ANNEXURE TO DIRECTORS’ REPORT 2007-2008 REPORTS AND...
Transcript of ANNEXURE TO DIRECTORS’ REPORT 2007-2008 REPORTS AND...
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Name of the Subsidiary Pages
Tractor Engineers Limited .................................................................................................................... S 3 – S 28
L&T-Sargent & Lundy Limited .............................................................................................................. S 29 – S 50
Spectrum Infotech Private Limited ...................................................................................................... S 51 – S 78
L&T-Valdel Engineering Limited ........................................................................................................... S 79 – S 99
L&T Power Development Limited ........................................................................................................ S 100 – S 111
L&T Power Projects Limited ................................................................................................................ S 112 – S 121
L&T-MHI Turbine Generators Private Limited ...................................................................................... S 122 – S 129
L&T-MHI Boilers Private Limited .......................................................................................................... S 130 – S 137
Bhilai Power Supply Company Limited ............................................................................................... S 138 – S 146
International Seaport Dredging Limited .............................................................................................. S 147 – S 169
L&T Shipbuilding Limited .................................................................................................................... S 170 – S 179
L&T Infra & Property Development Private Limited ............................................................................ S 180 – S 186
L&T Realty Private Limited ................................................................................................................... S 187 – S 194
L&T Concrete Private Limited .............................................................................................................. S 195 – S 201
L&T Strategic Management Limited .................................................................................................... S 202 – S 209
L&T - Gulf Private Limited .................................................................................................................... S 210 – S 216
L&T Finance Limited ............................................................................................................................ S 217 – S 246
L&T Capital Company Limited ............................................................................................................ S 247 – S 264
L&T Infrastructure Finance Company Limited 2006-2007 ................................................................. S 265 – S 283
L&T Infrastructure Finance Company Limited 2007-2008 ................................................................. S 284 – S 307
L&T General Insurance Company Limited .......................................................................................... S 308 – S 315
Larsen & Toubro Infotech Limited ....................................................................................................... S 316 – S 344
Larsen & Toubro Infotech Gmbh ......................................................................................................... S 345 – S 356
Larsen & Toubro Information Technology Canada Limited ................................................................ S 357 – S 367
GDA Technologies Inc. ........................................................................................................................ S 368 – S 383
GDA Technologies Limited .................................................................................................................. S 384 – S 402
GDA Systems Private Limited .............................................................................................................. S 403 – S 413
International Seaports (India) Private Limited ..................................................................................... S 414 – S 425
India Infrastructure Developers Limited .............................................................................................. S 426 – S 442
Raykal Aluminum Company Private Limited....................................................................................... S 443 – S 448
L&T Uttaranchal Hydropower Limited ................................................................................................. S 449 – S 459
L&T Transco Private Limited ................................................................................................................ S 460 – S 466
Larsen & Toubro LLC ........................................................................................................................... S 467 – S 478
Larsen & Toubro International FZE ..................................................................................................... S 479 – S 495
Larsen & Toubro (Oman) LLC ............................................................................................................. S 496 – S 509
Larsen & Toubro Electromech LLC ..................................................................................................... S 510 – S 525
L A R S E N & T O U B R O L I M I T E D
ANNEXURE TO DIRECTORS’ REPORT 2007-2008
REPORTS AND ACCOUNTS – SUBSIDIARY COMPANIES
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L&T Modular Fabrication Yard LLC ..................................................................................................... S 526 – S 539
Larsen & Toubro Saudi Arabia LLC ..................................................................................................... S 540 – S 551
L&T Electricals Saudi Arabia Company Limited, LLC ........................................................................ S 552 – S 566
Larsen & Toubro Atco Saudia LLC ...................................................................................................... S 567 – S 575
Larsen & Toubro (Wuxi) Electric Company Limited ............................................................................ S 576 – S 591
Larsen & Toubro (Jiangsu) Valve Company Limited .......................................................................... S 592 – S 603
Larsen & Toubro (Qingdao) Rubber Machinery Company Limited ................................................... S 604 – S 615
Qingdao Larsen & Toubro Trading Company Limited........................................................................ S 616 – S 626
L&T-ECC Construction (M) SDN.BHD ................................................................................................. S 627 – S 639
Larsen & Toubro Qatar LLC ................................................................................................................. S 640 – S 653
Larsen & Toubro Kuwait Construction General Contracting Company WLL ..................................... S 654 – S 665
Larsen & Toubro Readymix Concrete Industries LLC ........................................................................ S 666 – S 677
L&T Overseas Projects Nigeria Limited .............................................................................................. S 678 – S 685
International Seaports Pte. Limited ..................................................................................................... S 686 – S 695
L&T Infrastructure Development Projects Limited .............................................................................. S 696 – S 722
Narmada Infrastructure Construction Enterprise Limited ................................................................... S 723 – S 738
L&T Western India Tollbridge Limited ................................................................................................. S 739 – S 754
L&T Western Andhra Tollways Private Limited ................................................................................... S 755 – S 767
L&T Vadodara Bharuch Tollway Limited ............................................................................................. S 768 – S 781
L&T Transportation Infrastructure Limited........................................................................................... S 782 – S 798
L&T Krishnagiri Thopur Toll Road Limited .......................................................................................... S 799 – S 811
L&T Panipat Elevated Corridor Private Limited................................................................................... S 812 – S 825
L&T Interstate Road Corridor Limited ................................................................................................. S 826 – S 839
L&T Infrastructure Development Projects Lanka (Private) Limited .................................................... S 840 – S 850
L&T Urban Infrastructure Limited ........................................................................................................ S 851 – S 878
L&T South City Projects Limited .......................................................................................................... S 879 – S 893
Cyber Park Development & Construction Limited .............................................................................. S 894 – S 912
L&T Vision Ventures Limited ................................................................................................................ S 913 – S 923
L&T Tech Park Limited ......................................................................................................................... S 924 – S 939
L&T Phoenix Infoparks Private Limited ............................................................................................... S 940 – S 955
L&T Bangalore Airport Hotel Limited .................................................................................................. S 956 – S 966
CSJ Infrastructure Private Limited ....................................................................................................... S 967 – S 978
Arun Excello Infrastructure Private Limited ......................................................................................... S 979 – S 993
L&T Arun Excello Commercial Projects Private Limited ..................................................................... S 994 – S 1007
L&T Infocity Limited ............................................................................................................................. S 1008 – S 1028
L&T Infocity Infrastructure Limited ...................................................................................................... S 1029 – S 1041
L&T Infocity Lanka Private Limited ...................................................................................................... S 1042 – S 1053
Hyderabad International Trade Expositions Limited .......................................................................... S 1054 – S 1069
Andhra Pradesh Expositions Private Limited ...................................................................................... S 1070 – S 1077
L&T Hitech City Limited ....................................................................................................................... S 1078 – S 1088
Name of the Subsidiary Pages
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TRACTOR ENGINEERS LIMITED
DIRECTORS’ REPORT
The Directors have pleasure in presenting their Report and Audited Accounts for the year ended March 31, 2008.
FINANCIAL RESULTS
2007-08 2006-07
Rs. in lakhs Rs. in lakhs
Profit Before Depreciation & Tax 194 1675
Less / (Add): Depreciation and Amortisation 226 100
Profit Before Tax (32) 1575
Provision for Current Tax 1 310
Provision for Deferred Tax (13) (78)
Provision for Fringe Benefits Tax 26 11
Provision for tax for prior years (1) 6
Profit After Tax (45) 1326
Add: Balance brought forward from previous year 2536 1210
Balance carried to Balance Sheet 2491 2536
Dividend
The Directors do not recommend dividend in view of the
requirement of funds for expansion at Talegaon plant. NIL NIL
YEAR IN RETROSPECT / PERFORMANCE OF THE COMPANY
Sales and other income for the financial year under review were Rs. 17,331 Lakhs as against Rs. 10,395 Lakhs for the previous financial year. Net
Sales represented a strong growth of 82% over last year. In the past year, the Company was able to increase its supplies to OEMs in the Excavator
Market. Also there has been a substantial increase in Material Handling Equipment business where the Company invoiced more than 91 such
equipments in the year 2007-08. In Exports also, the Company was able to make good progress with a sale of Rs. 27 Crores and start with healthy
commitments for the year 2008-09.
In the year under review, though the Company was able to achieve a substantial growth in Sales, there was constraint by costs increases in Steel,
Freight, Power and increased Sub-contracting. Further Phase I of Talegaon Factory could not achieve its rated capacity due to delay in installation
of few critical machines. This has resulted in a Loss before tax of Rs. 32 Lakhs as compared to Profit before tax of Rs. 1575 Lakhs for the last year.
Profit for the last year included Profit on Sale of Navi Mumbai Fixed Assets of Rs. 699 Lakhs
The Company participated at BAUMA & CONEXPO International Exhibitions in the current year which has helped in further building TENGL brand
image in the International Market. The Company is going ahead with further expansion of its Talegaon Facility to take full advantage of growing
Construction and Equipment Industry in India.
CAPITAL EXPENDITURE
As at March 31, 2008, the gross fixed and intangible assets stood at Rs. 577,986,253 and the net fixed assets at Rs. 412,946,737 including Capital
Work-in-Progress of Rs. 69,070,014.
DEPOSITS
6 deposits totalling Rs. 57,000 due for payment on or before March 31, 2008 remained unclaimed. As on the date of this report, none of the above
has been claimed and paid.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
During the year, the Company has transferred a sum of Rs. 19,999.97 being the amount due & payable and remaining unpaid for a period of 7 years,
as provided in Section 205C of the Companies Act, 1956.
AUDITORS’ REPORT
The Auditors’ Report to the Shareholders does not contain any qualifications.
DISCLOSURE OF PARTICULARS
Information as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to conservation of energy,
technology absorption, foreign exchange earnings and outgo are given in Annexure ‘A’ forming part of this report.
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TRACTOR ENGINEERS LIMITED
PERSONNEL
The Board of Directors wishes to express its appreciation to all the employees of the Company for their contribution to the operations of the
Company during the year. There are no employees coming within the purview of Section 217(2A) of the Companies Act, 1956 as amended by
Companies (Particulars of Employees) Rules, 1975.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms:
i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material
departure;
ii. that the selected accounting policies were applied consistently and the Directors made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2008 and of the loss of the Company for the year
ended on that date;
iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
iv. that the annual accounts have been prepared on a going concern basis.
DIRECTORS
Mr. V. J. Shukla, who was appointed as a Director in the casual vacancy caused by the resignation of Mr. T. S. Sundaresan, will hold office up to the
date of the ensuing Annual General Meeting when Mr. T. S. Sundaresan would have retired by rotation, and is eligible for re-appointment.
The Company has received a notice from a member under the provisions of Section 257 of the Companies Act, 1956 proposing the candidature of
Mr. V. J. Shukla for the office of a Director.
AUDIT COMMITTEE
The Audit Committee consists of three Non-Executive and Independent Directors. The present members of the Committee are Mr. J. P. Nayak, Mr.
S. Raghavan and Mr. V. J. Shukla. Mr. J.P. Nayak is the Chairman of Audit Committee.
The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of the Companies Act, 1956.
The financial statements have been audited by M/s Sharp & Tannan, Chartered Accountants, and have been discussed with the Audit Committee.
AUDITORS
The Auditors, M/s. Sharp & Tannan, hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment.
Certificate from the auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section
224(1B) of the Companies Act, 1956.
ACKNOWLEDGEMENTS
The Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, vendors, suppliers and customers.
The Directors place on record their appreciation for the valuable contribution made by the employees of the Company.
For and on behalf of the Board
Place : Mumbai J. P. NAYAK S. RAGHAVAN V. J. SHUKLA
Date : April 25, 2008 Director Director Director
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TRACTOR ENGINEERS LIMITED
ANNEXURE A TO THE DIRECTORS’ REPORT(Additional information given in terms of notification issued by the Department of Company Affairs)
A. CONSERVATION OF ENERGY
a) Energy conservation measures taken
1. Replaced autotransformer with soft starter for 150 Kw high frequency motor generator set. This has reduced starting current kick and
no load current thus saving the electrical energy. The starting/stopping frequency is 6 times per day.
2. Provided additional capacitor bank to improve power factor. This has improved power factor from 0.98 to 0.99. This has resulted in
additional 1% rebate on energy bill every month.
3. Installed Smart Demand Controller for monitoring and controlling maximum demand on continuous basis. This helps in predicting
rising Maximum Demand and to take necessary corrective actions.
4. Double coil inductor on Pin Induction Hardening station has resulted in improved hardening speed. The heating time is reduced by
approx. 30%.
5. At Talegaon plant the Company has automatic power factor controller. With this there is control in the power factor precisely. This has
resulted in additional 1% rebate on energy bill every month.
6. The Company is treating their effluent & sewage in the ETP / STP. The treated water is used for gardening, thus saving approx. 87 KL
of water every month. The yearly saving will be around Rs. 15000/- thereby contributing toward conservation of natural resource.
b) Proposals
i. Installation of recuperator system for waste heat recovery on PNG furnace.
c) Impact of above
Measures taken will result in reduction in consumption of energy.
d) Total energy consumption and energy consumption per unit of production as per Form - A in respect of Industries specified in the
Schedule
– Not applicable.
B. TECHNOLOGY ABSORPTION
e) Efforts made in technology absorption as per Form B
FORM B
(Disclosure of particulars with respect to Technology Absorption)
RESEARCH AND DEVELOPMENT (R&D)
1. Specific areas in which R&D carried out by the Company
Development of new products / designs:
a. Undercarriage parts (tracks and rollers) for dozer / tractor application – two models of oil lubricated tracks and track rollers designed and
developed for overseas markets.
b. Excavator type undercarriage for extremely low temperature applications – polar conditions.
c. Fully integrated track systems (with hydraulic track drives) for applications such as mobile crushers & screeners, drilling machines,
cranes etc.
d. Designed and developed weigh apron feeder [real time weighing of bulk material being conveyed to regulate rate of material delivered
(TPH)].
e. As a part of value engineering efforts, optimised designs of excavator track links (models for 10 to 30 tonne class of HEX) by redistribution
of mass using FEA techniques.
f. Towards improving productivity in design related activities programmed parametric 3D templates of major tailor-made components /
subassemblies of apron feeders and track modules have been developed using high end design and modelling software.
2. Benefits derived as a result of the above R&D
l Wider range of products to cater to new segments of markets.
l Moving up the value chain to offer complete solutions in track systems and bulk material conveying systems.
l Cost reduction / Improved utilisation of material.
l Reduction in product development cycle time.
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TRACTOR ENGINEERS LIMITED
3. Future plans of action
l Actively working on project to set up endurance testing facility for undercarriage parts. (The facility is being erected at the company’s
Talegaon plant.)
l Continuation of the present work in R&D for introduction of new products and processes, improvement in existing products and processes
in various areas in which the Company is operating.
l Faster introduction of new products and processes.
l Actively associating with the Defence Ministry on indigenisation plans for products used by various defence forces.
l Actively working with overseas customers for developing new models of under-carriage for both excavator and dozer applications.
l Actively working with overseas customer to design and develop a crawler type complete chassis fully integrated with hydrostatic transmission
for mining application.
4. Expenditure on R&D (Rs.)
2007-2008 2006-2007
i) Capital — —
ii) Recurring 8,084,567 7,362,839
iii) Total 8,084,567 7,362,839
iv) Total R&D Expenditure as a percentage of total turnover 0.5% 1%
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1. Efforts, in brief, made towards technology absorption, adaptation and innovation
l Product and process technology developed through in-house R&D i.e. for design and manufacture of undercarriage for excavators has
been absorbed and several models upgraded to new designs. The technology of tracks for high speed defence crawler vehicles (Tanks)
has been absorbed.
2. Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, product development, import substitution,
etc.
l Improvement in existing processes and product quality, performance, safety and serviceability.
l Import substitution and reduced dependence on technology.
l Introduction of new products with indigenous know-how.
3. Information regarding technology imported during the last five years.
The Company has not imported any technology in the last five years.
C) FOREIGN EXCHANGE EARNINGS AND OUTGO
f) Activities relating to exports, initiatives taken to increase exports, development of new export markets for products and services
and export plans
l Entered Germany, Australia, Turkey & UK markets and initial orders received will help to develop market and the brand.
l Working to increase our export competitiveness with improved volumes and larger batch production.
g) Total foreign exchange earned and used (Rs.)
2007-2008 2006-2007
Foreign exchange earned 252,525,393 10,892,996
Foreign exchange used 369,949,681 120,834,590
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TRACTOR ENGINEERS LIMITED
AUDITORS’ REPORT
TO THE MEMBERS OF TRACTOR ENGINEERS LIMITED
We have audited the attached Balance Sheet of TRACTOR ENGINEERS LIMITED, as at March 31, 2008, and also the Profit and Loss Account andthe Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, ona test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our auditprovides a reasonable basis for our opinion.
As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India under sub-section (4A) of Section 227 ofthe Companies Act, 1956, and on the basis of such checks of the books of account and records of the Company as we considered appropriate andaccording to the information and explanations given to us, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5of the said Order.
Further to our comments in the Annexure referred to above, we report that:
a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes ofour audit;
b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination ofthose books;
c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books ofaccount;
d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accountingstandards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;
e) On the basis of written representations received from the Directors, as on March 31, 2008 and taken on record by the Board of Directors,we report that none of the Director is disqualified as on March 31, 2008 from being appointed as a Director in terms of clause (g) ofSub-section (1) of Section 274 of the Companies Act, 1956;
f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with thesignificant accounting policies in Schedule Q and the notes forming part of accounts in Schedule R give the information required by theCompanies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generallyaccepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008;
(ii) in the case of the Profit and Loss Account, of the loss for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
A. B. ChopraPlace : Mumbai PartnerDate: April 25, 2008 Membership No. 38159
ANNEXURE TO THE AUDITORS’ REPORT
As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of Section (4A) of Section 227 ofthe Companies Act, 1956, we report as under:
(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of all fixed assets.
(b) We are informed that the fixed assets have been physically verified by the management at reasonable intervals and no materialdiscrepancies were noticed on such verification.
(c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.
(ii) (a) As explained to us, inventories have been physically verified by the management during the year. In our opinion, the frequency of suchverification is reasonable.
(b) As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion,reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records ofinventory. No material discrepancies were noticed on physical verification of inventory as compared to book records.
(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies,firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions ofclause 4(iii)(b), (c) and (d) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.
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(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies,firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions ofclause 4(iii)(f) and (g) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.
(iv) In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensuratewith the size of the Company and the nature of its business for purchase of inventory, fixed assets and for sale of goods and services. Further,on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, wehave neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal controlsystems.
(v) In our opinion, and according to the information and explanations given to us, there are no contracts or arrangements that need to be enteredinto a register in pursuance of Section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4(v) of the Companies (Auditor’sReport) Order, 2003 are not applicable to the Company.
(vii) In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A,58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed thereunder with regard to deposits accepted from thepublic. According to the information and explanation given to us, no order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company.
(viii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.
(viii) According to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records underSection 209(1)(d) of the Companies Act, 1956 for any of the products of the Company.
(ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, in our opinion,the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, InvestorEducation and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty,Cess and other material statutory dues as applicable to it. According to the information and explanations given to us, there were noundisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees State Insurance, IncomeTax, Wealth Tax, Service Tax, Sales Tax, Customs Duty, Excise Duty, Cess and other statutory dues outstanding as at March 31, 2008 fora period of more than six months from the date they became payable.
(b) According to the information and explanations given to us and the records of the Company examined by us, there are no amounts inrespect of Sales Tax, Wealth Tax, Service Tax, Custom Duty and Excise Duty that have not been deposited with the appropriate authoritieson account of any dispute. However, the following disputed dues of Income Tax and Cess have not been deposited by the Company:
Name of the Statute Nature of dues Amount (Rs.) Forum where dispute is pending
Bombay Provincial Municipal Corporation Cess & Interest thereon 1,208,627 Bombay High Court(Cess on entry of Goods) Rules, 1996
Income Tax Act, 1961 Income tax & Interest for AY 2005-06 1,934,768 Income Tax Appellate Tribunal
(x) The Company has no accumulated losses as at March 31, 2008 and it has not incurred any cash losses in the financial year ended on thatdate or in the immediately preceding financial year.
(xi) According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaultedin repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.
(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security byway of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provision of clause 4(xiii) of the Companies(Auditor’s Report) Order, 2003 are not applicable to the Company.
(ix) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. TheCompany has invested surplus funds in marketable securities. According to the information and explanations given to us, proper recordshave been maintained of the transactions and contracts and timely entries have been made therein. The investments in marketable securitieshave been held by the Company in its own name.
(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank orfinancial institutions.
(xvi) According to the information and explanations given to us, we report that the term loan was applied for the purpose for which it was obtained.
(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report thatno funds raised on short-term basis have been used for long-term investments.
(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section301 of the Companies Act, 1956.
(xix) The Company has not issued any debentures during the year.
(xx) The Company has not raised any money by public issue during the year. Accordingly, the provisions of clause 4(xx) of the Companies(Auditor’s Report) Order, 2003 are not applicable to the Company.
(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally acceptedauditing practices in India, and according to the information and explanations given to us, we have neither come across any instances ofmaterial fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by Management.
SHARP & TANNANChartered Accountants
A. B. ChopraPlace : Mumbai PartnerDate: April 25, 2008 Membership No. 38159
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The schedules referred to above and the notes attached form an integral part of the financial statements.
As per our report attached For and on behalf of the Board
SHARP & TANNAN
Chartered Accountants
A. B. CHOPRA AMIT BHAT V. JETHMALANI J. P. NAYAK S. RAGHAVAN V. J. SHUKLA
Partner Company Secretary Manager Director Director Director
Membership No. 38159
Place : Mumbai Place : Mumbai
Date : April 25, 2008 Date : April 25, 2008
BALANCE SHEET AS AT MARCH 31, 2008
As at 31.03.2008 As at 31.03.2007Schedule Rupees Rupees Rupees Rupees
SOURCES OF FUNDS
Shareholders’ FundsShare capital A 68,000,000 68,000,000Reserves and surplus B 429,575,083 434,070,078
497,575,083 502,070,078Loan Funds
Secured loans C 654,025,672 282,446,451Unsecured loans D 50,057,000 70,000
704,082,672 282,516,451Deferred Tax Liabilities (net) 5,117,634 6,361,437(See Note No. 17 in Schedule R)
TOTAL 1,206,775,389 790,947,966
APPLICATION OF FUNDS
Fixed Assets E1Gross block 446,877,463 184,723,518Less : Depreciation and Impairment 159,666,990 135,698,405
Net Block 287,210,473 49,025,113Add: Capital Work-in Progress 69,070,014 356,280,487 202,480,514 251,505,627
Fixed Assets held for sale 775,624 2,656,395(See Note No. 6 in Schedule R)
Intangible Assets E2Gross block 62,038,776 61,910,776Less : Amortisation and Impairment 6,148,150 4,313,225
Net Block 55,890,626 57,597,551Add: Capital Work-in Progress – 55,890,626 – 57,597,551
Investments F 2,294,453 2,294,453
Current assets, Loans and advances GInventories 697,399,366 369,533,151Sundry debtors 613,631,793 213,603,494Cash and bank balances 2,462,256 2,537,853Loans and advances 146,195,297 112,711,157
1,459,688,712 698,385,655
Less : Current liabilities and provisions HLiabilities 638,365,643 187,747,319Provisions 30,436,610 35,127,995
668,802,253 222,875,314
Net current assets 790,886,459 475,510,341
Deferred Revenue ItemsMiscellaneous expenditure I 647,740 1,383,599(To the extent not written off or adjusted)
TOTAL 1,206,775,389 790,947,966
CONTINGENT LIABILITIES J
SIGNIFICANT ACCOUNTING POLICIES Q
NOTES FORMING PART OF ACCOUNTS R
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TRACTOR ENGINEERS LIMITED
The schedules referred to above and the notes attached form an integral part of the financial statements.
As per our report attached For and on behalf of the Board
SHARP & TANNAN
Chartered Accountants
A. B. CHOPRA AMIT BHAT V. JETHMALANI J. P. NAYAK S. RAGHAVAN V. J. SHUKLA
Partner Company Secretary Manager Director Director Director
Membership No. 38159
Place : Mumbai Place : Mumbai
Date : April 25, 2008 Date : April 25, 2008
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008
2007-2008 2006-2007Schedule Rupees Rupees Rupees Rupees
INCOME
Sales and Service K 1,965,939,218 1,103,533,997
Less:Excise duty 237,086,487 1,728,852,731 154,418,794 949,115,203
Other Income L 4,275,689 90,458,638
1,733,128,420 1,039,573,841
EXPENDITURE
Materials, manufacturing and operating expenses M 1,390,942,601 689,507,448
Staff expenses N 136,421,804 100,658,484
Sales, administration and other expenses O 164,685,716 76,932,921
Interest & Brokerage P 21,689,157 4,916,194
Depreciation and obsolescence 20,748,051 7,540,980
Amortisation of Intangible Assets 1,834,925 2,459,225
1,736,322,254 882,015,252
PROFIT BEFORE TAX (3,193,834) 157,558,589
Provision for Tax
Current tax - including Wealth Tax 55,000 31,000,000
Rs. 55,000 (previous year Rs. 36,000)
Deferred Tax (1,243,803) (7,808,728)
Fringe Benefits Tax 2,600,000 1,144,265
Provision for tax pertaining to prior years (110,036) 616,339
1,301,161 24,951,876
PROFIT AFTER TAX (4,494,995) 132,606,713
Add : Balance brought forward from previous year 253,610,911 121,004,198
PROFIT AVAILABLE FOR APPROPRIATION 249,115,916 253,610,911
Less : Transferred to General Reserve – –
PROFIT AVAILABLE FOR DISTRIBUTION 249,115,916 253,610,911
Balance carried to Balance Sheet 249,115,916 253,610,911
Basic and Diluted Earnings Per Equity Share (Rs.) (66.10) 1,950.10
(See Note No. 15 in Schedule R)
SIGNIFICANT ACCOUNTING POLICIES Q
NOTES FORMING PART OF ACCOUNTS R
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TRACTOR ENGINEERS LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008
2007-2008 2006-2007
Rupees Rupees
A Cash Flow Form Operating Activities
Net Profit before tax & extraordinary activities (3,193,834) 157,558,589
Adjustments for
Depreciation (including obsolescence) and amortisation 22,582,976 10,000,205
Interest (Net) 21,689,157 4,916,194
(Gain) / Loss on revaluation of ECB 24,889,866 (18,052,123)
(Profit) / Loss on Sale of Fixed Assets (16,862) (69,773,049)
Adjustments in opening General Reserve – (2,283,152)
Operating profit before Working Capital changes 65,951,303 82,366,664
Adjustments for
(Increase) / Decrease in Trade & other receivables (463,442,652) (34,301,202)
(Increase) / Decrease in Inventories (327,866,215) (84,141,453)
(Increase) / Decrease in Miscellaneous Expenditure 735,859 1,223,548
Increase / (Decrease) in Trade Payables 445,813,446 16,830,118
Cash Generated from Operations (278,808,259) (18,022,325)
Direct taxes paid (Net) (22,501,259) (25,453,019)
Net Cash from Operating Activities (301,309,518) (43,475,344)
B Cash Flow From Investing Activities
Purchase of fixed assets including CWIP (123,770,170) (210,769,016)
Sale of fixed assets 16,892 105,037,777
Loan / Deposit withholding Company 50,000,000 (50,000,000)
Purchase of Investments – (17,478)
Interest Received 893,439 5,945,679
Net Cash (used in) / from Investing Activities (72,859,839) (149,803,038)
C Cash Flow From Financing Activities
(Repayment) / Proceeds from Short Term & other borrowings 305,495,703 (1,325,375)
Proceeds from long term borrowings 41,193,653 207,778,058
Loan From Holding Company 50,000,000 –
Repayment of Fixed Deposits (13,000) –
Interest paid (22,582,596) (10,861,873)
Net Cash (used in) / from Financing Activities 374,093,760 195,590,810
D Net (decrease) / increase in Cash & Cash Equivalents (A+B+C) (75,597) 2,312,428
Cash & Cash Equivalents at the beginning of the year 2,537,853 225,425
Cash & Cash Equivalents at the end of the year 2,462,256 2,537,853
Notes :
1 Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard - 3 issued by the Institute of
Chartered Accountants of India.
2 Purchase of fixed assets includes movements of Capital Work-in-Progress between the beginning and end of the year.
3 Cash and cash equivalents represent cash on hand and bank balances on current accounts.
4 Previous year’s figures have been regrouped / reclassified wherever necessary.
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TRACTOR ENGINEERS LIMITED
SCHEDULES FORMING PART OF ACCOUNTS
As at 31.03.2008 As at 31.03.2007
Rupees Rupees Rupees Rupees
SCHEDULE - A
SHARE CAPITAL
Authorised
70,000 Equity Shares of Rs. 1,000 each 70,000,000 70,000,000
Issued & subscribed
68,000 Equity Shares of Rs. 1,000 each fully paid 68,000,000 68,000,000
SCHEDULE - B
RESERVES & SURPLUS
General Reserve
As per last Balance Sheet 180,459,167 182,742,319
Less: Employee Benefits – 180,459,167 2,283,152 180,459,167
Profit & Loss Account 249,115,916 253,610,911
TOTAL 429,575,083 434,070,078
SCHEDULE - C
SECURED LOAN
From Banks
External Commercial Borrowings 255,809,453 189,725,935
(Payable within one year Rs. 58,138,512)
Cash Credits 398,216,219 92,720,516
TOTAL 654,025,672 282,446,451
SCHEDULE - D
UNSECURED LOANS
Fixed Deposits
Due for not more than one year 57,000 70,000
Other deposits – 57,000 – 70,000
Inter Corporate Deposits 50,000,000 –
TOTAL 50,057,000 70,000
SCHEDULE - E1
TANGIBLE ASSETS Rupees
FIXED ASSETS COST DEPRECIATION BOOK VALUE
As at Additions Deductions As at As at For the On dedu- As at As at As at1.4.2007 31.3.2008 1.4.2007 year ctions 31.3.2008 31.3.2008 31.3.2007
Buildings 20,870,753 108,418,422 – 129,289,175 12,882,658 3,705,297 – 16,587,955 112,701,220 7,988,095
Plant & Machinery 163,296,426 139,798,955 – 303,095,381 121,909,309 15,293,778 – 137,203,087 165,892,294 39,506,346
Furniture & Fixtures 5,689,859 8,329,295 32,245 13,986,909 4,159,187 1,719,164 32,215 5,846,136 8,140,773 1,530,672
Vehicles – 505,998 – 505,998 – 29,812 – 29,812 476,186 –
TOTAL 189,857,038 257,052,670 32,245 446,877,463 138,951,154 20,748,051 32,215 159,666,990 287,210,473 49,025,113
Previous Year 177,772,545 7,296,862 345,889 184,723,518 128,381,164 7,540,980 223,739 135,698,405
Add : Capital work-in-progress (Including advance of Rs. 52,098,750 (previous year Rs. 126,422,000) 69,070,014 202,480,514
356,280,487 251,505,627
Note : Navi Mumbai Fixed Assets Having Original Cost Rs. 5,133,520 and Accumalated Depreciation Rs. 3,252,749 added to Plant & Machinery
as same have been installed and used at Talegaon facility.
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TRACTOR ENGINEERS LIMITED
SCHEDULE - E2
INTANGIBLE ASSETS Rupees
FIXED ASSETS COST DEPRECIATION BOOK VALUE
As at Additions Deductions As at As at For the On dedu- As at As at As at1.4.2007 31.3.2008 1.4.2007 year ctions 31.3.2008 31.3.2008 31.3.2007
Land- Leasehold 56,307,176 – – 56,307,176 591,225 591,225 – 1,182,450 55,124,726 55,715,951
Specialised Software 5,603,600 128,000 – 5,731,600 3,722,000 1,243,700 – 4,965,700 765,900 1,881,600
TOTAL 61,910,776 128,000 – 62,038,776 4,313,225 1,834,925 – 6,148,150 55,890,626 57,597,551
Previous Year 3,560,000 58,350,776 – 61,910,776 1,854,000 2,459,225 – 4,313,225
Add: Capital work-in-progress (including advance of Rs. Nil (previous year Rs. Nil)) – –
55,890,626 57,597,551
As at 31.03.2008 As at 31.03.2007Rupees Rupees Rupees Rupees
SCHEDULE - F
INVESTMENTS
Long Term
Trade, Unquoted at cost
Larsen and Toubro Saudi Arabia LLC
(200 shares of SAR 1000 each) 17,478 17,478
Larsen & Toubro LLC
(2,500 shares of USD 1 each) 119,475 119,475
Bonds
NonTrade, Quoted at cost
6.75 % Tax Free US 64 2,157,500 2,157,500
[21,575 bonds of Rs. 100 each 2,294,453 2,294,453
Market value as at the year end Rs. 2,170,445
(previous year Rs. 21,48,870)]
2,294,453 2,294,453
SCHEDULE - G
CURRENT ASSETS, LOANS AND ADVANCES
Inventories : At lower of cost and net realisable value
Loose tools 4,090,994 1,069,157
Consumables stores & spare parts 4,018,615 1,672,842
Raw materials 499,576,474 274,627,887
Finished goods 188,115,554 85,364,236
Work-in-progress 1,597,729 6,799,029
697,399,366 369,533,151
Sundry Debtors :
Unsecured :
Debts Outstanding for more than six months
Considered good 14,288,572 3,176,881
Considered doubtful – 119,925
14,288,572 3,296,806
Other debts:
Considered good 599,343,221 210,426,613
613,631,793 213,723,419
Less: Provision for doubtful debts – 119,925
613,631,793 213,603,494
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
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TRACTOR ENGINEERS LIMITED
Cash and bank balances
Cash on hand 284,102 404,700
Balances with scheduled banks on current accounts 2,178,154 2,133,153
2,462,256 2,537,853
Loans and Advances
Secured, Considered good
Loans against mortgage of house property 2,424,179 2,503,181
Unsecured, Considered good
Advances recoverable in cash or in kind 123,652,787 110,159,432
Taxes (net) 20,069,787 –
Interest accrued on Investments 48,544 48,544
146,195,297 112,711,157
TOTAL 1,459,688,712 698,385,655
SCHEDULE - H
CURRENT LIABILITIES AND PROVISIONS
Current Liabilities
Sundry Creditors
Due to Micro and Small Enterprises 214,682 1,734,753
Others 554,938,070 185,268,582
555,152,752 187,003,335
Acceptances 78,871,480 –
Interest accrued, but not due on loans 4,315,968 573,063
Pension payable under Voluntary retirement cum pension scheme
(Payable within one year Rs. 25,443; Previous year Rs.145,478 ) 25,443 170,921
638,365,643 187,747,319
Provisions for
Leave encashment 22,237,069 17,270,015
Gratuity (1,768,041) 693,130
Employee benefits 9,854,090 8,745,813
Taxes (net) – 8,293,713
Fringe Benefits Tax (net) 113,492 125,324
30,436,610 35,127,995
TOTAL 668,802,253 222,875,314
SCHEDULE - I
MISCELLANEOUS EXPENDITURE 647,740 1,383,599
(To the extent not written off or adjusted)
Voluntary Retirement Pension Scheme
TOTAL 647,740 1,383,599
SCHEDULE - J
CONTINGENT LIABILITIES
For Income tax matter in appeal 2,488,291 1,942,298
For Cess payable to Navi Mumbai Municipal Corporation, in appeal 1,208,627 1,208,627
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
As at 31.03.2008 As at 31.03.2007Rupees Rupees Rupees Rupees
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TRACTOR ENGINEERS LIMITED
SCHEDULE - K
SALES & SERVICE
Manufacturing & Trading activity 1,965,740,419 1,102,276,941
Servicing 198,799 1,257,056
TOTAL 1,965,939,218 1,103,533,997
SCHEDULE - L
OTHER INCOME
Profit on sale of fixed assets 16,862 69,773,049
Miscellaneous income 4,258,827 20,685,589
TOTAL 4,275,689 90,458,638
SCHEDULE - M
MATERIALS, MANUFACTURING AND OPERATING EXPENSES
Raw material consumed
Opening stock 274,627,887 183,281,071
Add : Purchases 1,600,156,112 727,624,353
1,874,783,999 910,905,424
Less : Closing stock 499,576,474 274,627,887
1,375,207,525 636,277,537
Add : Purchase of trading goods 20,536,927 2,683,338
Increase in manufacturing and trading stocks
Closing stocks :
Finished goods 188,115,554 85,364,236
Work-in-progress 1,597,729 6,799,029
189,713,283 92,163,265
Less :Opening stocks :
Finished goods 85,364,236 94,773,541
Work-in-progress 6,799,029 4,862,165
92,163,265 99,635,706
(97,550,018) 7,472,441
1,298,194,434 646,433,316
Less : Scrap sales 7,690,886 3,228,924
1,290,503,548 643,204,392
Stores, spares and tools 37,543,916 13,805,745
Excise duty (111,107) 199,905
Power and fuel 41,373,652 20,249,985
Hire Charges - Plant & Machinery and others 2,481,647 1,753,946
Repairs to plant and machinery 14,136,513 8,239,349
Repairs to buildings 5,014,432 2,054,126
TOTAL 1,390,942,601 689,507,448
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
2007-2008 2006-2007Rupees Rupees Rupees Rupees
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TRACTOR ENGINEERS LIMITED
SCHEDULE - N
STAFF EXPENSES
Salaries, wages and bonus 106,669,960 70,394,880
Contribution to
Provident funds and pension fund 5,891,859 4,790,826
Superannuation fund 1,232,272 1,968,473
Gratuity funds (1,973,346) 1,605,303
5,150,785 8,364,602
Provision for Leave encashment 4,967,054 1,743,330
Welfare and other expenses 19,634,005 20,155,672
TOTAL 136,421,804 100,658,484
SCHEDULE - O
SALES, ADMINISTRATION & OTHER EXPENSES
Rent 2,578,655 2,545,590
(including lease rentals Rs.1,470,947; previous year Rs.1,084,099)
Rates and taxes 747,134 2,964,953
Travelling and conveyance 24,159,979 15,858,673
Directors’ fees 36,000 26,000
Telephone Postage & Telegram 2,807,542 1,652,150
Advertising and sales promotion 12,055,522 5,445,809
Stationery & Printing 1,610,407 1,111,281
Insurance 1,480,677 1,656,726
Commission 6,223,874 7,269,320
Bank Charges 3,516,865 4,627,364
General Repairs & maintenance 174,550 91,008
Bad Debts and advances written off 565,542 638,969
Less: Provision for doubtful debts & advances written back – 565,542 1,066,484 (427,515)
Provision for doubtful debts & advances (net) – 119,925
Miscellaneous expenses 40,306,826 20,749,774
Exchange Difference (net) 23,997,673 –
Packing and forwarding 44,424,470 13,241,863
TOTAL 164,685,716 76,932,921
SCHEDULE - P
INTEREST & BROKERAGE
Fixed Deposits & Debentures – –
Others 22,582,596 22,582,596 10,861,873 10,861,873
Less:
Interest from others 747,808 5,800,048
(Tax deducted at source Rs. 34,301; previous year Rs. 917,630)
Interest on Long term investments 145,631 893,439 145,631 5,945,679
TOTAL 21,689,157 4,916,194
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
2007-2008 2006-2007Rupees Rupees Rupees Rupees
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TRACTOR ENGINEERS LIMITED
SCHEDULES FORMING PART OF ACCOUNTS
SCHEDULE Q
SIGNIFICANT ACCOUNTING POLICIES
1. Basis of Accounting
The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting
principles [“GAAP”] and in compliance with the Accounting Standards referred to in Section 211(3C) and other requirements of the Companies
Act, 1956.
The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions
that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures
relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include useful life of fixed assets &
intangible assets, provision for doubtful debts / advances, future obligations in respect of retirement benefit plans etc. Actual results could
differ from these estimates.
2. Revenue Recognition
(a) Sales & service include excise duty and adjustments made towards liquidated damages, price variation and charges paid for discounting
of receivables arising from construction / project contracts on a non-recourse basis, wherever applicable.
(b) Revenue is recognised based on the nature of activity when consideration can be reasonably measured and there exists reasonable
certainty of its recovery.
(i) Revenue from sale of goods is recognised when the substantial risks and rewards of ownership is transferred to the buyer under the
terms of the contract.
(ii) Other income is accounted on accrual basis as and when the right to receive arises.
3. Fixed Assets
Fixed Assets are stated at original cost net of tax / duty credits availed, if any, less accumulated depreciation / impairment.
Revenue expenses directly attributable to project site for the period prior to commencement of commercial production are capitalised as part
of asset cost.
4. Depreciation
Depreciation on fixed assets is provided at the rates prescribed from time to time under Schedule XIV of the Companies Act, 1956, on the
written down value method on all existing assets upto 30th September, 1987 and on straight line method on assets acquired from October 1,
1987 except in the case of vehicles which are depreciated at 14.14%. Depreciation on additions / deductions is calculated pro rata from / to the
month of additions / deductions.
5. Intangible Assets And Amortisation
Intangible assets are recognised as per the criteria specified in Accounting Standard (AS) 26 ‘Intangible Assets’ issued by the Institute of
Chartered Accountants of India and are amortised as follows:
i. The value of leasehold land is amortised over the period of the lease.
ii. Specialised software is amortised over a period of three years.
6. Impairment Of Assets
As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine:
a) the provision for impairment loss, if any, required or
b) the reversal, if any, required of impairment loss recognised in previous periods.
Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.
Recoverable amount is determined
a) in the case of an individual asset, at the higher of the net selling price and the value in use.
b) In the case of a cash generating unit (a group of assets that generates identified independent cash flows), at the higher of the cash
generating unit’s net selling price and the value in use.
(Value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the
end of its useful life)
7. Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of cost of such
assets till such time as the assets are ready for its intended use or sale . A qualifying asset is an asset that necessarily requires a substantial
period of time to get ready for its intended use or sale. All other borrowing costs are recognised as expense in the period in which they are
incurred.
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TRACTOR ENGINEERS LIMITED
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
8. Investments
i) Long Term investments are carried at cost, after providing for any diminution in value, if such diminution is of a permanent nature.
ii) Current investments are carried at lower of cost or market value.
9. Inventories
Inventories are valued at lower of cost or net realisable value as under after providing for obsolescence:
Loose Tools Weighted average cost method.
Raw material, and stores & spare parts Weighted average cost method.
Work in progress & Finished Goods Weighted average cost method
The cost include costs directly related to production and a systematic allocation of
fixed and variable production overheads.
Finished Goods Inventory is inclusive of excise duty paid / payable.
10. Foreign Currency
a) The reporting currency of the Company is the Indian Rupee.
b) Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the
transaction. At each balance sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items which
are carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
Exchange differences that arise on settlement of monetary items or on reporting at each balance sheet date of the Company’s monetary
items at the closing rate are:
i) adjusted in the cost of fixed assets acquired up to March 31, 2004 and specifically financed by the borrowings to which the exchange
differences relate.
ii) adjusted in the cost of fixed assets specifically financed by borrowings contracted after April 1, 2004 and to which the exchange
differences relate, provided the assets are acquired from outside India
iii) recognised as income or expense in the period in which they arise, in cases other than (i) and (ii) above
c) Premium or discount on forward exchange contracts that are intended for hedging purposes are amortised as expense or income over
the life of the contract. Exchange differences on such a contract are recognised in the statement of profit & loss in the reporting period in
which the exchange rates change.
11. Retirement Benefits
Provisions for / contributions to retirement benefit schemes are made as follows:
a. Provident fund on actual liability basis;
b. Gratuity on actuarial valuation basis;
c. Superannuation scheme on actual liability basis;
d. Leave encashment on retirement on actuarial valuation basis;
e. Liability in respect of medical benefits provided to retired employees on actuarial valuation basis;
f. Liability in respect of Long Service Awards on actuarial valuation basis.
12. Research & Development
Revenue expenditure on research and development is charged under respective heads of account. Capital expenditure on research and
development is included as part of fixed assets and depreciated on the same basis as other fixed assets.
13. Prior Period and Extraordinary Items
Income and expenditure pertaining to prior period as well as extraordinary items, where material, are disclosed separately.
14. Deferred Revenue Expenditure
Future pensions under Voluntary Retirement-cum-Pension Scheme are amortised over the period for which such pensions are payable. Lump
sum compensation paid under Voluntary Retirement Scheme is amortised over a period of five years.
15. Taxes on Income
Tax on Income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions
of the Income Tax Act, 1961,and based on expected outcome of the assessments / appeals.
Deferred tax is recognised on timing difference between the accounting income and taxable income for the year and quantified using the tax
rates and laws enacted or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognised and carried forward to the extent that there is a virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
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TRACTOR ENGINEERS LIMITED
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
16. Provisions
Provisions are recognised in the financial statements when the Company has a present obligation as a result of past event and it is probable
that an outflow of economic benefits will be required to settle the obligation. The provisions are determined on the basis of a reliable estimate
of expected outflows of economic benefits after considering the risks specific to the liability. The accounting policy in respect of certain material
classes of provisions is as follows:
a) Provision for Warranties
A provision for warranties is recognised when the underlying products and services are sold. The provision is based on historical information
on the nature, frequency and average cost of warranty claims and a weighting of all possible outcomes against their associated liabilities.
In case of products where the historical information reveals an uncertain pattern, the provision is recognised when the claims are lodged
by the customers.
b) Provision for Litigations
The provision for obligations arising on account of various litigations under Sales Tax laws, Excise law and Service Tax law, Income-Tax
law, Customs law and employment matters is recognised when it is probable that an outflow of economic benefits will be required to settle
the obligation based on management’s judgment in the similar cases and / or advice of independent experts.
SCHEDULE - R
NOTES FORMING PART OF ACCOUNTS
1. Of the total shares issued, 67,994 Equity Shares (Previous year 67,994 Equity Shares) are held by the Holding Company – Larsen & Toubro
Limited.
2. Of the total shares issued, 62,000 Equity Shares were issued as bonus shares by way of capitalisation of General Reserve of Rs.62,000,000.
3. Pursuant to the Employees Stock Options Scheme established by the Holding Company (i.e. Larsen & Toubro Limited), stock options were
granted to the employees of the Company. Total cost incurred by the holding company, in respect of the same is Rs. 89,05,955. The same is
being recovered over the period of vesting by the holding company. Accordingly, cost of Rs. 42,31,308 (PY Rs.14,31,307 ) has been recovered
by the holding company up to current year, out of which, Rs 28,00,001 (PY Rs. 11,14,646) was recovered during the year. Balance Rs. 46,74,647
will be recovered in future periods.
4. The Company has amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006,( the Act) as at
31st March, 2008. The disclosure pursuant to the said Act is as under:
2007-2008
Principal amount due to suppliers under the Act, 2006 214,682
Interest accrued and due to suppliers under the Act, on the above matters 519
Payment made to the suppliers (other than interest) beyond the appointed day, during the year 56,131
Interest paid to suppliers under the Act, (other than Section 16) —
Interest paid to suppliers under the Act, (Section 16) —
Interest due and payable to suppliers under the Act, for payment already made 271
Interest accrued and remaining unpaid at the end of the year to suppliers under the Act. 248
Note: The information has been given in respect of such vendors to the extent they could be identified as ‘Micro and Small enterprises’ on the
basis of the information available with the Company. This has been relied upon by the auditors.
5. Estimated amount of contracts remaining to be executed on capital account (net of advances) is :
Fixed Assets : Rs. 62,471,416 (previous year Rs. 70,231,225)
Intangible Assets : Rs. Nil (previous year Rs. Nil).
6. The Company had discontinued its operations at Navi Mumbai Plant, and consequently, fixed assets located at the Navi Mumbai plant were
retired from active use and were held for disposal until 31.03.07. During the year the Company installed some of those assets at Talegaon plant
having Original cost of Rs.5,133,520 and accumulated depreciation of Rs.3,252,749. During the year Company has provided additional
depreciation of Rs. 436,974 to match the Net book value as on 01.04.07,had those assets been used in business. Balance assets are carried
at estimated net realisable value or net book value, whichever is less.
7. Cash credit facilities from banks are secured by hypothecation of stocks, stores and book-debts.
External Commercial Borrowings from ABN Amro Bank is secured by mortgage of land at Talegaon, pari-passu first charge on specific
movable & immovable fixed assets present & future at Powai & Talegaon.
8. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at March 31, 2008.
9. Expenditure on research and development activities, as certified by the Management is Rs. 8,084,567 (previous year Rs. 7,362,839).
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S-20
TRACTOR ENGINEERS LIMITED
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
10. The Company has taken on operating lease certain assets comprising cars and personal computers costing Rs. 5,672,498 (previous year
Rs. 5,893,824). Total minimum future lease payments in this respect are as follows :
2007-2008 2006-2007
Rupees Rupees
Due :
Not later than one year 1,417,715 1,573,703
Later than one year but not later than five years 2,820,020 4,076,154
Later than five years Nil Nil
Total 4,237,735 5,649,857
11. Loans and advances include:
As at 31.03.2008 As at 31.03.2007
Rupees Rupees
Due from an Officer of the Company
(Maximum amount outstanding at any time during the year Rs. NIL)
(previous year Rs. NIL) Nil Nil
12. The exchange loss (net) arising on foreign currency transactions amounting to Rs. 25,685,898 has been provided for in the respective revenue
accounts. (previous year gain (net) Rs. 15,457,217)
13. Segment Reporting
The Company’s activities fall within a single segment, viz. undercarriage and related products. Segmental Reporting is on the basis of geographical
location of the customers and is as under:
2007-2008 2006-2007
Rupees Rupees
Revenue by location of the Customer
India 1,451,294,690 936,325,289
Europe 258,939,325 10,304,288
Rest of the World 18,618,716 2,485,626
Total 1,728,852,731 949,115,203
Carrying amount of Segment Assets by location of assets
India 1,715,528,091 1,002,867,452
Europe 153,424,593 3,962,810
Rest of the World 2,907,141 658,571
Total 1,871,859,825 1,007,488,833
Cost incurred on acquisition of tangible and intangible fixed assets
India 123,770,170 210,769,016
Europe — —
Rest of the World — —
Total 123,770,170 210,769,016
14. Disclosure of related parties / related party transactions:
I. Names of the Related Parties:
Sr. No. Name of the Related Party Relationship
1. Larsen & Toubro Limited Holding Company
2. L&T Finance Limited Fellow Subsidiary
3. Larsen & Toubro Infotech Limited Fellow Subsidiary
4. Larsen and Toubro Saudi Arabia LLC Fellow Subsidiary
5. Key Management Personnel and his relatives
Mr. Vishesh P. Jethmalani Chief Executive and Manager
Mrs. Shalini V. Jethmalani Wife
Ms. Khushboo V. Jethmalani Daughter
Mrs. Asha Jethmalani Mother
Mr. Parasram Jethmalani Father
Mr. Anil P. Jethmalani Brother
Mr. Sailesh P. Jethmalani Brother
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S-21
TRACTOR ENGINEERS LIMITED
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
II Names of the Related Parties with whom transactions were carried out during the year and description of relationship:
Sr. No. Name of the Related Party Relationship
1. Larsen & Toubro Limited Holding Company
2. L&T Finance Limited Fellow Subsidiary
3. Larsen & Toubro Infotech Limited Fellow Subsidiary
4. Larsen and Toubro Saudi Arabia LLC Fellow Subsidiary
5. Mr. Vishesh P Jethmalani Chief Executive and Manager
III. Disclosure of related party transactions:
Sr. No. Nature of transaction Holding Fellow Key Management TotalCompany Subsidiaries Personnel
1. Sale of goods 308,625,501 NIL NIL 308,625,501(199,611,648) (NIL) (NIL) (199,611,648)
2. Rendering of services / Other income 2,208,000 NIL NIL 2,208,000(2,274,500) (NIL) (NIL) (2,274,500)
3. Receiving of services : 19,596,936 NIL 21,984,436(14,547,509) (NIL) (16,997,509)
L&T Finance Limited 187,500(250,000)
Larsen & Toubro Infotech Limited 2,200,000(2,200,000)
4. Leasing or hire purchase NIL 1,139,962 NIL 1,139,962arrangements - L & T Finance Limited (NIL) (1,084,099) (NIL) (1,084,099)
5. Interest cost on Inter Corporate 3,125,137 NIL NIL 3,125,137Deposits / Bill discounting (1,386,217) (NIL) (NIL) (1,386,217)
6. Interest income on Inter Corporate 104,795 NIL NIL 104,795Deposits given (4,135,834) (NIL) (NIL) (4,135,834)
7. Finance (including loans and equitycontributions in cash or in kind) –
a) Inter Corporate Deposits 50,000,000 NIL NIL 50,000,000taken from L&T (110,000,000) (NIL) (NIL) (110,000,000)
b) Inter Corporate Deposits NIL NIL NIL NILrepaid to L&T (110,000,000) (NIL) (NIL) (110,000,000)
c) Inter Corporate Deposits NIL NIL NIL NILgiven to L&T (50,000,000) (NIL) (NIL) (50,000,000)
8. Sale of Navi Mumbai NIL NIL NIL NILLand (103,000,000) (NIL) (NIL) (103,000,000)
9. Purchase of investments NIL NIL NIL NIL(NIL) (17,478) (NIL) (17,478)
10. Management contracts (including 15,002,481 NIL NIL 15,002,481for deputation of employees) (11,590,790) (NIL) (NIL) (11,590,790)
11. Payment of Salary & NIL NIL 2,459,300 2,459,300Perquisites (NIL) (NIL) (2,066,132) (2,066,132)
12. Amounts due from / (due to) related parties
a) Accounts receivable 143,855,836 NIL NIL 143,855,836(51,506,297) (NIL) (NIL) (51,506,297)
b) Accounts payable : 14,271,763 NIL 38,172,714(11,992,958) (NIL) (17,894,261)
L&T Finance Limited 21,700,951(3,528,207)
Larsen & Toubro Infotech Limited 2,200,000(2,373,096)
c) Inter Corporate Deposit given NIL NIL NIL NIL(50,000,000) (NIL) (NIL) (50,000,000)
13. Provision for doubtful debts NIL NIL NIL NIL(NIL) (NIL) (NIL) (NIL)
14. Bad Debts written off NIL NIL NIL NIL(11,043) (NIL) (NIL) (11,043)
Note : Figures in bracket relate to previous year
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S-22
TRACTOR ENGINEERS LIMITED
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
15. Earnings Per Share:
2007-08 2006-07
Rupees Rupees
1. Basic Earnings Per Share (Rs.) (66.10) 1950.10
2. Diluted Earnings Per Share (Rs.) (66.10) 1950.10
3. Profit / (Loss) After Tax as per Profit & Loss Account (Rs.) (4,494,995) 132,606,713
4. Weighted average number of equity shares outstanding 68,000 68,000
5. Nominal Value per Equity Share 1,000 1,000
16. As required by the Accounting Standard (AS) 28 Impairment of Assets, issued by the Institute of Chartered Accountants of India, the Company
has reviewed potential generation of economic benefits from fixed assets and concluded that the fixed assets employed in the business will
generate adequate economic returns over their useful lives. Consequently, no provision of impairment loss is required.
17. The Company has during the year, in accordance with Accounting Standard (AS-22),”Accounting for Taxes on Income” issued by the Institute
of Chartered Accountants of India, recognised in the Profit & Loss Account, the difference of Rs. (1,243,803) between net deferred tax liabilities
of Rs. 6,361,437 as at 31st March 2007 and net deferred tax liabilities of Rs. 5,117,634 as at 31st March 2008.
Deferred Tax Assets and Liabilities are on account of the following timing differences:
2007-08 2006-07
Rupees Rupees
Deferred Tax Liabilities
Depreciation 24,037,059 6,582,542
Expenditure claimed on Payment basis for tax purposes 1,284,580 1,284,580
Voluntary Retirement Pension Scheme 8,648 58,092
Total 25,330,287 7,925,214
Deferred Tax Assets
Provision for doubtful debts 112,775 112,775
Expenditure on Software 3,002,539 1,451,002
Unabsorbed Depreciation 16,709,037 —
Unpaid bonus u/s 43 B 388,302 —
Total 20,212,653 1,563,777
Deferred Tax Liabilities (Net) 5,117,634 6,361,437
18. Contractual Product Warranties: The Company gives warranties on its products, undertaking to repair or replace the items that fail to perform
satisfactorily during the warranty period. A provision of Rs. 4,239,000/- (previous year Rs. 3,851,040/-) (included in Sundry Creditors – Others
of Schedule H) has been recognised for expected warranty claims on products sold during the year / represents the estimated amount of costs
for meeting such obligations of rectification / replacement. As the historical information reveals an uncertain pattern, the provision is recognised
when the claims are lodged by the customers. Most of them are expected to be settled in the next financial year. The movement during the year
is as below :
2007-08 2006-07
Rupees Rupees
Carrying amount at the beginning of the year 3,851,040 2,528,900
Less : Amount used against the opening provision (3,851,040) (1,643,702)
Additional provision for the current year 4,239,000 2,965,842
Carrying amount at the end of the year 4,239,000 3,851,040
19. Schedule J – Contingent Liabilities :
a) Income Tax matter in appeal : Rs. 253,123 for AY 2004-05 (previous year Rs. 1,942,298)
b) Income Tax matter in appeal : Rs. 2,235,168 for AY 2005-06 (previous year Rs. NIL)
c) Cess payable to Navi Mumbai Municipal Corporation for 1998-99, in appeal : Rs. 1,208,627 (previous year Rs. 1,208,627)
20. The Manager’s salary & perquisites
2007-08 2006-07
Rupees Rupees
Salaries 2,459,300 1,796,731
Perquisites NIL 182,281
Retirement Benefits 91,080 87,120
2,550,380 2,066,132
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S-23
TRACTOR ENGINEERS LIMITED
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
21. Auditors’ Remuneration
(excluding Service Tax and Education Cess) :
2007-2008 2006-2007
Rupees Rupees
Audit fees 175,000 175,000
Certification work 4,770 11,500
Tax audit fees 40,000 40,000
Expenses reimbursed 5,865 —
225,635 226,500
22. Details of licensed capacity, installed capacity, production and turnover:
Product Licensed capacity *Installed capacity
(i) Crawler Tractor parts For replacement needed for 2,000 For replacement needed for 2,000
(two thousand) track type tractors (2,000) (two thousand) track type tractors (2,000)
* As certified by a Director, on which certificate the auditors have placed reliance.
(ii) Actual production and opening/closing stocks
Production Opening stock Closing stock
Qty. Qty. Value Qty. Value
Nos. Nos. Rupees Nos. Rupees
Form of sets 72,601 999 10,406,758 2649 28,742,182
(35,965) (1917) (30,167,018 ) (999) (10,406,758)
Loose parts 431,208 123,097 74,952,568 333,193 159,368,664
(199,699) (89,374) (49,825,883) (123,097) (74,952,568)
Trading goods NA — 4,910 — 4,708
(NA) (—) (14,780,640) (—) (4,910)
Figures in brackets are in respect of previous year.
(iii) Turnover
2007-2008 2006-2007
Qty. Value Qty. Value
Nos. Rupees Nos. Rupees
(net of excise) (net of excise)
Form of sets 70,951 1,580,479,949 36,883 832,292,446
Loose parts — 126,214,430 — 83,674,591
Trading goods — 21,959,553 — 31,891,110
1,728,653,932 947,858,147
23. Raw materials consumed
2007-2008 2006-2007
Qty. Value Qty. Value
M.Tons Rupees M.Tons Rupees
Special steels 10,831 412,489,545 7,242 272,633,725
Iron & Steel castings 268 22,102,782 176 14,057,284
Bronze castings 53 26,102,572 25 9,945,324
Others 914,512,626 339,641,204
1,375,207,525 636,277,537
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S-24
TRACTOR ENGINEERS LIMITED
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
24. Purchases:2007-2008 2006-2007
Qty. Value Qty. ValueRupees Rupees
Trading goods — 20,536,927 — 2,683,338
25. Value of imported and indigenous materials consumed and percentage thereof:Raw Materials Stores & Spare parts
% Value % ValueRupees Rupees
Imported 21 282,605,864 0 0.00(20) (129,808,730) (0) (0.00)
Indigenous 79 1,092,601,661 100 37,543,916(80) (506,468,807) (100) (13,805,745)
100 1,375,207,525 100 37,543,916(100) (636,277,537) (100) (13,805,745)
Figures in brackets are in respect of previous year.
26. Value of imports (on C.I.F. basis):
2007-2008 2006-2007Rupees Rupees
Raw materials 352,687,328 113,218,364
27. Expenditure in foreign currency:Exhibition 5,482,698 2,329,059
Interest on ECB 2,669,902 905,412
Professional fees 2,476,941 766,427
Other matters 6,632,812 3,615,328
Total 17,262,353 7,616,226
28. Earnings in foreign exchange:Export of goods on F.O.B. basis 252,525,393 10,815,033
Freight outward — 77,963
252,525,393 10,892,996
29. Accounting Standard (AS) 15 (Revised) details-a) Defined Benefit Plans:
The amounts recognised in Balance Sheet are as follows:
Gratuity Plan Post-retirement Medical31.03.2008 Benefit Plan 31.03.2008
Particulars Rupees Rupees
A. Amount to be recognised in Balance SheetPresent Value of Defined Benefit Obligation
– Wholly Funded 24,777,378 Nil(24,842,521) (Nil)
– Wholly Unfunded Nil 4,413,287(Nil) (3,406,341)
Less: Fair value of Plan Assets –26,574,655 Nil(–24,149,394) (Nil)
Unrecognised Past Service Costs Nil Nil(Nil) (Nil)
Amount not recognized as an Asset (limit in para 59(b)) 29,236 Nil(Nil) (Nil)
Amount to be recognised as liability or (asset) –1,768,041 4,413,287(693,130) (3,406,341)
B. Amounts reflected in the Balance Sheet
Liability Nil 4,413,287(Nil) (3,406,341)
Assets 1,768,041 Nil(–693,130) (Nil)
Net Liability (Asset) –1,768,041 4,413,287(693,130) (3,406,341)
Figures in brackets are in respect of previous year.
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S-25
TRACTOR ENGINEERS LIMITED
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
b) The amount recognised in Profit and Loss Account as follows:
Gratuity Plan Post-retirement Medical31.03.2008 Benefit Plan 31.03.2008
Particulars Rupees Rupees
1 Current Service Cost 1,088,214 147,931
(1,047,813) (Nil)
2 Interest on Defined Benefit Obligation 2,003,286 290,551
(1,737,100) (Nil)
3 Expected Return on Plan Assets –1,770,315 Nil
(–1,701,060) (Nil)
4 Actuarial Losses / (Gains) –3,323,764 –76,438
(521,450) (Nil)
5 Past Service Cost Nil 745,819
(Nil) (Nil)
6 Losses / (Gains) on “Curtailments & Settlements” Nil Nil
(Nil) (Nil)
7 Losses / (Gains) on “Acquisition / Divestiture Nil Nil
(Nil) (Nil)
8 Effect of the limit in Para 59(b) 29,236 Nil
(Nil) (Nil)
Total included in Employee Benefit Expenses –1,973,343 1,107,863
(1,605,303) (Nil)
Actual Return on Plan Assets 3,391,070 Nil
(820,485) (Nil)
Figures in brackets are in respect of previous year.
c) The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balance thereof are
as follows:
Gratuity Plan Post-retirement Medical31.03.2008 Benefit Plan 31.03.2008
Particulars Rupees Rupees
Defined Benefit Obligation as at 1.4.2007 24,842,521 3,406,341
(23,305,607) (Nil)
Add: Current Service Cost 1,088,214 147,931
(1,047,813) (Nil)
Add: Interest Cost 2,003,286 290,551
(1,737,100) (Nil)
Add/(less): Actuarial Losses/(Gain) –1,703,009 –76,438
(–359,125) (Nil)
Add: Past service cost Nil 745,819
(Nil) (Nil)
Add/(less): Actuarial Losses/(Gain) due to curtailment Nil Nil
(Nil) (Nil)
Add: Liabilities Extinguished on Settlements Nil Nil
(Nil) (Nil)
Add: Liabilities Assumed on Acquisition/(Settled on Divestiture) Nil Nil
(Nil) (Nil)
Exchange Difference on Foreign Plans Nil Nil
(Nil) (Nil)
Less : Benefits paid –1,453,634 –100,917
(–888,874) (Nil)
Defined Benefit Obligation as at 31.03.2008 24,777,378 4,413,287
(24,842,521) (3,406,341)
Figures in brackets are in respect of previous year.
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S-26
TRACTOR ENGINEERS LIMITED
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
d) Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows:
Gratuity Plan Post-retirement Medical31.03.2008 Benefit Plan 31.03.2008
Particulars Rupees Rupees
Opening balance of the fair value of the plan assets as at 01.04.2007 24,149,394 Nil
(22,920,807) (Nil)
Add: Expected Return on plan assets 1,770,315 Nil
(1,701,060) (Nil)
Add / (less): Actuarial gains / (losses) 1,620,755 Nil
(–880,575) (Nil)
Add: Assets Distributed on Settlements Nil Nil
(Nil) (Nil)
Add: Contributions by Employer 487,825 100,917
(1,296,976) (Nil)
Add: Assets Acquired on Acquisition/(Distributed on Divestiture) Nil Nil
(Nil) (Nil)
Add: Exchange Difference on Foreign Plans Nil Nil
(Nil) (Nil)
Less: Benefits Paid –1,453,634 –100,917
(–888,874) (Nil)
Closing balance of the plan assets as at 31.03.2008 26,574,655 Nil
(24,149,394) (Nil)
Figures in brackets are in respect of previous year
e) The broad categories of plan assets as a percentage of total plan assets as at 31.03.2008, are as follows:
Gratuity Plan Post-retirement Medical31.03.2008 Benefit Plan 31.03.2008
1 Government of India Securities 34% 0%
(33%) (0%)
2 Corporate Bonds 32% 0%
(35%) (0%)
3 Special Deposit Scheme 26% 0%
(28%) (0%)
4 Equity Shares of Listed Companies 0% 0%
(0%) (0%)
5 Property 0% 0%
(0%) (0%)
6 Insurer Managed Funds 0% 0%
(0%) (0%)
7 Others 9% 0%
(4%) (0%)
Figures in brackets are in respect of previous year
Basis used to determine the overall expected return:
The Investments of Provident Fund and Gratuity Fund are managed by separate Trusts . Expected rate of return on investment is determined
based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated
incremental investments to be made during the year. Yield on the portfolio is calculated based on suitable mark-up over the benchmark
Government securities of similar maturities.
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S-27
TRACTOR ENGINEERS LIMITED
SCHEDULES FORMING PART OF ACCOUNTS (Contd.)
f) The amounts pertaining to defined benefit plans are as follows:
As at 31.03.2008
Particulars Rupees
1. Post-Retirement Medical Benefit Plan (Unfunded)
Defined Benefit Obligation 4,413,287
(3,406,341)
2. Gratuity Plan
Defined Benefit Obligation 24,777,378
(24,842,521)
Plan Assets 26,574,655
(24,149,394)
Surplus/(Deficit) (1,797,277)
(–693,130)
3. Leave Encashment
Defined Benefit Obligation 22,237,069
(17,270,015)
4. Long Service Award Scheme
Defined Benefit Obligation 2,163,203
(2,215,472)
Figures in italics are in respect of previous year
g) Principal actuarial assumptions at the Balance Sheet date (expressed as weighted averages):
1. Discount rates for Valuation
Post-Retirement Medical Benefit Plan 8.41%
Gratuity Plan 8.21%
Leave Encashment 8.27%
Long Service Award Scheme 7.59%
2. Expected return on plan assets as at 31.03.2008 7.50%
3. Salary growth rate:
a) Gratuity Scheme 6.00%
b) Company Pension Scheme
h) Attrition rate:
a) For post-retirement medical benefits and Company’s Pension Scheme, the attrition rate varies from 2% to 8% for various age groups.
b) For gratuity scheme, the attrition rate varies from 1% to 7% for various age groups.
i) The estimates for future salary increased, considered in actuarial valuation, take into account inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
j) The obligation of the Company under the post-retirement medical benefit plan is limited to the overall ceiling limits. At present, healthcare
cost, as indicated in the principal actuarial assumption given above, has been assumed to increase at 5% p.a.
k) A