1. Contingent Liabilities
PARTICULARS 2010-11 2009-10
Rs Million Rs Million
Sales Tax 94.61 108.24
Income Tax-Disputed Demands under Appeal - -
Claims not acknowledged as debts
- Employee Related 23.90 21.54
- Property Disputes 2.60 2.60
- Others 8.83 5.83
Provision of Security (Bank Deposits
pledged with a Bank against
which working capital loan has been
availed by Apollo Finance Ltd, 73.30 99.52
an Associate Company)
Guarantee given by Company for the
loan taken by Sub-Subsidiary
Companies 2,570.40 673.50
Guarantees given by bankers on behalf
of the Company 528.00 497.66
Custom Duty 23.50 23.50
Excise Duty* 177.30 56.34
Irrevocable Letters of Credit 2,916.73 3,865.72
* Excludes demand of Rs 532.12 Million (Rs 532.12 Million) raised on
one of the Companys units relating to issues which have been decided
by the Appellate Authority in Companys favour in appeals pertaining to
another unit of the Company. Show-cause notices received from various
Government Agencies pending formal demand notices have not been
considered as contingent liabilities.
In the opinion of the management, no provision is considered necessary
for the disputes mentioned above on the grounds that there are fair
chances of successful outcome of appeals.
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for as on 31st March, 2011 is Rs 4,076.59
Million (Rs 8,323.09 Million).
3. Lock Out at Perambra Plant
A Lock out was declared at Companys manufacturing facility at Perambra
in the state of Kerala on 11th June 2010. The same was lifted on 21st
August 2010 after signing of the Long Term Settlement Agreement with
the workers.
4. Status of Chennai Project
The first phase of passenger car vehicle segment of the Chennai project
had commenced operations from 11th March 2010 and the Truck/Bus radial
segment had commenced operations from 11th May 2010. The construction
of the second and third phase of the project to enhance the production
capacities of the passenger car and Truck/Bus radial tyres has started
in the current financial year.
5. MAT Credit Entitlement
In view of the consistent profits over the years and also considering
the future profit projections, the management believes that there is
convincing evidence with regard to the earning of future taxable income
and payment of tax under normal tax within the specified period.
Accordingly, MAT Credit Entitlement of Rs 315.93 Million has been
recognized during the year.
6. Based on and to the extent of information received from the
Suppliers by the Company, regarding their status under the Micro, Small
and Medium Enterprises Development Act, 2006 (MSMED Act) and relied
upon by the auditors, the relevant particulars as at March 31, 2011 are
furnished below:
7. Excise duty relating to sales has been disclosed as a reduction
from turnover. Excise duty related to difference between the closing
stock and opening stock has been disclosed in Schedule 10 Increase in
Work in Process and Finished Goods.
8. Borrowing costs capitalized/transferred to capital work in progress
during the year is Rs 251.28 Million (Rs 257.42 Million). This includes
Rs 69.90 Million (Rs 31.57 Million) towards loan processing fees and Rs
14.71 Million (Rs 15.44 Million) towards Bank Charges.
9A Employee Benefits
Gratuity
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service receives gratuity on leaving
the Company at 15 days salary (last drawn salary) for each completed
year of service. The scheme is funded with Life Insurance Corporation
of India.
The following table summarizes the components of net benefit expense
recognized in the profit and loss account and the funded status and
amounts recognized in the balance sheet for the respective plan:
10B Employees Phantom Stock Plan 2010
a) During the year the company had announced Cash-settled Employee
Share-based Payment Plan (Phantom Stock Plan) for eligible employees of
the company. Under the scheme, 12 Lacs phantom stock units have been
granted on April 1, 2010 by the board appointed committee and the same
will vest as per the following schedule:
Pursuant to the above scheme, the eligible employees are entitled to
get cash compensation upon exercise of the phantom stock unit within
seven years of the vesting date
b) Details of the expense recognized during the year and outstanding
phantom stock units of the company under the Phantom Stock Plan 2010
are as under:
Phantom Stock Scheme - Proforma P&L and EPS
Had compensation cost for the Phantom Stock units granted under the
Scheme been determined based on fair value approach, the Companys net
profit and earnings per share would have been as per the proforma
amounts indicated below:
11. The Companys operations comprise of only one business segment –
Automobile Tyres, Automobile Tubes & Automobile Flaps in the context of
reporting business/geographical segment as required under mandatory
accounting standards AS -17 Segment Reporting
The geographical segments considered for disclosure are - India and
Rest of the world. All the manufacturing facilities are located in
India:
Note: Related Parties and their Relationships are as identified by the
management and relied upon by the Auditors.
Notes:
(a) During the year, the management decided to deregister Pollock and
Atiken (Pty.) Ltd. Notice of deregistration has been received from
local authorities on February 17, 2011 and the company would be
deregistered on the expiry of two months from the date of publication
of the notice.
(b) The management had initiated the voluntary dissolution of Apollo
Tyres, Zrt during the last financial year. The dissolution process was
completed during the year with effect from October 1, 2010.
(c) The management had initiated the winding up of Apollo Tyres Pte
Ltd. during the last financial year. The winding-up process was
completed during the year and the name of Apollo Tyres Pte Ltd. was
struck off the register of companies with effect from June 4, 2010.
(d) During the year the company has incorporated a new subsidiary
company named Apollo Tyres Middle East FZE for trading activity in the
Middle Eastern countries of the tyres sourced from various group
companies.
(e) The company acquired 95% shareholding of KP Construction & Forestry
Development Co. Ltd. (name being changed to Apollo Tyres (LAO) Co.
Ltd.) through newly incorporated company in Singapore, Apollo Tyres
Holdings (Singapore) Pte. Ltd. (ATHS).
(f) During the year, the management decided to liquidate Apollo Tyres
(Nigeria) Ltd. Liquidation process is underway and is expected to be
completed during the next financial year.
(g) The associate companies Apollo Radial Tyres Ltd. & Apollo
Automotive Tyres Ltd. applied for voluntary dissolution during the
year. Notice pursuant to Section 560(3) of the Companies Act, 1956 has
been issued by Registrar of Companies on March 10, 2011 & March 7, 2011
respectively. Consequently, the companies have been dissolved and their
names struck-off from the register upon expiry of 30 days from the date
of said notices.
12. Operating Lease
The Company has acquired assets under the operating lease agreements
that are renewable on a periodic basis at the option of both the lessor
and lessee. Rental expenses under those leases were Rs 400 Million (Rs
250 Million)
13. Previous Years figures have been regrouped or rearranged wherever
considered necessary to conform to the classifications for the current
year. Figures in brackets relate to previous year.
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