Section B:• Creation of Reserve for Corporate Social Responsibility
Power Finance Corporation Ltd (31-03-2013)
From Notes to Accounts
The Company has formulated a Corporate Social Responsibility (CSR) policy in line with the guidelines issued by the Ministry of Heavy Industries and Public Enterprises (Department of Public Enterprises) vide Office Memorandum F.No.15(3)/2007 -DPE(GM)-GL-99 dated 09-04-2010. As per the CSR policy of the Company, a minimum of 0.5% of the consolidated profit after tax of the previous year will be allocated every financial year for CSR Activities, and Company was creating CSR provision for this purpose up to FY 2011-12. Now, the Expert Advisory Committee of the Institute of Chartered Accountants of India (ICAI) has given opinion that unspent expenditure on CSR activities should not be recognized as provision, but a reserve may be created as an appropriation of profits. Accordingly, CSR provision of Rs. 16.39 crore (amount unspent as at 01-04-2012) has been reversed to the credit of the statement of profit & loss through prior period account, and CSR reserve of Rs 18.36 crore has been created as appropriation of profit, the details of which are as under:
Coal India Ltd (31-3-2013)
From Notes to Accounts
CSR Reserve
As per CSR Policy of the company a reserve equivalent to 2.5% of the retained profit of previous year is created for meeting expenses relating to CSR activities of Coal India Ltd. The same is utilised for execution of CSR activities in the states which are not covered by any subsidiary company and also for supporting CSR activities in loss making subsidiaries.
The subsidiaries of CIL also create a reserve equivalent to 5% of the retained earnings of previous year subject to a minimum of Rs. 5 per tonne of coal production of previous year, for meeting expense relating to CSR activities in the state to which the subsidiary belongs.
ECL & BCCL although have earned profits in the relevant previous year are still having accumulated losses which does not make it possible to create such reserves. As such, CSR reserve created by CIL continues to be utilised for CSR activities of ECL& BCCL also.
The actual expenses incurred and accounted for during the year is Rs. 23.73 crore transferred to General Reserve from CSR Reserve as utilised.
Further CSR expenses of Rs. 1.67 crore charged to statement of profit & loss in earlier years and remaining to be transferred to General Reserve from CSR Reserve is also transferred to General Reserve during the year.
• No provision for impairment of Goodwill arising on Consolidation
Mahindra Forgings Ltd (31-3-2013)
From Notes to Accounts of CFS
Goodwill amounting to Rs. 60,065 lakh arises on consolidation of wholly owned subsidiaries the subsidiaries namely MFGL and MFIL and their step down subsidiaries Mahindra Forgings Europe AG (MFE AG) and its wholly owned subsidiary companies namely Jeco Jellinghaus GmbH, Schoneweiss & Co GmbH, Gesenkschmiede Schneider GmbH and Falkenroth Unfirmtechnik GmbH (collectively referred to as step-down subsidiaries). Due to downturn in the economic situation in Europe, the market demand declined significantly impacting the sales and profitability of MFE AG and the step down subsidiaries.
Necessary actions are being taken in MFE AG to:
• Improve the operating efficiencies and align the cost structure in line with current market demand.
• Enhanced Focus on exploiting the synergies of business in Europe and India.
• Closely monitor the performance with increased periodic reviews to facilitate timely corrective actions to improve profitability.
The management also considers the current market situations, to be temporary and expects that together with its above actions the company should turnaround its performance in the next few years planned.
Therefore, in the opinion of the management, there is no impairment of the goodwill.
From Auditors’ Report on CFS
Emphasis of Matter
We draw attention to Note no. XXVI(8) of the consolidated financial statements and for the reasons detailed therein the management of the Company does not perceive any impairment in the value of Goodwill of Rs. 60,065 lakh arising on consolidation of the subsidiaries in view of the measures for improving financial performance being taken by the management of the Company. Our opinion is not qualified in respect of this matter.
• Change of period of operating cycle
Tecpro systems ltd (31-03-2013)
From Notes to Accounts
In the previous year, the operating cycle was determine to be 12 months in view of the varying nature of contracts, customers, payment terms, project duration etc. Basis further analysis and considering additional guidance/clarity available related to implementation of revised schedule VI, the management is of the view that the Company has multiple operating cycles which are determined on the basis of the distinguishing features and characteristics of various categories of contracts.
Due to change in operating cycle during the current year, figures for the previous year have been regrouped for meaningful comparison of current and previous year classification. The impact of regrouping on significant financial statement items if summarised below:
