vested in the Company as on the Appointed Date are as follows: Rs.in lakhs Particulars Amount Assets Fixed assets 10,126.79 Leasehold land 351.59 Capital work in progress 332.61 Investments 820.02 Current Assets, Loans and Advances 9,842.59 Total Assets 21,473.60 Liabilities Loan Funds – Unsecured loans 1,204.99 Current Liabilities and Provisions 8,273.53 Total Liabilities 9,478.52 Deficit / (Surplus) – Net worth* 11,995.08 * Represented by Share capital 948.38 General Reserve 7,832.12 Profit and Loss (Surplus) 3,214.58 Total 11,995.08 3. The Appointed Date for the Scheme is from 1 st January 2007. However as mentioned above, the Scheme is given effect on 28 th March 2008. Accordingly the figures for the year ended 31 st March 2007 does not include the figures of Brakes Business.
WABCO-TVS (INDIA) LIMITED INFORMATION MEMORANDUM 1. Significant accounting policies: 1.1 Basis of preparation of financial statements: The financial statements are prepared under the historical cost convention, on accrual basis of accounting and in conformity with the accounting principles generally accepted in India. 1.2 Fixed Assets: Fixed Assets are stated at cost of construction, acquisition or manufacturing cost in case of assets fabricated by the company including expenditure incurred in bringing the asset to usable condition as reduced by the Central Value Added Tax (CENVAT) credit wherever applicable. 1.3 Depreciation: Depreciation has been provided under the Straight Line Method at the rates prescribed under Schedule XIV of the Companies Act 1956 with applicable shift allowances. In respect of the assets added / sold during the period, prorata depreciation has been provided. Depreciation in respect of computers and vehicles has been provided at 30% and 18% respectively which is higher than the rate prescribed under Schedule XIV of the Companies Act, 1956. Depreciation in respect of assets acquired during the year whose actual cost does not exceed Rs.5,000/- has been provided at 100%. 1.4 Impairment of Assets: An asset is treated as impaired when the carrying cost of the assets exceed its recoverable value. Such impairment loss is charged to the profit and loss account in the year in which an asset is identified as impaired. However, in respect of certain plant and machinery the carrying amount net of accumulated depreciation is less than the recoverable amount by Rs.9.62 lakhs and the impairment loss has been provided. This is included in depreciation charge. 1.5 Investments: Investments are valued at cost in line with the provisions of the Accounting Standard 13. Provision in diminution in value of investment is made only if such decline is other than temporary in the opinion of the management. There is, however, no such diminution in the carrying cost of investments. 2. Share capital & reserves and surplus 2.1 The Company was incorporated on 18 th November 2004 with a paid up capital of Rs.5.00 lakhs consisting of 1,00,000 equity shares of Rs.5/- each and subscribed to by the Demerged company, namely SCL and six nominees. 2.2 In terms of the Scheme, the Company has issued and allotted 1,89,67,584 equity shares of Rs.5/- each aggregating to Rs.9,48,37,920 to the shareholders of the Demerged Company, whose names were recorded in the Register of members as on 2 nd May 2008 (the record date) in the ratio of one Page 49 of 95
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