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Moneycontrol.com India | Notes to Account > Auto Ancillaries > Notes to Account from RACL Geartech - BSE: 520073, NSE: N.A
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RACL Geartech

BSE: 520073|ISIN: INE704B01017|SECTOR: Auto Ancillaries
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Nov 11, 16:00
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RACL Geartech is not listed on NSE
Mar 16
Notes to Accounts Year End : Mar '18

1. GENERAL INFORMATION

RACL Geartech Ltd (referred to as ‘RACL'' or ‘Company'') was established in the year 1989 for producing automotive components in the field of Motorcycles & Scooters, 3&4 Wheeler Passenger & Cargo Vehicles, Agricultural Machinery, Tractors, ATV, Light & Heavy Commercial Vehicles, etc. The company has also expanded into sub-assemblies, industrial Gears for electrical switch Gears and Circuit Breakers, Winches and Cranes.

It is a customer centric Organisation obsessed with world class benchmarking and are supplying to top Global OEM''s like BMW Mottarad, Germany, Kubota Corporation (Japan, Thailand and USA) , IT Switzerland (Same Group Company), KTM AG (Austria) Schneider Electric (Germany) , Dana (Italy and China) amongst others .

A BASIS FOR PREPARATION OF FINANCIAL STATEMENTS

(a) Statement of Compliance

The shares of the company are listed on Bombay Stock Exchange(BSE).

The Company''s financial statements complies in all material aspects with Indian Accounting Standards (Ind AS) notified under Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Companies Act, 2013 (the Act).

The financial statements up to the year ended 31 March 2017 were prepared in accordance with the Accounting Standards notified under the Companies (Accounting Standard) Rules, 2006 as amended and other relevant provisions of the Act (Previous GAAP).

These financial statements are the first financial statements of the Company under Ind AS. Refer Note no 41 for an explanation on how the transition from previous GAAP to IndAS has affected the Company''s financial position, financial performance and cash flows.

Dates for Ind As conversion:

(b) Basis of measurement

The financial statements have been prepared on a historical cost basis, except for the following items :

(c) Use of estimates and judgments

Preparation of these financial statements is in conformity with IndAS. It requires the management to make estimates and assumptions considered in the reported amounts of assets, liabilities (including contingent liabilities), income and expenses. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Actual 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. Estimates include the useful lives of property plant and equipment and intangible fixed assets, allowance for expected credit loss, future obligations in respect of retirement benefit plans, fair value measurement etc.

(d) Measurement of fair values

Accounting Policies and disclosures requires measurement of fair values for both financial and non-financial assets and liabilities. Fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that entity can access at measurement date.

- Level 2 inputs other than quoted prices included in Level 1, that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and

- Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs).

(e) Operating Cycle

Based on the nature of products/ activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current

Presentation of financial statements

The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in Schedule III to the Companies Act, 2013 modified in accordance with the requirements of Ind AS. The Cash Flow Statement has been prepared and presented as per the requirements of Ind AS 7 “Statement of Cash Flows”. The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in Schedule III to the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards.

Amounts in the financial statements are presented in Indian Rupees, rounded of to Rupees in Lakhs in line with the requirements of schedule III.

i. Terms and rights attached to equity shares

The Company has only one class of equity shares having a face value of Rs10 per share. Each holder of the equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend, if any proposed, by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31st March'' 2018, no dividend is declared by Board of Directors. ( Previous year : NIL)

In the event of liquidation of the company the holders of the equity shares will be entitled to receive remaining assets of the company, after distribution of all preferencial amounts in the proportion to number of equity shares held by the shareholders.

2 Disclosure pursuant to Ind AS 19 “Employee Benefit”

The details of various employee benefit provided to employee areas under:

Defined Benefit Plans

In accordance with the Payment of Gratuity Act, 1972, the Company provides for gratuity, as defined benefit plan. The gratuity plan provides for a lump sum payment to the employees at the time of separation from the service on completion of vested year of employment i.e. five years. The liability of gratuity plan is provided based on actuarial valuation as at the end of each financial year based on which the Company contributes the ascertained liability to Life Insurance Corporation of India with whom the plan assets are maintained. These plans typically expose the Company to actuarial risks such as: investment risk, inherent interest rate risk , longevity risk and salary risk, Investment Risk.

Interest Rate Risk The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase Longevity Risk.

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary Risk Higher than expected increases in salary will increase the defined benefit obligation.

The most recent actuarial valuation for determining present value of the defined benefit obligation were carried out as at March 31, 2018 by Mr. I Sambasavi Rao (Membership no. 158), Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost, were measured using the projected unit credit method. The principal assumption used for the purpose of the actuarial valuations were as follows:-”

3 Disclosure of Segmental reporting pursuant to Ind AS 108 “Segmental Reporting”

Ind AS 108 that relates to segmentalreporting is not applicable as the company does not have any identifible segment. The Company deals only in Automative Components meant for two wheeled, three wheeled and four wheeled Vehicles.

Remuneration & Perks include payment to Mr. Gursharan Singh, Chairman & Managing Director Rs. 97.60 Lakhs( Prev Year Rs 76.45Lakhs), Mr. Dev Raj Arya, Director & CFO Rs. 48.58 Lakhs( Prev Year Rs. 39.65Lakhs) Mr. Hitesh Kumar, Company Secretary Rs. 5.89 Lakhs (Prev Year Rs 4.57 Lakhs), KMP''s of the company.

Remuneration & Perks paid to Mrs. Narinder Paul Kaur ( as retainership fees), Rs 13.20 Lakhs(Prev Year Rs. 10.80 Lakhs), Ms Ranvita Singh Rs. Nil ( Prev Year 1.91Lakhs) and Mr. Prabh Mehar Singh Rs 10.11 Lakhs (Prev year Rs 7.09Lakhs) , Relatives of Key Managerial Person.

Director Sitting Fees is paid to Mrs. Narinder Paul Kaur, Non executive Director Rs. 0.75 Lakhs (Prev. Year Rs 0.90 Lakhs).

Financial Instruments

4 Capital Managment

The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximising the return to stakeholders through efficient allocation of capital towards expansion of business, opitimisation of working capital requirements and deployment of surplus funds into various investment options. For the purpose of the company''s capital management, capital includes issued equity capital, share premium , term loans from banks and financial institutions and all other equity reserves attributable to the equity holders.

The carrying amount of financial assets/liabilities including trade receivables and payables and others; measured at amortised cost are considered to be the same as their fair values, due to their short term nature.

The carrying value of Rupee Term Loan approximate fair value as the instruments are at prevailing market rate.

The Fair values are all measured at Level 3.

5 Financial Risk Management Objectives

The company''s activities expose it to variety of financial risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. market risk, credit risk and liquidity risk. The company''s focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Board of Directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The Board of Directors has established a risk management policy to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management systems are reviewed annually to reflect changes in market conditions and the Company''s activities. The Board of Directors oversee compliance with the Company''s risk management policies and procedures, and reviews the risk management framework.

A) Market risk

The market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.

i Foreign Currency Risk

Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rate.

ii Interest rate risk

Interest rate risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Interest risk arises to the company mainly from Long term borrowings with variable rates. The company measures risk through sensitivity analysis.

Currently, Lending by Commercial Banks is at variable rate, which is an inherent business risk.

B) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial assets.

The company is exposed to liquidity risk due to bank borrowings and trade and other payables.

The company measures risk by forecasting cash flows.

The Company''s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due without incurring unacceptable losses or risking damage to the Company''s reputation. The Company ensures that it has sufficient fund to meet expected operational expenses, servicing of financial obligations.

Details of Ind AS Adjustments:-

a) Miscellaneous Expenditure not written off transferred to Retained Earnings. - Rs.262.62 Lakhs

b) Bill Discounting recognised by stating Trade Receivables at gross value and recognising amount received from RBL Ltd-Rs.2024.26 Lakhs

c) Rectification of error -Amount transferred from Cash Credit Account to FD account -Rs.230.00 Lakhs

d) Foreign Currency in hand restated at 31-03-2016. Rectification of error -Rs.0.08 Lakhs

e) Subsidy from UPSIDC transferred to Retained Earnings- Rs.2.00 Lakhs

f) Revaluation Reserve on 31-03-2016 transferred to Retained Earnings - Rs.1102.69 Lakhs

g) Acturial Losses on 01-04-2016 recognised in Other Comprehensive Income - Rs.57.01 Lakhs

Source : Dion Global Solutions Limited
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