b) Rights, preferences and restrictions attached to equity shares:
The Company has a single class of equity shares having par value of H 2 per share. Accordingly, all equity shares rank equally with regard to one vote per share held. The dividends proposed by the Board of directors is subject to the approval of shareholders at the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the equity shareholders are eligible to receive assets of the Company, after distribution of all preferential amounts, in the proportion to their shareholding.
e) The Company in aggregate has not issued, any equity shares allotted as fully paid up pursuant to contract without consideration received in cash, bonus shares issued and shares bought back during the period of 5 years immediately preceding the financial year.
The above information has been compiled by the Company on the basis of information made available by vendors during the year ended December 31, 2024 and year ended December 31, 2023. This has been relied upon by auditors.
The Company’s exposure to currency and liquidity risks related to trade payables is disclosed in Note 40.
The management determines the information reported under Note 44 and 48 reporting is sufficient to meet the disclosure objective with respect to disaggregation of revenue and geographical segment under Ind AS 115 Revenue from contract with Customers. Hence, no separate disclosures of disaggregated revenues are reported.
Nature of CSR activities
The Company has incurred CSR expenses through our overarching programme HOPE, which emphasises four core areas: Healthcare, Occupational skills for better employability, the Preservation of heritage and environment, and the Empowerment of society which are specified in Schedule VII of the Companies Act, 2013.
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36. Contingent liabilities not provided for in respect of:
(' in million)
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| |
2024
|
2023
|
|
Claims against the Company not acknowledged as debts:
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|
|
|
a) Employees and ex-employees related matters:
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|
|
|
(i) Matters pending in labour court / civil court / High Court for reinstatement of service / recovery of salary, PF and ESIC matters.
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123.2
|
106.1
|
|
(ii) Demand for discontinuing of contract system and for differential wages
|
97.9
|
48.2
|
| |
221.1
|
154.3
|
|
b) (i) Sales-tax
|
|
|
|
For non-receipt of C Forms and non acceptance of Company's claim of certain sales as exempt sales in respect of various assessment years.
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25.3
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25.7
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(ii) Excise duty and Service tax:
In respect of matters decided against the Company, for which the Company is in appeal with higher authorities
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213.0
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138.2
|
| |
238.3
|
163.9
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c) Income tax:
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|
|
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i) In respect of matters decided against the Company, for which the Company is in appeal with higher authorities.
In respect of above matters, it is not practicable for the Company to estimate the closure of these issues and consequential timing of cash flows, if any.
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206.2
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284.6
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206.2
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284.6
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d) Others:
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|
|
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Demand notice for stamp duty on Order of Hon'ble National Company Law Tribunal, Mumbai Bench, approving the Scheme of Amalgamation of INA Bearings India Private Limited and LuK India Private Limited with the Company, for which the Company is in appeal with higher authorities.
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250.0
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250.0
|
| |
250.0
|
250.0
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37. Commitments
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(' in million)
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| |
2024
|
2023
|
|
Contracts on capital account:
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|
|
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Estimated amount of contracts remaining to be executed on capital account and not provided for (net of capital advance H 315.3 million; 2023: H 508.1 million).
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2,953.1
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4,888.8
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Amounts in brackets represents previous year amounts.
Terms and conditions with related parties;
The sales to and purchases from related parties including fixed Assets and other expenses are made in the normal course of business and on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free.
Names and details of fellow subsidiaries, affiliates and subsidiary having transaction value in excess of 10% in line transactions during the year.
39. Derivative instruments:
The Company’s exposure to foreign currency fluctuations relates to foreign currency assets, liabilities and forecasted cash flows. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives like forward contracts. The Company has entered into foreign currency forward contracts, majority having maturity of less than one year from reporting date, to hedge its risks associated with foreign currency fluctuations relating to such highly probable transactions. The currencies in which these transactions are mainly denominated is in US Dollars, CNY and Euro.
40. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- market risk [refer 40 (A) below]
- liquidity risk [refer 40 (B) below]
- credit risk [refer 40 (C) below]
In the course of its business, the Company is exposed primarily to aforesaid risks, which may impact the fair value of its financial instruments. The Company has a risk management system which not only covers the foreign exchange risks but also other
risks associated with the financial assets and liabilities such as credit risks. The risk management strategy is approved by Board of Directors which is implemented by the Company’s management. The risk management framework aims to create a stable business planning environment by reducing the impact of market related risks, credit risks and currency fluctuations on the Company’s earnings. The risks identified through the risk management system are analysed and evaluated by the Company’s management and reported to the Board of Directors periodically along with report of planned mitigation measures.
A) Market risk
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the foreign currency exchange rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.
(i) Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollars and Euro. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (Indian Rupees).
The Company has import and export transactions in foreign currencies. Imports are higher than exports and hence the Company has foreign currency exposure to the extent of imports being higher than exports. The risk of foreign currency fluctuation is mitigated through hedging. Please refer Note 39 for details of foreign currency exposure.
The Company’s exposure to foreign currency risk at the end of reporting period are as follows:
Foreign Currency Sensitivity
The following table demonstrates sensitivity to a reasonable possible change in major foreign currencies like USD and EUR with all other variables held constant:
(ii) Interest rate risk
Interest rate risk exposure: The Company does not have interest bearing borrowings and interest rate risk is towards opportunity cost on investment in tax free bonds. Surplus funds are being invested in bank deposits at fixed interest rates and the tenure is managed to match with the Company’s liquidity profile.
B) Liquidity risk
The Company’s principal sources of liquidity are cash and cash equivalents and cash flows generated from operations. The Company regularly monitors actual cash flows and forecasts to ensure that the Company maintains sufficient liquidity to meet the operation needs.
The following table shows the maturity analysis of the Company’s financial liabilities based on contractually agreed undiscounted cash flows (except lease liabilities refer note 49) at the balance sheet date:
C) Credit Risk
Credit risk is the unexpected loss in financial instruments if the counter parties fails to discharge it’s contractual obligations in entirety and timely. The Company is exposed to credit risks arising from it’s operating and financing activities such as trade receivables, loans and advances and other financial instruments. The carrying amounts of financial assets represent the maximum credit exposure.
Trade receivables
Credit risk on trade receivables is limited due to the Company’s diversified customer base which includes public sector enterprises and reputed private corporates. For trade receivables, the Company computes expected credit loss allowance based on provision matrix which is prepared considering customer’s industry segment and historically observed overdue rate over expected life of trade receivables ranging from 0.04% to 0.78%, except for few customer where specific provisions is being created. The expected credit loss allowance is considered as a percentage of net receivable position.
Financial assets other than trade receivables
Credit risk on cash and cash equivalents, bank balances other than cash and cash equivalents is limited as the Company generally invest in deposits with banks which have high credit rating assigned by external agencies. Credit risk on loans given to subsidiaries are assessed for credit risk based on the underlying valuation of the entity and their ability to repay within the contractual repayment terms. Based on the Company’s historical experience, the credit risk on other financial assets is low.
41. Capital management
For the purpose of Company’s capital management, capital includes equity share capital and all other reserves attributable to equity shareholders. The Company has a long-term strategy of pursuing profitable growth. Capital is managed proactively to secure the existence of the Company as a going concern in the long-term and create financial flexibility for profitable growth in order to add value to the Company. A further aim of the capital management is to ensure long-term availability of liquidity, maintain strong credit ratings and ensure optimal capital structure in order to support business through continuing growth and maximising shareholders value. The Company funds it’s operations through internal accruals and the Management along with the Board of Directors regularly monitor the returns on capital as well as dividend levels to shareholders.
42. Employee benefits: Post employment benefit plans Defined contribution plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Superannuation Fund which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund for the year aggregated to H 237.0 million (2023: H 206.1 million) and contribution to superannuation fund for the year aggregated to H 33.3 million (2023: H 33.4 million).
Defined benefit plans
The Company has defined benefit plans that provide gratuity benefit. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half month’s salary for each year of completed service at the time of retirement/exit. The Scheme is funded by the plan assets.
At December 31, 2024. the weighted-average duration of the defined benefit obligation was 6.83 years (December 31, 2023: 6.42 years).
Note: The estimates of future salary increases, considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.
Sensitivity Analysis
The following table summarises the impact in percentage terms on the reported defined benefit obligation at the end of the reporting period arising on account of an increase or decrease in the reported assumption by 100 basis points:
These sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analyses.
Characteristics of defined benefit plans and risks associated with them:
Valuations of defined benefit plan are performed on certain basic set of pre-determined assumptions and other regulatory framework which may vary over time. Thus, the Company is exposed to various risks in providing the above benefit plans which are as follows:
(i) Interest Rate risk: The plan exposes the Company to the risk of fall in interest rates.
A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (i.e. value of defined benefit obligation).
(ii) Salary Escalation Risk: The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.
(iii) Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.
(iv) Investment Risk : The Company has funded with well established Govt. of India undertaking & other IRDA approved agency and therefore, there is no material investment risk.
The carrying amounts of all financial instruments (except derivative instruments which are measured at fair value through Other Comprehensive Income and long-term loans) are not materially different from their fair values, since these are of short-term nature.
Valuation techniques and significant unobservable inputs
Specific valuation techniques used in measuring Level 2 and Level 3 fair values for financial instruments include:
- The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date
- All financial assets and liabilities referred in Level 3 are measured at amortised cost, their carrying amount are reasonable approximation of their fair value.
44. Segment reporting
(i) Information about business segments:
As per ‘Ind AS 108 - Operating Segments’, the Company has reported segment information under two segments i.e 1) Mobility components and related solutions and 2) Others.
(ii) Secondary segment information
The geographical information analyses the Company’s revenues and non-current assets by the Company’s country of domicile (i.e. India) and outside India. In presenting the geographical information, segment revenue has been based on geographical location of customers and segment assets which have been based on the geographical location of the assets.
(c) Customers accounted individually more than 10% of the revenue 2024 none (2023: none).
45. Research and development expenses under the respective heads aggregate to H 1,070.4 million (2023 : H 994.7 million) including of capital nature H 67.6 million (2023 : H 73.7 million).
46. The tax year for the Company being the year ending March 31, 2025, provision for taxation for the year ended December 31, 2024 is aggregate of provision made for three months ended March 31, 2024 and provision based on amounts for remaining nine months ended December 31, 2024, the ultimate tax liability of which will be determined on the basis of figures for the fiscal year April 1, 2024 to March 31, 2025.
The Company’s international transactions with associated enterprises are at arm’s length, as per the independent accountant’s report for the year ended March 31, 2024. The Management believes that the Company’s international transactions with associated enterprises post March 31, 2024 continue to be at arm’s length and that transfer pricing legislations will not have any impact on the Ind AS financial statements, particularly on the amount of tax expenses for the year and the amount of provision for taxation at the year end.
In the year 2019 the Company elected to exercise the option permitted under section 115BAA of the Income-tax Act 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019 with effect from April 1, 2019. Accordingly, the Company has recognised provision for Income Tax and deferred tax expenses for the twelve months ended December 31, 2019 on the basis of estimated annual effective income tax rate.
47. Amalgamation of INA Bearings India Private Limited and LuK India Private Limited with the Company
Scheme of Amalgamation of INA Bearings India Private Limited and LuK India Private Limited (jointly referred to as ‘transferor companies’) with Schaeffler India Limited, has been approved by the National Company Law Tribunal, Chennai and Mumbai Benches vide their orders dated June 13, 2018 and October 8, 2018 respectively.
48. Revenue (Ind AS 115)
The Company is manufacturing and distribution of bearings, engine systems and transmission components, chassis applications and clutch systems. All sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is typically upon dispatch/ delivery.
2. The Company’s significant leasing/ licensing arrangements are mainly in respect of residential / office premises. Leases generally have a lease term ranging from 12 months to 120 months. Most of the leases are renewable by mutual consent on mutually agreeable terms.
49. Leases1. Practical expedients applied
- Applied discount rate based Incremental borrowing rate as per portfolio of leases of similar assets in similar economic environment with a similar period
- Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the date of initial application.
- Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
5. Finance costs includes interest expense amounting to H 26.0 million (2023: H 29.6 million) on lease liability accounted in accordance with Ind AS 116 “Leases”.
6. Rent expense in Note No. 33 Represents lease charges for short-term leases.
7. Lease liabilities
The table provides details regarding contractual liabilities of lease liabilities on an undiscounted basis.
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
51. The Board of Directors of the Company on August 28, 2023 had approved acquisition of 100% shares 12,04,758 of H 10/- each of KRSV Innovative Auto Solutions Private Limited (in the following “Koovers”) for a total purchase consideration of H 1,424.0 million in 100% cash consideration. Schaeffler india Limited has completed the above acquisition by acquring 100% shareholding of Koovers on September 8, 2023 in cash consideration. Consquently, Koover’s has became a subsidiary of the Company. The expenditure towards acquistion of Koovers mainly includes professional/consulting fees, stamp duties and other costs amounting to H 47.0 million has been recognised as an exceptional items.
Koovers offers spare parts solution to Indian Automotive aftermarket workshops via B-to-B e-commerce platform. The acquistion is in line with Schaeffler India’s strategic initiatives for growth and provides a synergy potential. It will be a key enabler for the aftermarket ecosystem, inculding distribution partner and help to play an important role in the fast growing and evolving aftermarket digital landscape.
52. Other Statutory Information
1. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
2. The Company does not have any transactions with companies struck off.
3. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
4. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
5. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a) 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
b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
6. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a) 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
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
7. The Company does not have any such transaction which is not recorded in the books of account 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).
8. The Company has not been declared a wilful defaulter by any bank or financial institution or other lender (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
9. The Company has not entered into any scheme of arrangement which has an accounting impact on the current or previous financial year.
10. The Company has not revalued its property, plant and equipment or intangible asset during the year.
11. The Company has complied with the number of layers prescribed under the Companies Act, 2013.
53. Audit trail compliance
The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, inserted by the Companies (Accounts) Amendment Rules 2021, requiring companies which use accounting software for maintaining its books of account to use only such accounting software which has a feature of recording audit trail for each and every transaction, creating an edit log of each change made in the books of account, along with the date when such changes were made and ensuring that the audit trail cannot be disabled. The Company uses SAP as its ERP, which has an embedded feature of recording audit trail (edit log) facility and was operating effectively throughout the year, except at the database level. However, the Company has adequate mechanisms in form of security audit logging, review of change activities and access rights authorisation review for changes made by users with specific privilege access rights and direct changes if any made on database level.
54. Maintenance of books of account on server in India
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 account and other relevant books and papers in electronic mode that should be accessible in India at all times. Also, the Companies are required to maintain such back-up of accounts on servers which are physically located in India, on a daily basis.
The books of account along with other relevant records and papers of the Company are currently maintained in electronic mode. These are readily accessible in India at all times and back-up is maintained on a daily basis on servers located outside India. In order to comply with the requirements of the above notification, the Company has created a backup of data for year 2024 as of December 31, 2024 and Company has since then started to take back up of the books of accounts on a server located in India from January 1, 2025 onwards, on a daily basis.
55. Subsequent events
The Company evaluated all events or transactions that occurred after December 31, 2024 up through February 27, 2025, the date the standalone financial statements were approved for issue by the Board of Directors. Based on this evaluation, the Company is not aware of any events or transactions that would require recognition or disclosure in the standalone financial statements.
56. The figures for the previous year have been regrouped/reclassified wherever necessary, to make them comparable. The impact of such reclassification/ regrouping is not material to the financial statements.
57. The financial statement are approved for issued by the Board of Directors in their meeting held on February 27, 2025.
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