Auditor red flags SBN Deposits in Hinduja Leyland Finance Ltd
Independent Auditor’s Report (Page 155 of AR 2017):
“(h) iv. ……..However, the auditor of one subsidiary engaged in financing activities was unable to obtain sufficient and appropriate audit evidence to report on whether the disclosure are in accordance with the books of account maintained by the Group and as produced to them by the management of the subsidiary, refer Note 3.12 to the consolidated Ind AS financial statements.”
ESOPs Allotment on January 2017 to CEO at INR 1
The Nomination and Remuneration Committee at its meeting held on January 24, 2017 had granted 7,454,000 options (one-time) to Chief Executive Officer at par i.e. INR 1.
Assumptions for calculating fair value of options
Assumption for calculating fair value of options for two ESOP schemes (September, 2016 and January 2017) differs from each other.
JVs/Associates/Subsidiaries: Millstone Around The Neck
Impairment in the value of goodwill and provision for obligation relating to a subsidiary amounted to INR 1.8 bn (F16: INR 3.0 bn).
Total losses (excluding intercompany adjustments) recorded by subsidiaries (ex-HLFL) /JVs/Associates for the year is INR 1.7 bn.
During the year company has recognized gain on disposal of interest in former JV i.e. Nissan JV of INR 1.9 bn and goodwill of INR 44.9 bn based on account of acquisition of stake from Nissan for all JVs. Earlier all the investments in these JVs were written off.
Unrecognised deductibles towards temporary differences/ unutilized capital losses/ unabsorbed depreciation rose more than 2 folds to INR 22.7 bn (F16: INR 10.2 bn).
Sales Volume Up, Warranty Provisions/ Expense Dip
During the year, total number of Vehicles sold, increased by 3.3% to 145,066 (F16: 140,457)
Non- current provision for product warranties dipped by ~26% to INR 761.9 mn (F16: 1,027 mn), however current provision for product warranties seen surge of 21% to INR 1,973 mn (F16: INR 1,630.8 mn).
Expenses recognized in income statement towards service and product warranties dipped by ~14% to INR 2.9 bn (F16: 3.4 bn).
WIP rose 3 folds, Advances from customers dipped
7,123 BS III vehicles identified for conversion have been classified under work in progress (impact INR 8.2 bn), excluding BS III adjustment WIP has witnessed increase of approx. 3 times to INR 2.1 bn in F17. Advance from customers dipped ~29% to INR 1.9 bn (F16: 2.8 bn).
Future Plan of action
Introduction of BS VI range of Vehicles, Commercialisation of Alternate Propulsion vehicles including Electric, Hybrid, LNG, etc. and Introduction of a New Modular Platform for Buses and Trucks.
For complete PDF version click here AR DOTS – Ashok Leyland
Cheers!
Nitin Mangal
SEBI Registered Research Analyst (INH000004723)
Your feedback will be highly appreciated. You may reach me at nitin@nmadvisors.com
AR DOTS is a short reading of the annual reports highlighting certain prominent assertions made in the Annual Report available in public domain. AR DOTS does not in anyway incorporate analysis or opinion on the factors featuring in the Annual Report. AR DOTS is purely an academic exercise aimed for educational purposes for everyone. I or my associate or my relatives do not hold any position in the mentioned company.
Nitin Mangal's Blog 