1. THE CORPORATE INFORMATION
Force Motors Limited ("the Company") is a Public Limited Company domiciled and incorporated in India. The Registered Office of the Company is situated at Mumbai-Pune Road, Akurdi, Pune - 411035. The Company’s ordinary shares are listed on the BSE Limited and the National Stock Exchange of India Limited.
The Company is a fully, vertically integrated automobile company, with expertise in design, development and manufacture of the full spectrum of vehicles, automotive components and aggregates. Its range of products includes Light Commercial Vehicles (LCV), Multi-Utility Vehicles (MUV), Small Commercial Vehicles (SCV), Special Vehicles (SV) and Agricultural Tractors.
2. SIGNIFICANT AND MATERIAL ACCOUNTING POLICY INFORMATION
The Company has disclosed accounting policy information material to its financial statements in accordance with amendments in Ind AS 1 as notified in the Companies (Indian Accounting Standards) Amendment Rules, 2023.
(a) Statement of Compliance
The financial statements of the Company comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 ("the Act") [the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Indian Accounting Standards) Amendment Rules, 2023] and other relevant provisions of the Act.
(b) Basis of Preparation
The financial statements have been prepared on the historical cost basis, except certain financial instruments and defined benefit plans, which are measured affair values.
All assets and liabilities, other than deferred tax assets and liabilities, have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Schedule III (Division II) to the Act.
These standalone financial statements were approved by the Board of Directors and authorised for issue, on 26 April, 2024.
(c) Revenue Recognition
(i) Sales
Revenue towards satisfaction of performance obligation is measured at transaction price. Amounts disclosed as revenue are net of Value Added Taxes, Goods and Services Tax (GST), Returns, Discounts, Rebates and Incentives. The Company recognizes revenue, when it has transferred to the buyer the significant risks and rewards associated with the ownership of goods, no significant performance obligation is pending and the amount of revenue can be reliably measured and it is probable that future economic benefits willflowtothe Company.
Trade Receivables that do not contain a significant financing component are measured at transaction price.
(ii) Other Incomes
Other incomes are recognized when it is probable that the economic benefit will flow to the Company and the amount of income can be measured reliably.
(iii) Cost Recognition
Costs and expenses are recognised when incurred and are classified according to their nature. Expenditure are capitalised where appropriate internally generated capital items (tangible and intangible assets) and various product development projects undertaken by the Company, forthe introduction of new products and development of Engines and existing product variants.
(d) Inventories
Inventories are valued at lower of their cost or net realizable value. The cost of raw materials, stores and consumables is measured on moving weighted average basis.
Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition.
Raw materials and bought out components are valued at the lower of cost or net realizable value. Cost is determined on the basis of the weighted average method.
Finished Goods and work-in-progress are carried at cost or net realizable value, whichever is lower.
Stores, spares and tools other than obsolete and slow moving items are carried at cost. Obsolete and slow moving items are valued at cost or estimated net realizable value, whichever is lower.
(e) Property, Plant and Equipment
Property, plant and equipment, except land, are carried at historical cost of acquisition, construction or manufacturing cost, as the case may be, less accumulated depreciation and amortization. Freehold land is carried at cost of acquisition.
Cost represents all expenses directly attributable to bringing the assetto its working condition capable of operating in the manner intended. Costs incurred to manufacture property, plant and equipment and intangibles are reduced from the total expense under the head 'Expenditure included in above items capitalised1 in the Statement of Profit and Loss.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at regular intervals and adjusted prospectively, if appropriate.
(f) Intangible Assets
Intangible Assets acquired are stated at acquisition cost, less accumulated amortization and impaired losses, if any.
Intangible Assets internally generated
Expenditure incurred by the Company on development of know-how researched, is recognized as an intangible asset, if and only if the future economic benefits attributable to the use of such know-how are probable to flow to the Company and the costs/expenditure can be measured reliably.
(g) Investment Property
Investment property is measured at cost less accumulated depreciation.
(h) Impairment of assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
(i) Depreciation & Amortization
(i) Property, Plant and Equipment
• The Depreciation on Property, Plant and Equipment is provided on straight-line method and as per Schedule-ll to the Companies Act, 2013.
• Leasehold land is amortized overthe period of lease.
(ii) Intangible Assets
• Software and their implementation costs are written off overthe period of 5 years.
• Technical Know-how acquired and internally generated is amortized overthe useful life of the assets, not exceeding 10 years.
(j) Borrowing Costs
Cost of borrowings incurred for acquisition, construction or production of qualifying asset is capitalized.
(k) Research and Development Expenses
Revenue expenditure on Research and Development is charged off as an expense in the year in which incurred and capital expenditure is grouped with Assets under appropriate heads and depreciation is provided as per rates applicable.
(l) Leases
(i) Where the Company is the Lessee
• The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset orto restore the underlying asset or the site on which it is located, less any lease incentives received.
• The right-of-use asset is subsequently depreciated using the straight-line method overthe useful life of the right-of-use asset orthe end of the lease term.
Short-term leases and leases of low-value assets
• The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis overthe lease term.
(ii) Where the Company is the Lessor
Lease rentals are recognized in the Statement of Profit and Loss. Costs, including depreciation, are recognized as an expense in the Statement of Profit and Loss.
(m) Investment in Subsidiary and Joint Venture
The Company has elected to recognize its investments in Joint Venture at cost in accordance with the option available in Ind AS 27, ‘Separate Financial Statements’.
(n) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and cash on hand and short-term deposits with an original maturity of three months or less, which are subjectto an insignificant risk of changes in value.
(o) Earnings per Share
Basic earnings per share are computed by dividing the profit aftertax by the weighted average number of equity shares outstanding during the period.
(p) Foreign currency transactions Transactions and balances
(i) Foreign Currency transactions are recorded at the rate of exchange on the date of the transaction.
(ii) Monetary items of Assets and Liabilities booked in foreign currency are translated in to rupee at the exchange rate prevailing at the Balance Sheet date.
(iii) Exchange difference resulting from settlement of such transaction and from translation of monetary items of Assets and Liabilities are recognized in the Statement of Profit and Loss.
(iv) Exchange difference arising on translation of foreign currency liabilities for acquisition of Property, Plant and Equipments are adjusted to the Statement of Profit and Loss.
(v) The date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance.
(q) Functional and presentation currency
These financial statements are presented in Indian Rupees, which is the Company’s functional currency. All amounts disclosed in the financial statements and notes have been rounded off to nearest lakhs, unless otherwise stated.
(r) Employee Benefits Defined benefit plans
(i) The accruing liability of Gratuity is covered by Employees Group Gratuity Scheme of Life Insurance Corporation of India (LIC) and the premium is accounted for in the year of accrual. The additional liability, if any, due to deficit in the Plan assets managed by LIC as compared to the present value of accrued liability on the basis of actuarial valuation, is recognized and provided for.
(ii) Provident fund contributions are made to Company’s Provident Fund Trust. The contributions are accounted for as defined benefit plans and are recognized as employee benefits expense when they are due. Deficits, if any, of the fund as compared to liability on the basis of an independent actuarial valuation is to be additionally contributed by the Company.
(iii) Current service cost and net interest on defined benefit obligation are directly recognized in the Statement of Profit and Loss.
(iv) Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the Statement of Changes in Equity and in the Balance Sheet.
Defined contribution plans
(i) The Company’s superannuation scheme is a defined contribution plan. The contributions are recognized as employee benefit expense when they are due.
(ii) Benefits in respect of compensated absence payable after 12 months are provided for, based on valuation, as at the Balance Sheet date, made by independent actuaries.
(iii) Defined contribution to Employees Pension Scheme 1995 is made to Government Provident Fund Authority and recognized as expense as and when due.
(s) Taxation
Current tax is determined as the amount of tax payable in respect of taxable income for the year. The Company’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognized on temporary differences between the tax base of assets and liabilities and their carrying amount in the financial statements. Deferred tax liabilities are recognized for all deductible temporary differences. Deferred tax assets are recognized to the extent it is probable that future taxable income will be available against which the deductible temporary differences could be utilized. Deferred tax is determined using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Current and deferred taxes are recognized in profit or loss, except to the extent that it relate to the items that are recognized in other comprehensive income or directly in equity, in this case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity respectively.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset, if there is convincing evidence that the Company will pay normal income tax against which the MAT paid will be adjusted.
(t) Provisions and Contingent Liabilities
(i) Provision
A provision is recorded when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated.
Provision is made for estimated warranty claims in respect of products sold which are still under warranty at the end of the reporting period. These claims are expected to be settled as and when warranty claims will arise. Management estimates the provision based on historical warranty claim information and any recent trends that may suggest future claims could differfrom historical amounts.
(ii) Contingent liability
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources or liabilities, which are frivolous claims, but required disclosure, are disclosed considering the relevant Accounting Standards.
(u) Incentives
Incentives are considered/ recorded on the basis of sanction order received from the Government Authority.
(v) Financial instruments
Equity investments at fair value through other comprehensive income
These include financial assets that are equity instruments and are irrevocably designated as such upon initial recognition. Subsequently, these are measured affair value and changes therein are recognized directly in other comprehensive income, net of applicable income taxes. Dividends from these equity investments are recognized in the Statement of Profit and Loss, when the right to receive payment has been established. When the equity investment is derecognized, the cumulative gain or loss in equity is transferred to retained earnings.
(w) Fair value measurement
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as;
• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
• Level 3 -Valuation techniques for which the lowest level inputthat is significantto thefair value measurement is unobservable.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
(x) Use of estimates and judgements
Detailed information about accounting judgements, estimates and assumption is included in the relevant notes.
(i) Estimation of defined benefit obligation - refer Note No.37.
(ii) Estimation of provision for warranty claims - refer Note No.18.
(iii) Estimated useful life and residual value of property, plant and equipments - refer Note No. 2(i) (i) above.
(iv) Estimated useful life of intangible assets- refer Note No.2(i) (ii) above.
(v) Estimation of provision forTax expenses-refer Note No.2(s) above.
Estimation and underlying assumptions are reviewed on on-going basis. Revisions to estimates are recognized prospectively.
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