1. Rights, preferences and restrictions
Equity shares
The Company has only one class of equity shares having a par value of
Rs. 10 per share. Each holder of equity share Is entitled to one vote
per share. The paid-up equity shares of the Company rank pari-passu in
all respects including dividend. The Company declares and pays
dividend, if any, in Indian Rupees. The dividend, if any, proposed by
the Board of Directors is subject to the approval of Shareholders in
the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
Preference shares
Preference shares issued by the Company are non-convertible,
non-cumulative, non participating and redeemable. Preference
shareholders are not entitled to vote.
Preference shareholders are entitled to 0.0000001 % dividend.
Preference shareholders have preference over equity shareholders for
the payment of dividend and repayment of capital, in the event of
liquidation of the Company.
Company overview
Hella India Lighting Limited, ('the Company') is a public limited
Company and Is incorporated under the Companies Act, 1956. Its shares
are listed on Bombay Stock Exchange and Delhi Stock Exchange. The
Company is primarily engaged in manufacturing of automotive lights,
switches, blinkers etc.
2. Contingent liabilities
The Company has received assessment orders for the Assessment Year
2001-02 and 2004-05 from the Income-tax authorities as a result of
which demands have been raised against the Company. The Company has
filed appeals with High Court against these assessment orders, details
of which are as under:
Name of the Nature of dues Amount Period to which
Statute involved (Rs.) the amount
relates #
Income-tax Disallowance for foreign 3,119,228 2001-02
Act, 1961 exchange fluctuation
Income-tax Disallowance for foreign 3,958,969 2004-05
Act, 1961 exchange fluctuation
Name of the Forum where
Statute dispute is pending
Income-tax Hon'ble High Court
Act, 1961 of Delhi
Income-tax Hon'ble High Court
Act, 1961 of Delhi
# Assessment year
3. Employee benefits
Disclosure in respect of employee benefits under Accounting Standard
(AS) - 15 "Employee Benefits" prescribed by the Companies (Accounting
Standards) Rules, 2006:
a) Defined Contribution Plans:
An amount of Rs. 5,762,088 (previous year Rs. 4,344,939) pertaining to
employers' contribution to Provident Fund and Employees' State
Insurance is recognised as an expense and included in "Employee benefit
expense" in note no. 2.22.
b) Gratuity Plan (defined benefit plan)
The following table sets forth the status of the Gratuity Plan of the
Company, and the amounts recognised in the Balance Sheet and Statement
of Profit and Loss.
Actuarial assumptions
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotions and other
relevant factors. Medical cost trend rates have no impact on actuarial
valuation of the above defined benefit plan. Discount rate is based on
market yields prevailing on government securities as at 31 March 2014
for the estimated term of the obligations.
4. The Company has obtained relevant information from its suppliers
about their coverage under the Mico, Small and Medium Enterprises
Development Act, 2006 ('the Act') which came into force from 2 October
2006. Based on the information presently available with the management,
following are the disclosures under the Micro, Small and Medium
Enterprises Development Act, 2006 in respect of micro and small
suppliers as defined in the Act:
5. Segment information
The Company is engaged in the business of manufacture and after sale
support of auto components / accessories which is a primary segment for
the Company which constitutes a single business segment and accordingly
disclosure requirements of Accounting Standard 17, "Segment Reporting",
prescribed by the Companies (Accounting Standard) Rules 2006 in
relation to primary segment are not required to be given.
Segment accounting policies
The accounting principles consistently used in the preparation of the
financial statements and consistently applied to record revenue and
expenditure in individual segments are as set out in Note 1,
Significant accounting policies. The description of segment assets and
revenue and the accounting policies in relation to segment accounting
are as under:
a) Segment revenue
Segment revenue excludes trade discounts, excise duty and exceptional
item and includes other income. Segment revenue has been allocated to
both the segments on the basis of specific identification.
b) Segment assets
Segment assets include all operating assets used by a segment and
consist principally of fixed assets, capital work in progress, current
assets and loans and advances.
6. The Company has established a comprehensive system of maintenance
of information and documents as required by the transfer pricing
regulation under sections 92-92F of the Income-Tax Act, 1961. Since the
law requires existence of such information and documentation to be
contemporaneous in nature, the Company continuously updates its
documentation for the international and domestic transactions entered
into with the associated enterprises during the financial year and
expects such records to be in existence latest by the due date as
required under law. The management is of the opinion that its
international and domestic transactions are at arms length so that the
aforesaid legislation will not have any impact on the financial
statements, particularly on the amount of income tax expense and that
of provision for taxation.
7. The promoters of the Company hold 81.85% of the total issued and
subscribed equity capital of the Company and balance 18.15% stake is
held by public shareholders. In 2005-06, the Company had applied for
delisting from Delhi Stock Exchange ('DSE') and Bombay Stock Exchange
('BSE'). While DSE allowed the Company to delist, BSE rejected the
application vide letter dated 15 February 2006. On appeal, the
Securities Appellant Tribunal ('SAT') passed a favorable order for
delisting of the Company. However, the said order of SAT was challenged
before the Honourable Supreme Court of India by certain individual
shareholders. The Supreme Court vide order dated 24 October 2008 stayed
the delisting of the Company and the matter is currently sub- judice.
The management of the Company believes that pending such decision from
the Hon'ble Supreme Court, the requirement of increasing /maintaining
at least 25% of its equity shares with public by 3 June 2013, as
required by Clause-40 A of the Listing Agreement read with rule 19(2)
(B) of Securities Contract Regulation Rules, 1957 ('SCRR') and related
notifications in this regard, is not applicable to the Company. As a
precautionary measure, vide letter dated 19 March 2013, the Company had
written/ applied to SEBI seeking specific waiver to comply with the
aforesaid conditions till the matter is sub-judice.
SEBI did not respond to the request of the Company and thereafter,
issued notices to non-compliant companies vide order dated 4 June 2013.
In a separate press release dated 4 June 2013, SEBI has also confirmed
that notices were not issued to 3 companies as there matter are
sub-judice.
Although the name of the Company have not been mentioned in the above
referred list of non-compliant companies, the Company, as a matter of
abundant caution, again sought a confirmation from CGM (Corporate
Finance Department of SEBI) vide email dated 21 June, 2013 that they
are one of those 3 companies where the matter is sub-judice, as
mentioned in the Press Release. This understanding was confirmed by
SEBI vide their email dated 16 July 2013.
Further to above, the case has appeared on 'list of curative' and
'review petitions' of Honourable Supreme Court.
In view of the above circumstances, the Company believes that there is
no legal, regulatory and financial risk on the Company due to its
inability to meet the requirements of Clause 40 A of the Listing
agreement.
8.In view of continued losses incurred by the Company, during the
year ended 31 March 2012, the management had done a detailed analysis
to assess impairment of its fixed assets at the Derabassi factory,
which is a separate cash generating unit. This analysis was based on
future revenue growth and related expenditure and accordingly a
provision of Rs. 424 lakhs had been created towards writing down the
value of fixed assets to their recoverable amount in the year ended 31
March 2012. The recoverable amount was based on value in use which had
been computed on the basis of discounted future cash flows projected by
the management. This analysis had further been considered and taken on
record by the Board of Directors in their meeting on 30 May 2012.
Expense towards the impairment provision was included under the head
Other expenses.
9. Previous period figures have been regrouped/ reclassified
wherever necessary to confirm to current year's classification.
As per our report of even date attached.
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