1.00 Corporate Information
Yuken India Limited (YIL) was established in 1976 in technical and
financial collaboration with Yuken Kogyo Company Limited, Japan. YIL
Manufacturing unit is located in Bangalore. Sales and distribution
network is spread across India. Today YIL is the most preferred source
of supply by most of the original equipment manufacturers in India. YIL
manufacture wide range of Vane Pumps, Piston Pumps, Gear Pumps,
Pressure Controls, Flow Controls, Directional Controls, Modular Control
Valves, Servo Valves, Custom built/standard Hydraulic Systems and Chip
Compactor. YIL established Foundry Division in 1984, catering to
Hydraulics, Automobile, Machine Tools, Textile Machinery, Earth moving,
Agriculture and Material Handling segments. YIL has been certified as
an ISO- 9001:2008.
2.00 BASIS OF ACCOUNTING
The financial statements have been prepared on the accrual concept of
accounting under the Historical Cost Convention in accordance with the
generally accepted accounting principles and comply with the mandatory
Accounting Standards in accordance with the relevant provisions of The
Companies Act, 1956.
2.01 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognized in the periods in which
the results are known / materialize.
Inventories are valued as follows
(i) a) Raw Materials & Components At lower of cost on Moving Weighted
value and net realizable value
(ii) a) Material in transit At lower of cost and net realizable
b) Work in Process *
(iii) Finished Goods * At lower of cost and net
(iv) Tools At lower of cost and net
(* Cost includes cost of material, direct labour and other applicable
2.03 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
2.04 Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
2.05 Depreciation / Amortization
Depreciation on Fixed Assets is provided at the rates specified in
Schedule XIV of the Companies Act 1956, under Technical Knowhow fee is
amortized over a period of 5 years on pro-rata basis.
Cost of License and Implementation of Enterprise Resource Planning
(ERP) software is amortized over the Expenses incurred on research and
developments are charged to revenue in the same year. Fixed assets
purchases for research and development purposes are capitalized and
depreciated as per the Company''s policy.
2.06 Revenue recognition
Sale of goods
Sales are recognized on dispatch of goods when significant risks and
rewards of ownership are considered to be transferred. Sales returns
are recognized as and when ascertained and are reduced from the sales
turnover of the year. Sales are inclusive of excise duty and are net of
Income from services
Revenue from Hydraulic Training programme is recognized on completion
of the Training program.
2.07 Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
2.08 Tangible fixed assets
Fixed Assets are capitalized at cost inclusive of taxes, incidental
expenses on freight, installation etc. and interest on borrowed funds
attributable to acquisition of fixed assets for the period upto the
date such asset is put to use.
Fixed Assets taken on financial lease prior to April 1st ,2001 are not
capitalized and lease rentals are absorbed in the Profit and Loss
Account without reference to useful life of the asset, while assets
acquired under Hire Purchase are capitalized.
2.09 Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
2.10 Intangible assets
Intangible assets are carried at cost less accumulated amortization and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing authorities), and
any directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. Subsequent
expenditure on an intangible asset after its purchase is recognized as
an expense when incurred unless it is probable that such expenditure
will enable the asset to generate future economic benefits in excess of
its originally assessed standards of performance and such expenditure
can be measured and attributed to the asset reliably, in which case
such expenditure is added to the cost of the asset.
2.11 Foreign currency transactions and translations
Transactions in Foreign Currency are accounted at exchange rates
prevailing on the date of Transaction. Monetary items denominated in
foreign currency and forward exchange contracts outstanding as at the
end of the year are re-stated at year end rates. The loss or gain
arising on restatement / settlement is adjusted to the Profit and Loss
In case of items which are covered by forward exchange contracts, the
difference between the yearend rate and rate on the date of the
contract is recognized as exchange difference and the premium paid on
forward contracts is recognized over the life of the contract. Non
monetary foreign currency items are carried at cost.
Long-term investments are carried individually at cost less provision
for diminution, other than temporary, in the value of such investments.
2.13 Employee benefits
Employee benefits include provident fund, superannuation fund, gratuity
fund, compensated absences.
Defined contribution plans
The Company''s contribution to provident fund and superannuation fund
are considered as defined contribution plans and are charged as an
expense as they fall due based on the amount of contribution required
to be made.
Defined benefit plans
For defined benefit plans in the form of gratuity fund the cost of
providing benefits is determined using the Projected Unit Credit
method, with actuarial valuations being carried out at each Balance
Sheet date. Actuarial gains and losses are recognized in the Statement
of Profit and Loss in the period in which they occur. Past service cost
is recognized immediately to the extent that the benefits are already
vested and otherwise is amortized on a straight-line basis over the
average period until the benefits become vested. The retirement benefit
obligation recognized in the Balance Sheet represents the present value
of the defined benefit obligation as adjusted for unrecognized past
service cost, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus
the present value of available refunds and reductions in future
contributions to the schemes.
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognized
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service. The cost of such
compensated absences is accounted as under:
(a) in case of accumulated compensated absences, when employees render
the services that increase their entitlement of future compensated
(b) in case of non-accumulating compensated absences, when the absences
Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognized as a liability at the present value of
the defined benefit obligation as at the Balance Sheet date less the
fair value of the plan assets out of which the obligations are expected
to be settled. Long Service Awards are recognized as a liability at
the present value of the defined benefit obligation as at the Balance
2.14 Borrowing costs
Borrowing costs include interest, amortization of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilized for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset up to the date of
capitalization of such asset is added to the cost of the assets.
Capitalization of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
Assets taken on lease where the company acquires substantially the
entire risks and rewards incidental to ownership are classified as
finance leases. The amount recorded is the lesser of the present value
of minimum lease rental and other incidental expenses during the lease
term or the fair value of the assets taken on lease. The rental
obligations, net of interest charges, are reflected as secured loans.
Leases that do not transfer substantially all the risks and rewards of
ownership are classified as operating leases and recorded as expense as
and when the payments are made over the lease term.
2.16 Earnings per share
In determining the earning per share, the Company considers the net
profit after tax. The number of shares used in computing basic earnings
per share is the weighted average number of shares outstanding during
the period. The number of shares used in computing diluted earning per
share comprises the weighted average shares considered for deriving
basic earnings per share and also the weighted average number of equity
shares that could have been issued on the conversion of all dilutive
potential equity shares. Dilutive potential equity shares are deemed
converted as of the beginning of the period unless issued at a later
2.17 Taxes on income Current Tax :
Current tax expense is determined in accordance with the provisions of
the Income - tax Act, 1961.
Minimum alternate tax (MAT) paid in accordance with the tax laws, which
gives rise to future economic benefits in the ''orm of adjustment of
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax.
Deferred tax assets and liabilities are measured using the tax rate
which have been enacted or substantively enacted at the Balance Sheet
date. Deferred tax expense or benefit is recognized, on timing
differences being the difference between taxable income and accounting
income that originate in one period and are capable of reversing in one
or more subsequent periods.
Deferred tax assets are recognized only to the extent that there is a
reasonable certainty of their realization. Where there is unabsorbed
depreciation or carried forward losses, deferred tax asset is
recognized only if there is virtual certainty of realization of such
2.18 Impairment of assets
Consideration is given at each Balance Sheet date to determine whether
there is any indication of impairment of the carrying amount of the
Company''s fixed assets. If any indication exists, an impairment loss is
recognized when the carrying amount exceeds greater of net selling
price and value in use.
A previously recognized impairment loss is further provided or reversed
depending on changes in circumstances.
2.19 Provisions and contingencies
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.