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ACCOUNTING POLICIES

MARUTI SUZUKI TATA MOTORS


The Company is primarily in the business of The Company recognizes revenues on the sale of
manufacturing, purchase and sale of motor vehicles, products, net of discounts and sales incentives, when the
components and spare parts ("automobiles"). products are delivered to the dealer / customer or when
delivered to the carrier for export sales, which is when
Business Business risks and rewards of ownership pass to the dealer /
customer.

(a) Domestic and export sales on transfer of significant Sales include income from services and exchange
risks and rewards to the customer which takes place on fluctuations relating to export receivables. Sales include
dispatch of goods from the factory and port respectively. export and other recurring and non-recurring incentives
(b) Income from services on completion of rendering of from the Government at the national and state levels.
Sales services. Sales Sale of products is presented gross of excise duty where
applicable, and net of other indirect taxes.

In the Year, the Company witnessed muted demand due


For the financial year 2016-17, Maruti Suzuki posted to weak replacement demand, subdued freight demand
record net profit of Rs 7,338 crore, a jump of 36.8% from from industrial segment, further hit post demonetization,
Rs 5,364.3 crore the year before. Net sales grew by and lower than expected pre-buying ahead of the
18.5% to Rs 66,909.4 crore in the fiscal year. Maruti implementation of BS IV. M&HCV segment witnessed a
Profit Report Suzuki sold 15,68,603 vehicles in this period, a growth of Profit Report fall of 2.2% and LCV segment witnessed a fall of 6.1%.
9.8% from last year. Exports de-grew by 8.7% Y-o-Y.
MARUTI SUZUKI TAX PLANNING
Leasehold land is amortized over the
period of lease. All assets, the individual Custom duty
Depreciation has been provided in accordance
with useful lives prescribed in the Companies
written down value of which at the available as
Act, 2013 except for certain fixed assets beginning of the year is Rs. 5,000 or less, drawback is
where, based on technical evaluation of the are depreciated at the rate of 100%. initially
useful lives of the assets, higher depreciation
Assets purchased during the year costing recognized as
has been provided on the straight line method
over the following useful lives: Plant and Rs. 5,000 or less are depreciated at the purchase cost
Machinery 8 - 11 Years Dies and Jigs 4 Years rate of 100%. Lump sum royalty is and is credited
Electronic Data Processing 3 Years Equipment amortized on a straight line basis over its
In respect of assets whose useful lives has to consumption
been revised, the unamortized depreciable
estimated useful life i.e. 4 years from the of materials on
amount is charged over the revised remaining start of production of the related model. exported
useful lives of the assets.
vehicles.

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act and
at the prevailing tax rates. Deferred tax is recognized for all timing differences, subject to the consideration of prudence in
respect of deferred tax assets. Deferred tax assets are recognized and carried forward only to the extent there is a
reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be
realized. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or
substantively enacted by the Balance Sheet date. At each Balance Sheet date, the Company reassesses unrecognized
deferred tax assets, if any.
TATA MOTORS TAX PLANNING
Finance lease Assets acquired under finance
leases are recognized as an asset and a liability
Depreciation is provided on the Straight Line Method (SLM) over the at the commencement of the lease, at the lower
estimated useful lives of the assets considering the nature, estimated usage, of the fair value of the assets and the present
operating conditions, past history of replacement, anticipated technological value of minimum lease payments. The finance
changes, manufacturers warranties and maintenance support. Taking into expense is allocated to each period during the
account these factors, the Company has decided to retain the useful life lease term so as to produce a constant periodic
hitherto adopted for various categories of fixed assets, which are different rate of interest on the remaining balance of the
from those prescribed in Schedule II of the Act. Estimated useful lives of liability. Assets given under finance leases are
assets are as follows : Type of Asset Estimated useful life - Leasehold Land recognized as receivables at an amount equal to
Amortized over the period of the lease - Buildings, Roads, Bridges and the net investment in the lease and the finance
culverts 4 to 60 years - Plant, machinery and equipment 8 to 20 years - income is based on a constant rate of return on
Computers and other IT assets 4 to 6 years -Vehicles 4 to 10 years - Furniture, the outstanding net investment. (ii) Operating
fixture and office appliances 5 to 15 years - Technical Know-how 5 to 6 years - lease Leases other than finance lease, are
Computer software 4 years - Water system and sanitation 20 years - Assets operating leases, and the leased assets are not
taken on lease are amortized over the period of lease 10 years recognized on the Company's Balance Sheet.
Payments / rental income under operating
leases are recognized in the Statement of Profit
and Loss on a straight-line basis over the term of
the lease.

Current tax is net of credit for entitlement for Minimum Alternative Tax (MAT). Deferred tax is recognised, on timing
differences, being the difference between taxable income and accounting income that originate in one period and are capable
of reversal in one or more subsequent periods.
MARUTI SUZUKI TATA MOTORS

MARUTI SUZUKIS PROFIT HAS BEEN INCREASING YEAR BY YEAR DESPITE OF INCREASING TAX. WHEREAS TATA
MOTORS NET PROFIT IS DECREASING WITH FLUCTUATING TAX EXPENSES. ITS NET PROFIT IS GOING NEGATIVE AS
WE CAN SEE THAT PROFIT BEFORE TAX FROM 2014 IS NEGATIVE.
MARUTI SUZUKI TATA MOTORS

PROFIT BEFORE TAX IS INCREASING OF MARUTI SUZUKI BECAUSE OF SALES OF BREZZA AND VITARA IN
SUV SEMENT OF PASSENGER VEHICLES DESPITE OF DEMONETISATION. WHEREAS, WITH TATA MOTORS
SALES WENT DOWN OF PASSENGER VEHICLES, ALONG WITH BS IV NORMS THE PRICES OF VEHICLES
WENT DOWN TO SELL OF INVENTORY. THERE SALES WERE MORE IMPACTED POST DEMONETIZATION.
MARUTI SUZUKI TATA MOTORS

CURRENT TAX IS MEASURED AT THE AMOUNT EXPECTED TO BE PAID TO THE TAX AUTHORITIES IN ACCORDANCE
WITH THE INCOME TAX ACT AND AT THE PREVAILING TAX RATES. FOR TATA MOTORS HIGHER DIVIDEND INCOME
AND WEIGHTED TAX DEDUCTIONS ON PRODUCT DEVELOPMENT AND ENGINEERING EXPENSES HAVE PARTLY
CONTRIBUTED TO THE LOWER TAX INCIDENCE. THE COMPANY ALSO HAD AN INCREMENTAL SAVING OF
ABOUT RS. 30 CRORE DURING THIS QUARTER DUE TO ITS COST REDUCTION INITIATIVES. FOR MARUTI SUZUKI
CURRENT TAX IS PAID ACCORDING WITH ITS PROFIT BEFORE TAX WHICH IS GRADUALLY INCREASING.
MARUTI SUZUKI TATA MOTORS

DEFFERED TAX FLUCTUATION IS DIFFERENC EBETWEEN THE AMOUNT PAID IN CURRENT TAX AND WHICH IS
ACTUALLY PAID. THIS HAPPENED DUE TO CURRENCY FLUCTUATIONS MAINLY IN CASE OF BOTH MARUTI SUZUKI
AND TATA MOTORS.
MARUTI SUZUKI TATA MOTORS
MARUTI SUZUKI TATA MOTORS
Short - Term Employee Benefits: (i) Gratuity The Company has an obligation towards gratuity, a defined
benefit retirement plan covering eligible employees. The plan provides
Recognized as an expense at the undiscounted amount in the Statement of for a lump sum payment to vested employees at retirement, death while
Profit and Loss for the year in which the related service is rendered. in employment or on termination of employment of an amount
Post Employment and Other Long Term Employee Benefits: equivalent to 15 to 30 days salary payable for each completed year of
service. Vesting occurs upon completion of five years of service. The
(i) The Company has Defined Contribution Plans for post employment Company makes annual contributions to gratuity fund established as
benefit namely the Superannuation Fund which is recognized by the trust. The Company accounts for the liability for gratuity benefits
income tax authorities. This Fund is administered through a Trust set up payable in future based on an independent actuarial valuation carried
by the Company and the Company's contribution thereto is charged to out at each Balance Sheet date using the projected unit credit method..
the Statement of Profit and Loss every year. The Company also
maintains an insurance policy to fund a post-employment medical (ii) Bhavishya Kalyan Yojana (BKY) Bhavishya Kalyan Yojana is an
assistance scheme, which is a Defined Contribution Plan administered unfunded defined benefit plan for employees of the Company. The
by The New India Insurance Company Limited. The Company's benefits of the plan include pension in certain cases, payable up to the
contribution to State Plans namely Employees' State Insurance Fund and date of normal superannuation had the employee been in service, to an
Employees' Pension Scheme are charged to the Statement of Profit and eligible employee at the time of death or permanent disablement, while
Loss every year. in service, either as a result of an injury or as certified by the appropriate
authority.
(ii) (ii) The Company has Defined Benefit Plans namely Gratuity, Provident
Fund & Retirement Allowance for employees and Other Long Term (iii) Post-retirement Medicare scheme
Employee Benefits i.e. Leave Encashment / Compensated Absences, the Provident fund The eligible employees of the Company are entitled to
liability for which is determined on the basis of an actuarial valuation at receive benefits in respect of provident fund, a defined contribution plan,
the end of the year based on the Projected Unit Credit Method and any in which both employees and the Company make monthly contributions
shortfall in the size of the fund maintained by the Trust is additionally at a specified percentage of the covered employees'' salary (currently
provided for in the Statement of Profit and Loss. The Gratuity Fund and 12% of employees'' salary).. The Company is generally liable for annual
Provident Fund are recognized by the income tax authorities and are contributions and any shortfall in the fund assets based on the
administered through Trusts set up by the Company. Termination government specified minimum rates of return or pension and
benefits are immediately recognized as an expense. Gains and losses recognizes such contributions and shortfall, if any, as an expense in the
arising out of actuarial valuations are recognized immediately in the year incurred. (vi) Compensated absences The Company provides for the
Statement of Profit and Loss as income or expense. encashment of leave or leave with pay subject to certain rules. The
employees are entitled to accumulate leave subject to certain limits, for
future encashment..
FUTURE TAX PLANNING OF THESE COMPANIES

MARUTI TATA
SUZUKI MOTORS TO AVOID CURRENCY
TO AVOID CURRENCY
FLUCTUATIONS THE
FLUCTUATIONS
COMPANY PLANS TO
HEDGING OF
INVEST IN FUTURES AND
TRANSACTIONS AND
OPTIONS TO AVOID
TRANSLATION AS THERE
ECONOIC EXPOSURES
EXPORTS ARE MORE.

LAUNCHOF NEW VEHICLES ACCORDING TO THE ABOVE LIST TO INCRAESE THEIR REVENUE TO ATTRACT CUSTOMERS WHICH WILL INCREASE THEIR SALES.
TARGETING BOTH INDIAN AND FOREIGN CUSTOMERS AS EXPORTING WONT HARM CURRENCY FLUTUATIONS AS RUPEE IS APPRECIATING AND EXPORTERS
CAN MAKE PROFIT OUT OF IT. IN THIS WAY, THEY CAN SAVE FOR THEIR TAX AND PROFITS WONT FALL DOWN.