Write-downs of inventories, except for stores and spare parts and work in progress, to net realisable value amounted to March 31, 2025 - Rs.129, March 31, 2024 - Rs.47. These were recognised as an expense during the year and included in 'changes in inventories of work-in-progress,stock-in-trade and finished goods in the statement of profit and loss.
The Company has an accounting policy to record work-in-progress (WIP) and finished goods inventory on standard costing at the time of production and at each month end standard cost has been actualized based on the actual cost. Further, the Company does actualization of WIP inventory at regular interval by way of physical verification. During the current year, the Company has performed the physical verification in July 2024, November 2024, December 2024 and March 2025 and recorded the loss of Rs.234, Rs.39, Rs.95 and gain of Rs.255 respectively.
(ii) Terms and rights attached to equity shares
The Company has only one class of equity shares having par value of Rs. 10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed, if any by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
(v) Nature and purpose of other reserves
(i) Securities premium
Securities premium is used to record the premium on issue of shares and is utilised in accordance with the provisions of the Companies Act, 2013.
(ii) General reserve
General reserve is kept aside out of Company's profits and are used to meet future obligations.
(iii) Other equity - revaluation
As the Company opted for exemption under paragraph D7AA of Ind AS 101 and also elected the cost model under Ind AS 16 for subsequent measurement of Property, Plant and Equipment, the revaluation reserve recognised under previous GAAP has been transferred to 'Other equity- revaluation' on the date of transition to Ind AS. This balance does not constitute free reserves available for distribution as dividend in accordance with the provisions of the Companies Act, 2013.
(a) Information about individual provisions and significant estimates
Provision for customs, excise and sales tax litigation: These represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes. It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.
Provision for replacement loss / Warranty expenses: Replacement loss reserves are based on past claims experience, sales history and other considerations. Replacement loss is provided on the sale of the Company's products and an accrual for estimated future claims is recorded at the time revenue is recognized. Tyres replacement offered by the Company is on a prorated basis.
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
(v) Risk Exposures:
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below : Salary Increases:
Actual salary increases will increase the Plan's liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
Investment Risk:
If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
Discount Rate:
Reduction in discount rate in subsequent valuations can increase the plan's liability.
Mortality & disability:
Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
Withdrawals:
Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan's liability.
The Company through its Trusts ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans.
The Company through its Trusts actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.
A large portion of assets in 2024-25 consists of government and corporate bonds, although the Company through its Trusts also invests in equities and mutual funds. The plan asset mix is in compliance with the requirements of the respective local regulations.
(vi) Defined benefit liability and employer contributions
Expected contributions to post-employment benefit plans for the year ending March 31, 2025 are Rs. 597.
The weighted average duration of the defined benefit obligation is 9 years (March 31,2024- 9 years).
(c) The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. For this purpose, the Company has appointed independent consultants for conducting Transfer Pricing Study. Management is of the opinion that its international transactions with associated enterprises have been undertaken at arms' length basis at duly negotiated prices on usual commercial terms. The Company has submitted the Accountants' Report in form 3CEB upto the financial year ended on March 31, 2024 as required under section 92E of the Income Tax Act, 1961.
The carrying amounts of security deposits, trade receivables, trade payables, creditors for capital items, cash and cash equivalents, other bank balances, lease liabilities and other financial assets/ liabilities are considered to be the same as their fair values, due to their short-term nature.
The Company does not have any financial instruments where significant estimation was involved in determination of its fair value.
28 Financial Risk Management
The Company 's activities expose it to the market risk, liquidity risk and the credit risk. The Company's risk management is carried out by the treasury department for cash and cash equivalent, deposits with banks, foreign currency risk exposure and liquidity risk under various approved policies. The risk management for trade receivables is carried out by controlling department of the Company.
(A) Credit Risk
Credit risk arises from cash and cash equivalents, other bank balance, trade receivables and other financial assets.
(i) Credit risk management
(a) Cash and cash equivalents and other bank balance:
The Company is in control of its exposure to these financial instruments by diversifying the deposit, by investing cash and cash equivalents and other bank balance based on counterparty credit strength as measured by long-term credit ratings of the three major rating agencies (Standard & Poors, Moody's and Fitch) and by monitoring the financial strength of these banks on regular basis.
By controlling and monitoring exposure in this manner, the Company believes that it effectively manage the risk of loss due to non performance by the banks.
(b) Trade Receivables:
The Company has Credit Policy and the independent credit control department to review the credit worthiness of the customers and assess the recoverability of the asset. Finance Director is the authority to approve any exception to the Policy.
Customer credit risk is managed basis established policies of the Company, procedures and controls relating to customer credit risk management which helps in assessing the risk at the initial recognition of the asset. Outstanding customer receivables are regularly and closely monitored. The Company has a monthly process of following past due analysis leading to very few cases of bad debts and delayed payments. The same is evident from the earlier years receivable write-off. The Company provides for any outstanding beyond 180 days. The trade receivables on the respective reporting dates are net off the allowance which is sufficient to cover the entire lifetime loss of sales recognised including those that are currently less than 180 days outstanding.
A default on a financial asset is when the counterparty fails to make contractual payment within 180 days of when they fall due. This definition of default is determined by considering the business environment in which entity operates.
The Company believe that there are efficient processes established to monitor and control the risk of loss associated with receivables.
(c) Other financial assets:
Other financial assets of the Company mainly comprises of security deposit with Dakshin Haryana Bijli Vitran Limited, security deposits for the rental premises and others, accrued interest on fixed deposits with banks, deposits held as lien with Banks and other receivables from related parties.
Credit risk exposure with respect to other financial assets are negligible as they are either supported by legal agreement or are with Nationalised banks and Government organisations:
- Security deposit with Dakshin Haryana Bijli Vitran Limited, a public sector organisation, represents low credit risk.
- Security deposits for the rental premises and others are with counter parties with strong capacity to meet the obligation, hence the risk of default is considered to be negligible.
- Accrued interest on fixed deposits are with banks having strong financial strength as explained above, hence the risk of default is considered to be negligible.
- Other receivables from related parties are as per approved policy and the established procedure to monitor the dues from related parties which also ensures timely payments and no default, hence credit risk is negligible.
(ii) Provision for expected credit losses
ustomer credit risk is managed basis established policies of the Company, procedures and controls relating to customer credit risk management. Outstanding customer receivables are regularly monitored. The Company has a diverse customer base, as its customers are located and operate in largely independent markets and does not see any significant concentration of risk related to reliance on any single customer. The credit quality of the customers is evaluated based on the approved policies and established processes.
Impairment of Trade Receivables:
The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
(B) Liquidity Risk
The Company's primary sources of liquidity are cash generated from operation. The cash flows from operating activities are driven primarily by operating results and changes in the working capital requirements.
The Company intend to operate the business in a way that allows the Company to address its needs with existing cash and available financing arrangement if they cannot be funded by cash generated from operations.
The Company believe that its liquidity position is adequate to fund the operating and investing needs and to provide with flexibility to respond to further changes in the business environment
(ii) Maturities of financial liabilities
The table below analyses the Company's financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities.
(C) Market Risk
(ia) Foreign Currency Risk: The Company operates internationally and is exposed to foreign exchange risk in relation to operating activities (when revenue or expense is denominated in a foreign currency) arising from foreign currency transactions, primarily with respect to the USD and EUR. The Company has approved policies to enter into foreign currency contracts in order to manage the impact of changes in foreign exchange rates on the results of operations and future foreign currency-denominated cash flows.
(ii) Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not have any borrowings therefore it is not impacted by interest rate risk.
(iii) Price Risk: Price risk arises from exposure to equity securities prices from investments held by the Company. The Company does not have any investments in equity shares.
29 Capital Management (a) Risk Management
The Company's objectives when managing capital is to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders.
As of March 31, 2025, the Company has only one class of equity shares and no debt. Therefore, there are no externally imposed capital requirements.
There is no change in the Company's capital structure since previous year.
30 Segment Information
The Company is engaged in the business of sales of automotive tyres, tubes and flaps.The Company is domiciled in India and majorly manufactures farm tyres and trades in passenger car tyres.
The Company has monthly review and forecasting procedure in place. The review involves the operating results of the Company as a whole except for sales and sales volume information which is available on disaggregated basis.
The Chief Operating Decision Maker (CODM), Managing Director, performs a detailed review of the operating results including cashflow, working capital, headcount of the Company as a whole and sales and sales volume on disaggregated basis and thereby makes decisions about the allocation of resources among the various functions. Since the operating results of each of the functions are not considered individually by the CODM, the functions do not meet the requirements of Ind AS 108 for classification as an operating segment, hence there is only one operating segment namely, "Automotive tyres,tubes & flaps".
(e) Terms and conditions
Transactions relating to dividends were on the same terms and conditions that applied to other shareholders. All other transactions were made on normal commercial terms and conditions and at arm's length.
All outstanding balances are unsecured and are repayable in cash.
(i) The Company has income tax demand of INR 6,895 lakhs for FY 2016-17; FY 2017-18, FY 2019-20, FY 2020-21 & FY2021-22 in respect of disallowance of regional service charges (RSC) (except IT services) which was charged by Ultimate Holding Company in respect of the various services provided. The Company has requisite documents to substantiate actual rendering of said service and same have been allowed by tax department in earlier years assessments. During the year, the Company has received remand back order from the Hon'ble Tribunal against which the Company has filed appeal before the Hon'ble High Court in Nov'24. The Company also has income tax demand of INR 3,639 lakhs for FY 2006-07 to FY 2021-22 in respect of disallowance of trademark fees which was charged by Ultimate Holding Company in respect of brand used by the Company, however, the fellow subsidiary has received relief in similar matter from the Hon'ble Tribunal for period from FY 2006-07 to FY 2017-18. Considering favorable precedence on both the matters, the management is of the view that the Company will be able to defend the cases on merit and accordingly disclosed as contingent liability.
These represent the best estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes. It is not practicable for the Company
to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings. Amount of contingent liabilities are inclusive of Interest as per order.
(ii) In 2008, the State of Haryana (the State) introduced "the Haryana Tax on Entry of Goods into Local Areas Act, 2008 ("Act”) which High Court of Punjab and Haryana declared as 'Unconstitutional'. As on date, the State did not frame and notify enabling "Rules” under the Act, and no demand has been received by the Company. Accordingly, the amount of liability involved, if any, under the Act also cannot be measured.
Further, on November 11, 2016 the nine Judges Bench of Hon'ble Supreme Court held that the State Governments do have right to levy an 'Entry Tax', however (i) whether States have enacted correct legislations in alignment with Indian Constitutional provisions, (ii) whether such taxes demanded by State Governments were actually used for intended development of local area and (iii) the interpretation of the word "Local Area” were among questions not addressed by the November 11, 2016 ruling, but instead are to be heard by Hon'ble Divisional Bench of the Supreme Court individually for each state, on merits. The above mentioned matters were heard by the Hon'ble Divisional Bench of the Supreme Court and remanded back to High Court of Punjab and Haryana and directed that fresh petitions should be filed by the parties, based on the principles given by the nine Judges Bench of Hon'ble Supreme Court. The Company filed its fresh petition in May 2017.
In Dec'2024, Haryana Government issued "Removal of Difficulty Order (ROD), 2024” effective April'2008 u/s 174 of the Haryana Goods and Service Tax, 2017 for assessment & recovery of Haryana Entry Tax. Subsequent to this order, Haryana Tax Authority issued 15 notices for the period AY 2003-04 to AY 2017-18 for initiating the assessment of said period and arbitrarily determined tax liability of Rs. 13,274 Lakhs. The Company has filed WRIT petition before Punjab and Haryana High Court challenging the ROD, 2024 and the 15 notices on the ground that said ROD and notices both are time barred in law and non-sustainable.
Having regard to the status of matter above and in the absence of any rules notified until the ROD, 2024 under which tax can be levied or measured and matter is also time barred since no demand has been raised till date since enactment of the Act, the management supported by the legal opinion has assessed obligation towards entry tax, if any, is Remote.
(b) The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.
34 Events occurring after the reporting period
Refer to note 29 for the final dividend recommended by the directors which is subject to the approval of shareholders in the ensuing annual general meeting.
35 Share-based payments
The Goodyear Tire & Rubber Company, Akron, Ohio, USA (Ultimate holding company) issues stock-based awards to the Company's employees under their approved Performance Plan. The issue of grants of restricted stock units and stock appreciation rights to the employees of the Company are covered under the same Performance Plan as declared by the ultimate holding company.
Stock appreciation rights (SAR)
Grants of Stock Appreciation Right generally have a graded vesting period of four years whereby one-fourth of the awards vest on each of the first four anniversaries of the grant date, an exercise price equal to the fair market value of one share of the ultimate holding company on the date of grant (calculated as the average of the high and low price or the closing market price on that date depending on the terms of the related Plan) and a contractual term of ten years. Stock Appreciation Rights are cancelled on, or 90 days following, termination of employment unless termination is due to retirement, death or disability under certain circumstances, in which case, all outstanding options vest fully and remain outstanding for a term set forth in the related grant agreement. As the obligation to settle the share based transaction rests with the Company in cash, hence these are accounted for as cash-settled options. The Company has not granted any SAR after December 2014.
Restricted stock units (RSU)
Restricted stock units have vesting period of three years beginning on the date of grant. Restricted stock units will be settled through the issuance of an equivalent number of shares of The Goodyear Tire & Rubber Company, Akron, Ohio, USA common stock. The Company is required to reimburse the ultimate holding company the cost of the share issuance as on the date of vesting. As the obligation to settle the share based transaction rests with the Company in cash, hence these are accounted for as cash-settled options.
iii. Measurement of fair values
The fair value of SAR's have been measured using the Black Scholes formula. Service and non-performance conditions attached to the arrangements were not taken into account in measuring fair value.
The fair value of grant of restricted stock unit is based on the closing market price of a share of The Goodyear Tire and Rubber Company, Akron's common stock on the date of grant, thereafter re-measuring the value on each reporting date at the closing market price of a share.
Explanation for variances exceeding 25%:
1 Primarily due to new lease taken during the current year.
39 Standards issued but not yet effective
Ministry of Corporate Affairs ("MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2025, MCA has notified Ind AS - 117 Insurance Contracts and amendments to Ind AS 116 - Leases, relating to sale and leaseback transactions, applicable to the Company w.e.f. April 1, 2024. The Company has reviewed the new pronouncements and based on its evaluation has determined that it does not have any significant impact in its standalone financial statements.
40A As per the MCA notification dated August 05, 2022, the Central Government has notified the Companies (Accounts) Fourth Amendment Rules, 2022. As per the amended rules, the Companies are required to maintain back-up of the books of accounts and other relevant books and papers in electronic mode that should be accessible in India on a daily basis.
The books of account along with other relevant records and papers of the Company are maintained in electronic mode. These are readily accessible in India at all times and currently a backup is maintained on a cloud - based server. The Company has complied with the requirements of maintaining of back-up of books of accounts and other relevant books and papers on daily basis on the server(s) physically located in India.
40B The Ministry of Corporate Affairs (MCA) introduced certain requirements, where accounting softwares used by the Company should have a feature of recording audit trail of each and every transaction (effective April 01, 2023). The Company has an IT environment which is adequately governed with General information technology controls (GITCs) for financial reporting process and the Company has assessed all of its IT application that are relevant for maintaining books of accounts.
The Company has used accounting software for maintaining its books of account for the year ended March 31, 2025 where in audit trial (edit log) feature is enabled for capturing audit logs for transactions processed through transaction codes (user interface) and the same has operated throughout the year for all relevant transactions recorded in the software, except that the audit trail feature was not enabled for certain tables at application level.
The Company has not noted any tampering of the audit trail feature in respect of the software for which the audit trail feature was operating.
Additionally, the audit trail that was enabled and operated for the year ended March 31, 2024, has been preserved by the Company as per the statutory requirements for record retention.
41 Other Statutory information :
(a) The Company did not have any transactions or balances with the Companies whose name is struck off under section 248 of the Companies Act, 2013.
(b) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Group for holding any Benami property.
(c) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(d) The Company did not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(e) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,
(f) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
42 While performing physical verification in November 2024, the Company identified certain shortages in the finished goods inventory aggregating to value of Rs 452 lakhs which was accounted for as loss in the Statement of Profit and Loss in the quarter ended December 31, 2024. As reported in public domain in February 2025, the Company had appointed Ernst & Young LLP to conduct a fact-finding review in the matter. The review is ongoing and the final report is awaited. As a proactive step, the Company has identified key areas for strengthening controls and is implementing them. The Company will take all necessary steps after evaluating the final report. Pending completion of review, management is of the view that on conclusion, the review will not have any further material impact on the financial statement as at March 31, 2025, as all known impact has already been accounted for and further no material discrepancy has been noted in the physical verification performed on March 31, 2025.
43 On July 21, 2022, the Ministry of Environment, Forest and Climate Change issued notification containing Regulations on Extended Producer Responsibility (EPR) for Waste Tyre applicable to Tyre manufacturers and Recyclers. As per the notification, the Company had a legal obligation as at March 31, 2024, for FY 2023-24 (quantified basis the production in FY 21-22) and for FY 2022-23 (quantified basis the production in FY 20-21). As at March 31, 2023, the Company could not estimate the liability reliably since the infrastructure for the same was not enabled and hence this obligation was not provided for. In the previous year the enabling framework had been established for the Company to reliably estimate the liability and accordingly INR 1,400 lakhs had been provided in the books for the year ended March 31, 2024 including Rs.447 lakhs pertaining to FY 22-23 obligations, which was disclosed as part of other expenses.
Further, during the current year, the Company has recognised provision for EPR obligation amounting to Rs. 1,414 lakhs for FY 24-25 and utiised by way of purchasing of all the certificates related thereto.
44 No funds (either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
45 No funds (either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
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