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Accounting Policies of Apcotex Industries Ltd. Company
Mar 31, 2025
1.3 Material accounting policies:
I. Property Plant and Equipment
a) Initial and subsequent recognition and CWIP:
Property Plant & Equipment are carried at the cost of acquisition or construction, less accumulated depreciation
and accumulated impairment, if any. The cost of items of Property Plant & Equipment includes taxes (other than
those subsequently recoverable from tax authorities), duties, freight and other directly attributable costs related
to the acquisition or construction of the respective assets. Know-how related to plans, designs and drawings of
buildings or plant and machinery is capitalized under relevant asset heads.
Subsequent costs are included in the assets carrying amount or recognized as separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the company and the
cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate
asset is derecognized when replaced. All other repairs & maintenance are charged to profit and loss during the
reporting period in which they are incurred.
Capital work-in-progress comprises of the cost of Property Plant and Equipment that are not ready for their
intended use at the reporting date. Any gain or loss on de-recognition (calculated as difference between the net
disposal proceeds and the carrying amount of the asset) is recognized in the Statement of Profit and Loss when
the asset is derecognized.
b) Depreciation & Amortization:
Depreciation is provided on a pro-rata basis on the straight-line method based on estimated useful life prescribed
under Schedule II to the Companies Act, 2013.
c) Impairment:
The carrying amounts of the Company''s tangible assets are reviewed at each balance sheet date to determine whether
there is any indication of impairment. If any such indication exists, the assets'' recoverable amounts are estimated in
order to determine the extent of impairment loss, if any. An impairment loss is recognized whenever the carrying
amount of an asset exceeds its recoverable amount. The impairment loss, if any, is recognized in the Statement of
Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate
of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that
would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the
asset in prior accounting periods.
The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each
financial year end and adjusted prospectively, if appropriate.
d) Non Current Assets Held for Sale:
Non-Current Assets are classified as Held for Sale if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use and sale is considered highly probable. Also, such assets are classified
as held for sale only if the management expects to complete the sale within one year from the date of classification.
Non-current assets classified as held for sale are measured at the lower of their carrying amount and the fair value
less cost to sell. Noncurrent assets are not depreciated or amortized.
II. Intangible Assets:
a) Initial and subsequent recognition:
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less
accumulated amortization and impairment, if any.
Separately purchased intangibles are initially measured at cost. Intangible assets acquired in a business
combination are recognized at fair value at the acquisition date. Subsequently intangible assets are carried at
cost less accumulated amortization and accumulated impairment loss, if any.
The useful lives of intangible assets is assessed as either finite or infinite. Finite-life intangible assets are
amortized on a straight-line basis over the period of their expected useful lives. Estimated useful lives of finite-life
intangible assets is as follows:
Computer Software - 3 years
b) Amortization:
The amortization period and the amortization method for finite-life intangible assets is reviewed at each financial
year end and adjusted prospectively, if appropriate.
III. Investments property
a) Initial and subsequent recognition:
Investment properties are properties that are held to earn rentals and /or for capital appreciation (including property
under construction for such purposes) and not occupied by the Company for its own use.
Investment properties are measured initially at cost, including transaction costs and net of recoverable taxes. The cost
includes the cost of replacing parts and borrowing costs if recognition criteria are met. When significant parts of the
investment property are required to be replaced at intervals, the Company depreciates them separately based on their
specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred.
Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and
accumulated impairment loss, if any.
b) Depreciation:
Depreciation on Investment property, wherever applicable, is provided on straight line basis as per useful lives
prescribed in Schedule II to Companies Act, 2013.
c) De-recognition:
Investment properties are derecognized either when they have been disposed of or when they are being occupied
by the Company for its own use or when they are permanently withdrawn from use and no future economic benefit
is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the
asset is recognized in profit or loss in the period of de-recognition.
IV. Inventories:
Inventories are valued at lower of Cost and Net Realizable Value.
The cost is determined as follows:
a) Raw and Packing Materials are valued at cost or market value, whichever is lower, computed on weighted
average basis. The cost includes the cost of purchase and other expenses directly attributable to their acquisition
but excludes duties and taxes, which are subsequently recoverable.
b) The finished goods inventory is valued at cost or net realizable value whichever is lower. Cost includes material
cost, conversion, appropriate factory overheads, any tax or duties (as applicable) and other costs incurred in
bringing the inventories to their present location and condition.
c) Work-in-Process is valued at material cost and cost of conversion appropriate to their location in the manufacturing
cycle.
d) Stores, Spares and consumables are valued at cost, computed on First in First Out (FIFO) basis. The cost
includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and
taxes that are subsequently recoverable, if any.
Slow-moving and damaged, unserviceable stocks are adequately provided wherever considered necessary.
V. Cash and Cash Equivalents:
Cash and cash equivalents for the purposes of Cash Flow Statements includes cash in hand, deposits with banks
and short term highly liquid investments, which are readily convertible into cash and have original maturities of three
months or less and which are subject to an insignificant risk of changes in value.
VI. Non-current Assets held for sale:
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for sale'' when all the
following criteria are met:
(i) decision has been made to sell
(ii) the assets are available for immediate sale in its present condition
(iii the assets are being actively marketed
(iv) sale has been agreed or expected to be concluded within 12 months of the Balance Sheet date
Subsequently, such non-current assets and disposal groups classified as held for sale are measured at the lower of its
carrying value and fair value less cost to sell. Non-current assets held for sale are not depreciated or amortized.
VII. Borrowing costs:
Borrowing costs, if any, directly attributable to the acquisition, construction or production of an qualifying asset (net of
income earned on temporary deployment of funds) that necessarily takes a substantial period of time to get ready for
its intended use or sale are capitalized. All other borrowing costs are charged to statement of profit and loss. Borrowing
cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and
exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the
borrowing cost.
General Borrowing cost incurred in connection with qualifying assets is capitalized by applying the capitalization rate
on the quantum of such borrowings utilized for such assets.
VIII. Revenue recognition:
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the
customer at an amount that reflects the consideration to which the company expects to be entitled in exchange for
those goods or services.
Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts and other
incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes or other amounts
collected from customers in its capacity as an agent. If the consideration in a contract includes a variable amount, the
company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to
the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable
that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated
uncertainty with the variable consideration is subsequently resolved.
Dividend income is recognized in statement of profit and loss only when the right to receive payment is established,
which is generally when shareholders approve dividend.
Export incentives receivable under Duty Drawback Scheme and MEIS are accounted on accrual basis.
Interest income is recognized using the effective interest rate (EIR) method.
Insurance claims are recognized post filing of the claim with the insurer.
IX. Foreign Currency Transactions:
Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing on the date of
transaction. Monetary items denominated in foreign currencies at the year end are re-measured at the exchange rate
prevailing on the balance sheet date. Non-monetary foreign currency items are carried at cost. Any income or expense
on account of exchange difference either on settlement or on restatement is recognized in the Statement of Profit and
Loss.
The Exchange Rate Difference and the forward premium on the loan taken for capital assets are being capitalized
along with Interest till the date of commissioning of the said capital assets.
X. Employee Benefits:
a) Short term employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term
employee benefits and they are recognized in the period in which the employee renders the related service. The
Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange
for services rendered as a liability (accrued expense) after deducting any amount already paid.
b) Long term employee benefits:
i) Defined contribution plans:
Contributions to defined contribution schemes such as employees state insurance, labour welfare fund,
superannuation scheme, employee pension scheme etc. are charged as an expense based on the amount
of contribution required to be made as and when services are rendered by the employees. Company''s
provident fund contribution is made to a government administered fund and is charges as an expense in the
Statement of Profit and Loss. The above benefits are classified as Defined Contribution Schemes as the
Company has no further obligations beyond the monthly contributions.
ii) Defined benefit plans:
The Company operates a defined benefit gratuity plan, which required contributions to be made to a
separately administered fund. The cost of providing benefits under the defined benefit plan is determined
using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts
included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts
included in net interest on the net defined benefit liability) are recognized immediately, in the balance sheet
with a corresponding debit or credit to retained earnings through Other Comprehensive Income in the period
in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognized in profit or loss on the earlier of:
- the date of the plan amendment or curtailment or
- the date that the Company recognizes related restructuring costs
- Net interest is calculated by applying the discount rate to the net defined liability or asset. The Company
recognizes the following changes in the net defined benefit obligation as an expense in the statement
of Profit and Loss:
- service costs comprising current service costs, pasts service costs, gains and losses on curtailments
and non-routine settlements.
- Net Interest expense or income.
c) Termination benefits:
Termination benefits in the nature of voluntary retirement benefits or termination benefits arising from restructuring
are recognized in the Statement of Profit or Loss. The Company recognizes termination benefits at the earlier of the
following dates:
- when the Company can no longer withdraw the offer of these benefits
- when the company recognizes costs for restructuring that is within the scope of IND AS 37 and involves the
payment of termination benefits.
XI. Fair Value Measurement:
The Company measures financial instruments at fair value on each Balance Sheet date. Fair value is the price that
would be received to sell an asset or settle a liability in an ordinary transaction between market participants at the
measurement date. The fair value measurement is based on presumption that the transaction to sell the asset or
transfer the liability takes place either:
- in the principal market for the asset or liability or
- in absence of principal market, in the most advantageous market for asset or liability. The principal or the most
advantageous market should be accessible to the Company.
The fair value of an asset or a liability is measured using the assumption that market participants would use when
pricing an asset or liability acting in their best economic interest. The Company uses valuation techniques, that are
appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use
of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:¬
- Level 1 - Quoted market prices in active market for identical assets or liabilities.
- Level 2 - valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable.
- Level 3 - valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest
level input that is significant to the fair value measurement as whole) at the end of each reporting period.
External valuers are involved for valuation of significant assets, such as properties, unquoted financial assets etc.
Involvement of independent external valuers is decided upon annually by the Company. Further such valuation is done
annually at the end of the financial year and the impact if any on account of such fair valuation is taken in the annual
financial statements.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
XII. Leases:
The Company''s lease asset classes primarily consist of leases for land and buildings. The Company, at the inception
of a contract, assesses whether the contract is a lease or not lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a time in exchange for a consideration.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-
use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs
to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less
any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the
end of the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the Company''s incremental borrowing rate. It is remeasured when there is a change in future
lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the
amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of
whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way,
a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if
the carrying amount of the right-of-use asset has been reduced to zero.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have
a lease term of 12 months or less and leases of low-value assets (assets of less than Rs. 1,00,000 in value). The
Company recognises the lease payments associated with these leases as an expense over the lease term.
In the comparative period, leases under which the Company assumes substantially all the risks and rewards of
ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value
of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments and receipts under
operating leases are recognised as an expense and income respectively, on a straight line basis in the statement of
profit and loss over the lease term except where the lease payments are structured to increase in line with expected
general inflation.
XIII. Financial Instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
a) Financial Assets:
i) Initial recognition and measurement:
Financial assets are recognized when the Company becomes a party to the contractual provisions of the
instrument.
On initial recognition, all financial assets are recognized at fair value. In case of financial assets which are
recognized at Fair Value through Profit and Loss (FVTPL), its transaction costs are recognized in the statement
of profit and loss. In other cases, transaction costs are attributable to the acquisition value of the financial asset
are added to the value of financial asset.
Financial assets are not reclassified subsequent to their recognition, except and if and in the period the Company
changes its business model for managing financial assets.
ii) Subsequent measurement:
Financial assets are subsequently classified and measured at:
- Amortized cost
- Fair value through profit and loss (FVTPL)
- Fair value through other comprehensive income (FVTOCL)
Investments in Debt Instruments:
A debt instrument is measured at amortized cost or at FVTPL. Any debt instrument, which does not meet the criteria
for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. Debt instruments included within the
FVTPL category are measured at fair value with all changes recognized in the Statement of profit and loss.
a) Financial Assets measured at amortized cost:
Financial assets are measured at amortized cost when the asset is held within a business model, whose objective
is to hold assets for collecting contractual cash flows and contractual terms of the assets are such that they give
rise on specified dates to cash flows that are solely payments of principal and interest. Such financial assets
are subsequently measured at amortized cost using the effective interest rate method (EIR). The EIR is the rate
that discounts estimated future cash income through the expected life of financial instrument. The losses from
impairment are recognized in the statement of profit and loss.
b) Financial Assets measured at fair value through OCI (FVTOCI):
Financial assets under this category are measured initially as well as at each reporting date at fair value. Fair
value movements are recognized in the other comprehensive income.
c) Financial Assets measured at fair value through profit and loss:
Financial Assets under this category are measured initially as well as at each reporting date at fair value, with all
changes recognized in statement of profit and loss.
Investments in Equity Instruments:
All investments in equity instruments classified under financial assets are initially measured at fair value. The
Company may, on initial recognition, chooses to measure the same either at FVTOCI or FVTPL, which is done
on an instrument-by-instrument basis.
Fair value changes on an equity instrument is recognized as other income in the Statement of Profit and Loss
unless the Company has elected to measure irrevocably such instrument at FVTOCI. Fair value changes
excluding dividends, on an equity instrument measured at FVTOCI are recognized in OCI. Amounts recognized
in OCI are not subsequently reclassified to the Statement of Profit and Loss even on the sale of investment.
Dividend income on the investments in equity instruments are recognized as ''other income'' in the Statement of
Profit and Loss.
Investment in Subsidiary, Joint Venture and Associate
Investments in equity instruments of Subsidiaries are measured at costs. Provision for impairment loss on such
investment is made only when there is a diminution in the value of investment which is other than temporary.
iii) Derecognition of Financial Assets:
A financial asset is derecognized only when the contractual rights to receive cash flows from the asset have
expired or the Company has transferred the financial asset and substantially all the risks and rewards of ownership
of the asset.
iv) Impairment of Financial Assets:
Expected credit losses are recognized for all financial assets subsequent to initial recognition other than financials
assets in FVTPL category.
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12-months expected credit losses (expected credit losses that result from those default events on the
financial instrument that are possible within 12 months after the reporting date); or
- Full lifetime expected credit losses (expected credit losses that result from all possible default events over
the life of the financial instrument).
For trade receivables Company applies simplified approach which requires lifetime ECL allowances to be
recognized from initial recognition of the receivables. The Company uses historical default rates to determine
impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are
reviewed and changes in the forward looking estimates are analyzed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant
increase in credit risk. If there is significant increase in credit risk lifetime ECL is used.
The impairment losses and reversals are recognized in Statement of Profit and Loss.
b) Financial Liabilities:
i) Initial recognition and measurement:
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the
instrument.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs, if any.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank
overdrafts, financial guarantee contracts and derivative financial instruments.
ii) Subsequent measurement:
Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial liabilities
carried at fair value through profit or losses are measured at fair value with all changes in fair value recognized
in the Statement of Profit and Loss.
Loans and borrowings:
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost
using the EIR method. Gains and losses are recognized in profit and loss when the liabilities are derecognized.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and
loss.
iii) Derecognition:
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or
expires.
XIV. Derivatives:
The Company enters into various derivative financial instruments to manage its exposure to interest and foreign
exchange rate risks, like foreign exchange forward contracts and interest rate swaps.
Derivatives are initially recognized at fair value on the date the derivative contracts are entered into and are
subsequently re-measured to their fair value (Mark to Market) at the end of each reporting period. The resulting
gain or loss is recognized in the Statement of profit and loss. Company does not designate any of its derivative
instruments as hedge instruments. Derivatives are carried as financial assets when fair value is positive and as
financial liabilities when the fair value is negative.
Mar 31, 2024
1.1 COMPANY INFORMATION:
Apcotex Industries Limited. is one of the leading producers of Synthetic Lattices (VP Latex, SBR and Acrylic Latex, Nitrile Latex) and Synthetic Rubber (HSR, NBR) in India. The Company has one of the broadest ranges of products based on Styrene - Butadiene Chemistry And Acrylonitrile-Butadiene Chemistry available in the market today. Company''s product range is used, among other applications, for Tyre Cord Dipping, Paper/Paper Board Coating, Concrete Modification/Water Proofing,Textile Finishing,Hand Gloves etc. The various grades of Synthetic Rubber find application in products such as Footwear, Automotive components, V-belts, Conveyor belts and Hoses. The Registered office of the company is situated at 49-53 Mahavir Centre, Sector 17, Vashi, Navi Mumbai -400703.
These financial statements have been prepared in accordance with the Indian Accounting Standards (herein referred to as ''IND AS'') as notified by Ministry of Corporate Affairs pursuant to Section 133 of Companies Act 2013, read with Companies (Indian Accounting Standards) Rules 2015 (as amended).
The financial statements have been prepared and presented under historical cost convention, on accrual and going concern basis of accounting except certain financial asset and liabilities that are measured at fair value at the end of each accounting period as stated in the accounting policies below. The Accounting policies are applied consistently in presenting these financial statements.
The classification of assets and liabilities of the Company into current or non-current is based on the criterion specified in the Schedule III to the Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
The financial statements are approved by the Audit Committee and Board of Directors at their meeting held on 6th May, 2024. The Board of Directors of the Company has authorized to issue the financial statements as per decision taken in their meeting held on 6th May, 2024.
(a) Functional and Presentation currency:
The financial statements are prepared in Indian Rupees, which is the Functional and Presentation currency for the Company.
(b) Use of Estimates:
The preparation of Financial Statement in accordance with IND AS requires use of estimates and assumptions for some items, which might have effect on their recognition and measurement in the Balance Sheet and Statement of Profit and Loss. The actual amounts realized may differ from these estimates. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as Management becomes aware of changes in circumstances surrounding the estimates. Differences between the actual results and estimates are recognized in the period in which the results are known / materialized, and if material, their effects are disclosed in the notes to financial statements.
Estimates and assumptions are required for:
i. Useful life of Property Plant and Equipment:
Determination of estimated useful life of Property Plant and Equipment and the assessments as to which components of cost may be capitalized. Useful life of Property Plant and Equipment is based on life prescribed in Schedule II of the Companies Act, 2013. Assumptions also need to be made, when the Company assesses, whether an asset may be capitalized and which components of the cost of the asset may be capitalized.
ii. Recognition and measurement of defined benefit obligations:
The obligation arising from the defined benefit plan is determined on basis of actuarial assumptions. Key actuarial assumptions include discount rate, salary escalation rate, attrition rate, and life expectancy. The discount rate is determined with reference to market yields at the end of reporting period on the government bonds.
iii. Recognition of deferred tax assets:
A deferred tax asset is recognized for all the deductible temporary differences to the extent that is probable that taxable profits will be available against which the deductible temporary difference can be utilized. The management assumes that taxable profits will be available while recognizing deferred tax assets.
iv. Recognition and measurement of other provisions:
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the Balance Sheet date. The actual outflow of resources at future date may vary from the figure included in other provisions.
v. Discounting of long-term financial liabilities:
All financial liabilities are required to be measured at fair value on initial recognition. In case of financial liabilities, which are subsequently measured at amortized cost, interest is accrued using the effective interest method.
vi. Determining whether an arrangement contains a lease:
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease. At the inception or on reassessment of an arrangement that contains a lease, the Company separates payments and other consideration required by the arrangement into those for the lease and those for the other elements on the basis of their relative fair values. If the company concludes for a finance lease that it is impracticable to separate the payments reliably then an asset and a liability are recognized at an amount equal to the fair value of the underlying asset; subsequently the liability is reduced as payments are made and an imputed finance cost on the liability is recognized using the Company''s incremental borrowing rate.
vii. Fair value of financial instruments:
Derivatives are carried at fair value. Derivatives include Foreign Currency Forward Contracts and options. Fair value of Foreign Currency Forward Contracts is determined using the rates published by Reserve Bank of India / State Bank of India.
viii. Current Vs. Non-Current classification:
I. An asset is classified as current when it is:
1. Expected to be realized or intended to be sold or consumed in normal operating cycle
2. Held primarily for purpose of trading
3. Expected to be realized within twelve months after the reporting period or
4. Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non - current
II. A liability is classified as current when it is:
1. Expected to be settled in normal operating cycle
2. Held primarily for purpose of trading
3. Due to be settled within twelve months after the reporting period or
4. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are treated as non-current.
III. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
1.3 MATERIAL ACCOUNTING POLICIES:
I. Property Plant and Equipment
a) Initial and subsequent recognition and CWIP:
Property Plant & Equipment are carried at the cost of acquisition or construction, less accumulated depreciation and accumulated impairment, if any. The cost of items of Property Plant & Equipment includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and other directly attributable costs related to the acquisition or construction of the respective assets. Know-how related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant asset heads.
Subsequent costs are included in the assets carrying amount or recognized as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs & maintenance are charged to profit and loss during the reporting period in which they are incurred.
Capital work-in-progress comprises of the cost of Property Plant and Equipment that are not ready for their intended use at the reporting date. Any gain or loss on de-recognition (calculated as difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the Statement of Profit and Loss when the asset is derecognized.
b) Depreciation & Amortization:
Depreciation is provided on a pro-rata basis on the straight-line method based on estimated useful life prescribed under Schedule II to the Companies Act, 2013.
c) Impairment:
The carrying amounts of the Company''s tangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets'' recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss, if any, is recognized in the Statement of Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior accounting periods.
The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate.
II. Intangible Assets:
a) Initial and subsequent recognition:
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment, if any.
Separately purchased intangibles are initially measured at cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. Subsequently intangible assets are carried at cost less accumulated amortization and accumulated impairment loss, if any.
The useful lives of intangible assets is assessed as either finite or infinite. Finite-life intangible assets are amortized on a straight-line basis over the period of their expected useful lives. Estimated useful lives of finite-life intangible assets is as follows:
Computer Software - 3 years
b) Amortization:
The amortization period and the amortization method for finite-life intangible assets is reviewed at each financial year end and adjusted prospectively, if appropriate.
III. Investments property
a) Initial and subsequent recognition:
Investment properties are properties that are held to earn rentals and /or for capital appreciation (including property under construction for such purposes) and not occupied by the Company for its own use.
Investment properties are measured initially at cost, including transaction costs and net of recoverable taxes. The cost includes the cost of replacing parts and borrowing costs if recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred.
Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
Depreciation on Investment property, wherever applicable, is provided on straight line basis as per useful lives prescribed in Schedule II to Companies Act, 2013.
c) De-recognition:
Investment properties are derecognized either when they have been disposed of or when they are being occupied by the Company for its own use or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of de-recognition.
Inventories are valued at lower of Cost and Net Realizable Value.
The cost is determined as follows:
a) Raw and Packing Materials are valued at cost or market value, whichever is lower, computed on weighted average basis. The cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes, which are subsequently recoverable.
b) The finished goods inventory is valued at cost or net realizable value whichever is lower. Cost includes material cost, conversion, appropriate factory overheads, any tax or duties (as applicable) and other costs incurred in bringing the inventories to their present location and condition.
c) Work-in-Process is valued at material cost and cost of conversion appropriate to their location in the manufacturing cycle.
d) Stores, Spares and consumables are valued at cost, computed on First in First Out (FIFO) basis. The cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes that are subsequently recoverable, if any.
Slow-moving and damaged, unserviceable stocks are adequately provided wherever considered necessary.
V. Cash and Cash Equivalents:
Cash and cash equivalents for the purposes of Cash Flow Statements includes cash in hand, deposits with banks and short term highly liquid investments, which are readily convertible into cash and have original maturities of three months or less and which are subject to an insignificant risk of changes in value.
VI. Non-current Assets held for sale:
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for sale'' when all the following criteria are met:
(i) decision has been made to sell
(ii) the assets are available for immediate sale in its present condition
(iii) the assets are being actively marketed
(iv) sale has been agreed or expected to be concluded within 12 months of the Balance Sheet date
Subsequently, such non-current assets and disposal groups classified as held for sale are measured at the lower of its carrying value and fair value less cost to sell. Non-current assets held for sale are not depreciated or amortized.
VII. Borrowing costs:
Borrowing costs, if any, directly attributable to the acquisition, construction or production of an qualifying asset (net of income earned on temporary deployment of funds) that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized. All other borrowing costs are charged to statement of profit and loss. Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the borrowing cost.
General Borrowing cost incurred in connection with qualifying assets is capitalized by applying the capitalization rate on the quantum of such borrowings utilized for such assets.
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.
Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts and other incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes or other amounts collected from customers in its capacity as an agent. If the consideration in a contract includes a variable amount, the company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Dividend income is recognized in statement of profit and loss only when the right to receive payment is established, which is generally when shareholders approve dividend.
Export incentives receivable under Duty Drawback Scheme and MEIS are accounted on accrual basis.
Interest income is recognized using the effective interest rate (EIR) method.
Insurance claims are recognized post filing of the claim with the insurer.
IX. Foreign Currency Transactions:
Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing on the date of transaction. Monetary items denominated in foreign currencies at the year end are re-measured at the exchange rate prevailing on the balance sheet date. Non-monetary foreign currency items are carried at cost. Any income or expense on account of exchange difference either on settlement or on restatement is recognized in the Statement of Profit and Loss.
The Exchange Rate Difference and the forward premium on the loan taken for capital assets are being capitalized along with Interest till the date of commissioning of the said capital assets.
X. Employee Benefits:
a) Short term employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
b) Long term employee benefits:
i) Defined contribution plans:
Contributions to defined contribution schemes such as employees state insurance, labour welfare fund, superannuation scheme, employee pension scheme etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. Company''s provident fund contribution is made to a government administered fund and is charges as an expense in the Statement of Profit and Loss. The above benefits are classified as Defined Contribution Schemes as the Company has no further obligations beyond the monthly contributions.
ii) Defined benefit plans:
The Company operates a defined benefit gratuity plan, which required contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability) are recognized immediately, in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognized in profit or loss on the earlier of:
- the date of the plan amendment or curtailment or
- the date that the Company recognizes related restructuring costs
Net interest is calculated by applying the discount rate to the net defined liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of Profit and Loss:
- service costs comprising current service costs, pasts service costs, gains and losses on curtailments and non-routine settlements.
- Net Interest expense or income.
c) Termination benefits:
Termination benefits in the nature of voluntary retirement benefits or termination benefits arising from restructuring are recognized in the Statement of Profit or Loss. The Company recognizes termination benefits at the earlier of the following dates:
- when the Company can no longer withdraw the offer of these benefits
- when the company recognizes costs for restructuring that is within the scope of IND AS 37 and involves the payment of termination benefits.
The Company measures financial instruments at fair value on each Balance Sheet date. Fair value is the price that would be received to sell an asset or settle a liability in an ordinary transaction between market participants at the measurement date. The fair value measurement is based on presumption that the transaction to sell the asset or transfer the liability takes place either:
- in the principal market for the asset or liability or
- in absence of principal market, in the most advantageous market for asset or liability. The principal or the most advantageous market should be accessible to the Company.
The fair value of an asset or a liability is measured using the assumption that market participants would use when pricing an asset or liability acting in their best economic interest. The Company uses valuation techniques, that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:- Level 1 - Quoted market prices in active market for identical assets or liabilities.
- Level 2 - valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable.
- Level 3 - valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as whole) at the end of each reporting period.
External valuers are involved for valuation of significant assets, such as properties, unquoted financial assets etc.
Involvement of independent external valuers is decided upon annually by the Company. Further such valuation is done annually at the end of the financial year and the impact if any on account of such fair valuation is taken in the annual financial statements.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
The Company''s lease asset classes primarily consist of leases for land and buildings. The Company, at the inception of a contract, assesses whether the contract is a lease or not lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a time in exchange for a consideration.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company''s incremental borrowing rate. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets (assets of less than Rs. 1,00,000 in value). The Company recognises the lease payments associated with these leases as an expense over the lease term.
In the comparative period, leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments and receipts under operating leases are recognised as an expense and income respectively, on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
a) Financial Assets:
i) Initial recognition and measurement:
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument.
On initial recognition, all financial assets are recognized at fair value. In case of financial assets which are recognized at Fair Value through Profit and Loss (FVTPL), its transaction costs are recognized in the statement of profit and loss. In other cases, transaction costs are attributable to the acquisition value of the financial asset are added to the value of financial asset.
Financial assets are not reclassified subsequent to their recognition, except and if and in the period the Company changes its business model for managing financial assets.
ii) Subsequent measurement:
Financial assets are subsequently classified and measured at:
- Amortized cost
- Fair value through profit and loss (FVTPL)
- Fair value through other comprehensive income (FVTOCL)
Investments in Debt Instruments:
A debt instrument is measured at amortized cost or at FVTPL. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of profit and loss.
a) Financial Assets measured at amortized cost:
Financial assets are measured at amortized cost when the asset is held within a business model, whose objective is to hold assets for collecting contractual cash flows and contractual terms of the assets are such that they give rise on specified dates to cash flows that are solely payments of principal and interest. Such financial assets are subsequently measured at amortized cost using the effective interest rate method (EIR). The EIR is the rate that discounts estimated future cash income through the expected life of financial instrument. The losses from impairment are recognized in the statement of profit and loss.
b) Financial Assets measured at fair value through OCI (FVTOCI):
Financial assets under this category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income.
c) Financial Assets measured at fair value through profit and loss:
Financial Assets under this category are measured initially as well as at each reporting date at fair value, with all changes recognized in statement of profit and loss.
Investments in Equity Instruments:
All investments in equity instruments classified under financial assets are initially measured at fair value. The Company may, on initial recognition, chooses to measure the same either at FVTOCI or FVTPL, which is done on an instrument-by-instrument basis.
Fair value changes on an equity instrument is recognized as other income in the Statement of Profit and Loss unless the Company has elected to measure irrevocably such instrument at FVTOCI. Fair value changes excluding dividends, on an equity instrument measured at FVTOCI are recognized in OCI. Amounts recognized in OCI are not subsequently reclassified to the Statement of Profit and Loss even on the sale of investment. Dividend income on the investments in equity instruments are recognized as ''other income'' in the Statement of Profit and Loss.
Investment in Subsidiary, Joint Venture and Associate
Investments in equity instruments of Subsidiaries are measured at costs. Provision for impairment loss on such investment is made only when there is a diminution in the value of investment which is other than temporary.
iii) Derecognition of Financial Assets:
A financial asset is derecognized only when the contractual rights to receive cash flows from the asset have expired or the Company has transferred the financial asset and substantially all the risks and rewards of ownership of the asset.
iv) Impairment of Financial Assets:
Expected credit losses are recognized for all financial assets subsequent to initial recognition other than financials assets in FVTPL category.
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables Company applies simplified approach which requires lifetime ECL allowances to be recognized from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analyzed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk lifetime ECL is used.
The impairment losses and reversals are recognized in Statement of Profit and Loss.
i) Initial recognition and measurement:
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs, if any.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
ii) Subsequent measurement:
Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial liabilities carried at fair value through profit or losses are measured at fair value with all changes in fair value recognized in the Statement of Profit and Loss.
Loans and borrowings:
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit and loss when the liabilities are derecognized.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
iii) Derecognition:
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.
The Company enters into various derivative financial instruments to manage its exposure to interest and foreign exchange rate risks, like foreign exchange forward contracts and interest rate swaps.
Derivatives are initially recognized at fair value on the date the derivative contracts are entered into and are subsequently re-measured to their fair value (Mark to Market) at the end of each reporting period. The resulting gain or loss is recognized in the Statement of profit and loss. Company does not designate any of its derivative instruments as hedge instruments. Derivatives are carried as financial assets when fair value is positive and as financial liabilities when the fair value is negative.
XV. Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as finance cost.
Contingent Assets are not recognized but disclosed in the Financial Statements when economic inflow is probable.
XVI. Segment Information:
The Managing Director (MD) is designated as company''s Chief Operating Decision Maker (CODM). The MD reviews the company''s internal financial information for the purpose of evaluating performance and assigning resources to segments. The Company has determined the operating segment based on structure of reports reviewed by MD. The Company operates in a single primary business segment, i.e. Synthetic Lattices & Rubber.
Income tax expense for the year comprises of current tax and deferred tax, recognized in the Statement of Profit and Loss, except to the extent it is relates to a business combination, or items recognized directly in equity or in other Comprehensive Income. Current tax is the expected tax payable/receivable on the taxable income/loss for the year using applicable tax rates at the Balance Sheet date, and any adjustment to taxes in respect of previous years. Interest income/expenses and penalties, if any, related to income tax are included in current tax expense.
Deferred tax is recognized in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. A deferred tax liability is recognized based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, by the end of the reporting period.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax assets deriving from carry forward of unused tax credits (including MAT) and unused tax losses are recognized to the extent that it is probable that future taxable profit will be available in future against which the deductible temporary differences, unused tax losses and credits can be utilized. Deferred tax relating to items recognized in other comprehensive income and directly in equity is recognized in correlation to the underlying transaction.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.
XVIII. Research and Development:
Expenditure on research and development is charged to statement of profit and loss in the year in which it is incurred, with the exception of:
- expenditure incurred in respect of major new products where the outcome of these projects is assessed as being reasonably certain as regards viability and technical feasibility. Such expenditure is capitalized and depreciated over useful life. Capital expenditure in respect of assets used for conducting research activities are capitalized under respective heads of Property Plant and Equipment. These assets are depreciated over their useful life.
XIX. Earnings per Share:
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
XX. Recent Accounting Pronouncements
Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards. There is no such notification which would have been applicable from April 1st, 2024.
Mar 31, 2023
1.1 COMPANY INFORMATION:
Apcotex Industries Limited. is one of the leading producers of Synthetic Lattices (VP Latex, SBR and Acrylic Latex, Nitrile Latex) and Synthetic Rubber (HSR, NBR) in India. The Company has one of the broadest ranges of products based on Styrene - Butadiene Chemistry and Acryonitrile-Butadiene Chemistry available in the market today. Company''s product range is used, among other applications, for Tyre Cord Dipping, Paper/Paper Board Coating, Concrete Modification/Water Proofing, Textile Finishing, Hand Gloves etc. The various grades of Synthetic Rubber find application in products such as Footwear, Automotive Components, V-belts, Conveyor Belts and Hoses. The Registered office of the Company is situated at 49-53 Mahavir Centre, Sector 17, Vashi, Navi Mumbai -400703.
1.2 BASIS OF PREPARATION
These financial statements have been prepared in accordance with the Indian Accounting Standards (herein referred to as ''IND AS'') as notified by Ministry of Corporate Affairs pursuant to Section 133 of Companies Act 2013, read with Companies (Indian Accounting Standards) Rules 2015 (as amended).
The financial statements have been prepared and presented under historical cost convention, on accrual and going concern basis of accounting except certain financial asset and liabilities that are measured at fair value at the end of each accounting period as stated in the accounting policies below. The Accounting policies are applied consistently in presenting these financial statements.
The classification of assets and liabilities of the Company into current or non-current is based on the criterion specified in the Schedule III to the Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
The financial statements are approved by the Audit Committee and Board of Directors at their meeting held on 27th April 2023. The Board of Directors of the Company has authorized to issue the financial statements as per decision taken in their meeting held on 27th April 2023.
(a) Functional and Presentation currency:
The financial statements are prepared in Indian Rupees, which is the Functional and Presentation currency for the Company.
(b) Use of Estimates:
The preparation of Financial Statement in accordance with IND AS requires use of estimates and assumptions for some items, which might have effect on their recognition and measurement in the Balance Sheet and Statement of Profit and Loss. The actual amounts realized may differ from these estimates. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as Management becomes aware of changes in circumstances surrounding the estimates. Differences between the actual results and estimates are recognized in the period in which the results are known / materialized, and if material, their effects are disclosed in the notes to financial statements.
Estimates and assumptions are required for:
i. Useful life of Property Plant and Equipment:
Determination of estimated useful life of Property Plant and Equipment and the assessments as to which components of cost may be capitalized. Useful life of Property Plant and Equipment is based on life prescribed in Schedule II of the Companies Act, 2013. Assumptions also need to be made, when the Company assesses, whether an asset may be capitalized and which components of the cost of the asset may be capitalized.
ii. Recognition and measurement of defined benefit obligations:
The obligation arising from the defined benefit plan is determined on basis of actuarial assumptions. Key actuarial assumptions include discount rate, salary escalation rate, attrition rate, and life expectancy. The discount rate is determined with reference to market yields at the end of reporting period on the government bonds.
iii. Recognition of deferred tax assets:
A deferred tax asset is recognized for all the deductible temporary differences to the extent that is probable that taxable profits will be available against which the deductible temporary difference can be utilized. The management assumes that taxable profits will be available while recognizing deferred tax assets.
iv. Recognition and measurement of other provisions:
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the Balance Sheet date. The actual outflow of resources at future date may vary from the figure included in other provisions.
v. Discounting of long-term financial liabilities:
All financial liabilities are required to be measured at fair value on initial recognition. In case of financial liabilities, which are subsequently measured at amortized cost, interest is accrued using the effective interest method.
vi. Determining whether an arrangement contains a lease:
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease. At the inception or on reassessment of an arrangement that contains a lease, the Company separates payments and other consideration required by the arrangement into those for the lease and those for the other elements on the basis of their relative fair values. If the Company concludes for a finance lease that it is impracticable to separate the payments reliably then an asset and a liability are recognized at an amount equal to the fair value of the underlying asset; subsequently the liability is reduced as payments are made and an imputed finance cost on the liability is recognized using the Company''s incremental borrowing rate.
vii. Fair value of financial instruments:
Derivatives are carried at fair value. Derivatives include Foreign Currency Forward Contracts and options. Fair value of Foreign Currency Forward Contracts is determined using the rates published by Reserve Bank of India / State Bank of India.
viii. Current Vs. Non-Current classification:
I. An asset is classified as current when it is:
1. Expected to be realized or intended to be sold or consumed in normal operating cycle
2. Held primarily for purpose of trading
3. Expected to be realized within twelve months after the reporting period or
4. Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non - current
II. A liability is classified as current when it is:
1. Expected to be settled in normal operating cycle
2. Held primarily for purpose of trading
3. Due to be settled within twelve months after the reporting period or
4. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are treated as non-current.
III. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
1.3 Significant accounting policies:
I. Property Plant and Equipment
a) Initial and subsequent recognition and CWIP:
Property Plant and Equipment are carried at the cost of acquisition or construction, less accumulated depreciation and accumulated impairment, if any. The cost of items of Property Plant and Equipment includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and other directly attributable costs related to the acquisition or construction of the respective assets. Know-how related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant asset heads.
Subsequent costs are included in the assets carrying amount or recognized as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs & maintenance are charged to profit and loss during the reporting period in which they are incurred.
Capital work-in-progress comprises of the cost of Property Plant and Equipment that are not ready for their intended use at the reporting date. Any gain or loss on de-recognition (calculated as difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the Statement of Profit and Loss when the asset is derecognized.
b) Depreciation & Amortization:
Depreciation is provided on a pro-rata basis on the straight-line method based on estimated useful life prescribed under Schedule II to the Companies Act, 2013.
c) Impairment:
The carrying amounts of the Company''s tangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets'' recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss, if any, is recognized in the Statement of Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior accounting periods.
The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate.
II. Intangible Assets:
a) Initial and subsequent recognition:
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment, if any.
Separately purchased intangibles are initially measured at cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. Subsequently intangible assets are carried at cost less accumulated amortization and accumulated impairment loss, if any.
The useful lives of intangible assets is assessed as either finite or infinite. Finite-life intangible assets are amortized on a straight-line basis over the period of their expected useful lives. Estimated useful lives of finite-life intangible assets is as follows:
Computer Software - 3 years
b) Amortization:
The amortization period and the amortization method for finite-life intangible assets is reviewed at each financial year end and adjusted prospectively, if appropriate.
III. Investments property
a) Initial and subsequent recognition:
Investment properties are properties that are held to earn rentals and /or for capital appreciation (including property under construction for such purposes) and not occupied by the Company for its own use.
Investment properties are measured initially at cost, including transaction costs and net of recoverable taxes. The cost includes the cost of replacing parts and borrowing costs if recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred.
Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
b) Depreciation:
Depreciation on Investment property, wherever applicable, is provided on straight line basis as per useful lives prescribed in Schedule II to Companies Act, 2013.
Investment properties are derecognized either when they have been disposed of or when they are being occupied by the Company for its own use or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of de-recognition.
Inventories are valued at lower of Cost and Net Realizable Value.
The cost is determined as follows:
a) Raw and Packing Materials are valued at cost or market value, whichever is lower, computed on weighted average basis. The cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes, which are subsequently recoverable.
b) The finished goods inventory is valued at cost or net realizable value whichever is lower. Cost includes material cost, conversion, appropriate factory overheads, any tax or duties (as applicable) and other costs incurred in bringing the inventories to their present location and condition.
c) Work-in-Process is valued at material cost and cost of conversion appropriate to their location in the manufacturing cycle.
d) Stores, Spares and consumables are valued at cost, computed on First in First out (FIFO) basis. The cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes that are subsequently recoverable, if any.
Slow-moving and damaged, unserviceable stocks are adequately provided wherever considered necessary.
V. Cash and Cash Equivalents:
Cash and cash equivalents for the purposes of Cash Flow Statements includes cash in hand, deposits with banks and short term highly liquid investments, which are readily convertible into cash and have original maturities of three months or less and which are subject to an insignificant risk of changes in value.
VI. Non-current Assets held for sale:
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for sale'' when all the following criteria are met:
(i) decision has been made to sell
(ii) the assets are available for immediate sale in its present condition
(iii) the assets are being actively marketed
(iv) sale has been agreed or expected to be concluded within 12 months of the Balance Sheet date
Subsequently, such non-current assets and disposal groups classified as held for sale are measured at the lower of its carrying value and fair value less cost to sell. Non-current assets held for sale are not depreciated or amortized.
VII. Borrowing costs:
Borrowing costs, if any, directly attributable to the acquisition, construction or production of an qualifying asset (net of income earned on temporary deployment of funds) that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized. All other borrowing costs are charged to statement of profit and loss. Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the borrowing cost.
General Borrowing cost incurred in connection with qualifying assets is capitalized by applying the capitalization rate on the quantum of such borrowings utilized for such assets.
VIII. Revenue recognition:
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts and other incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes or other amounts collected from customers in its capacity as an agent. If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Dividend income is recognized in statement of profit and loss only when the right to receive payment is established, which is generally when shareholders approve dividend.
Export incentives receivable under Duty Drawback Scheme and MEIS are accounted on accrual basis.
Interest income is recognized using the effective interest rate (EIR) method.
Insurance claims are recognized post filing of the claim with the insurer.
IX. Foreign Currency Transactions:
Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing on the date of transaction. Monetary items denominated in foreign currencies at the year end are re-measured at the exchange rate prevailing on the balance sheet date. Non-monetary foreign currency items are carried at cost. Any income or expense on account of exchange difference either on settlement or on restatement is recognized in the Statement of Profit and Loss. The Exchange Rate Difference and the forward premium on the loan taken for capital assets are being capitalized along with Interest till the date of commissioning of the said capital assets.
X. Employee Benefits:
a) Short term employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
b) Long term employee benefits:
i) Defined contribution plans:
Contributions to defined contribution schemes such as employees state insurance, labour welfare fund, superannuation scheme, employee pension scheme etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. Company''s provident fund contribution is made to a government administered fund and is charges as an expense in the Statement of Profit and Loss. The above benefits are classified as Defined Contribution Schemes as the Company has no further obligations beyond the monthly contributions.
ii) Defined benefit plans:
The Company operates a defined benefit gratuity plan, which required contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability) are recognized immediately, in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognized in profit or loss on the earlier of:
- the date of the plan amendment or curtailment or
- the date that the Company recognizes related restructuring costs
Net interest is calculated by applying the discount rate to the net defined liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of Profit and Loss:
- service costs comprising current service costs, pasts service costs, gains and losses on curtailments and non-routine settlements.
- Net Interest expense or income.
Termination benefits in the nature of voluntary retirement benefits or termination benefits arising from restructuring are recognized in the Statement of Profit or Loss. The Company recognizes termination benefits at the earlier of the following dates:
- when the Company can no longer withdraw the offer of these benefits
- when the Company recognizes costs for restructuring that is within the scope of IND AS 37 and involves the payment of termination benefits.
The Company measures financial instruments at fair value on each Balance Sheet date. Fair value is the price that would be received to sell an asset or settle a liability in an ordinary transaction between market participants at the measurement date. The fair value measurement is based on presumption that the transaction to sell the asset or transfer the liability takes place either:
- in the principal market for the asset or liability or
- in absence of principal market, in the most advantageous market for asset or liability. The principal or the most advantageous market should be accessible to the Company.
The fair value of an asset or a liability is measured using the assumption that market participants would use when pricing an asset or liability acting in their best economic interest. The Company uses valuation techniques, that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:- Level 1 - Quoted market prices in active market for identical assets or liabilities.
- Level 2 - valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
- Level 3 - valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as whole) at the end of each reporting period.
External valuers are involved for valuation of significant assets, such as properties, unquoted financial assets etc. Involvement of independent external valuers is decided upon annually by the Company. Further such valuation is done annually at the end of the financial year and the impact if any on account of such fair valuation is taken in the annual financial statements.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
The Company''s lease asset classes primarily consist of leases for land and buildings. The Company, at the inception of a contract, assesses whether the contract is a lease or not lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a time in exchange for a consideration.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company''s incremental borrowing rate. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets (assets of less than '' 1,00,000 in value). The Company recognises the lease payments associated with these leases as an expense over the lease term.
In the comparative period, leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments and receipts under operating leases are recognised as an expense and income respectively, on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. a) Financial Assets:
i) Initial recognition and measurement:
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument.
On initial recognition, all financial assets are recognized at fair value. In case of financial assets which are recognized at Fair Value through Profit and Loss (FVTPL), its transaction costs are recognized in the statement of profit and loss. In other cases, transaction costs are attributable to the acquisition value of the financial asset are added to the value of financial asset.
Financial assets are not reclassified subsequent to their recognition, except and if and in the period the Company changes its business model for managing financial assets.
ii) Subsequent measurement:
Financial assets are subsequently classified and measured at:
- Amortized cost
- Fair value through profit and loss (FVTPL)
- Fair value through other comprehensive income (FVTOCL)
Investments in Debt Instruments:
A debt instrument is measured at amortized cost or at FVTPL. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of profit and loss.
a) Financial Assets measured at amortized cost:
Financial assets are measured at amortized cost when the asset is held within a business model, whose objective is to hold assets for collecting contractual cash flows and contractual terms of the assets are such that they give rise on specified dates to cash flows that are solely payments of principal and interest. Such financial assets are subsequently measured at amortized cost using the effective interest rate method (EIR). The EIR is the rate that discounts estimated future cash income through the expected life of financial instrument. The losses from impairment are recognized in the statement of profit and loss.
b) Financial Assets measured at fair value through OCI (FVTOCI):
Financial assets under this category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income.
c) Financial Assets measured at fair value through profit and loss:
Financial Assets under this category are measured initially as well as at each reporting date at fair value, with all changes recognized in statement of profit and loss.
Investments in Equity Instruments:
All investments in equity instruments classified under financial assets are initially measured at fair value. The Company may, on initial recognition, chooses to measure the same either at FVTOCI or FVTPL, which is done on an instrument-by-instrument basis.
Fair value changes on an equity instrument is recognized as other income in the Statement of Profit and Loss unless the Company has elected to measure irrevocably such instrument at FVTOCI. Fair value changes excluding dividends, on an equity instrument measured at FVTOCI are recognized in OCI. Amounts recognized in OCI are not subsequently reclassified to the Statement of Profit and Loss even on the sale of investment. Dividend income on the investments in equity instruments are recognized as ''other income'' in the Statement of Profit and Loss.
Investment in Subsidiary, Joint Venture and Associate
Investments in equity instruments of Subsidiaries are measured at costs. Provision for impairment loss on such investment is made only when there is a diminution in the value of investment which is other than temporary.
iii) Derecognition of Financial Assets:
A financial asset is derecognized only when the contractual rights to receive cash flows from the asset have expired or the Company has transferred the financial asset and substantially all the risks and rewards of ownership of the asset.
iv) Impairment of Financial Assets:
Expected credit losses are recognized for all financial assets subsequent to initial recognition other than financials assets in FVTPL category.
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables Company applies simplified approach which requires lifetime ECL allowances to be recognized from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analyzed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk lifetime ECL is used.
The impairment losses and reversals are recognized in Statement of Profit and Loss. b) Financial Liabilities:
i) Initial recognition and measurement:
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs, if any.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
ii) Subsequent measurement:
Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial liabilities carried at fair value through profit or losses are measured at fair value with all changes in fair value recognized in the Statement of Profit and Loss.
Loans and borrowings:
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit and loss when the liabilities are derecognized.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.
The Company enters into various derivative financial instruments to manage its exposure to interest and foreign exchange rate risks, like foreign exchange forward contracts and interest rate swaps.
Derivatives are initially recognized at fair value on the date the derivative contracts are entered into and are subsequently re-measured to their fair value (Mark to Market) at the end of each reporting period. The resulting gain or loss is recognized in the Statement of profit and loss. Company does not designate any of its derivative instruments as hedge instruments. Derivatives are carried as financial assets when fair value is positive and as financial liabilities when the fair value is negative.
XV. Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.
Contingent Liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as finance cost.
Contingent Assets are not recognized but disclosed in the Financial Statements when economic inflow is probable.
XVI. Segment Information:
The Managing Director (MD) is designated as Company''s Chief Operating Decision Maker (CODM). The MD reviews the Company''s internal financial information for the purpose of evaluating performance and assigning resources to segments. The Company has determined the operating segment based on structure of reports reviewed by MD. The Company operates in a single primary business segment, i.e. Synthetic Lattices & Rubber.
Income tax expense for the year comprises of current tax and deferred tax, recognized in the Statement of Profit and Loss, except to the extent it is relates to a business combination, or items recognized directly in equity or in other Comprehensive Income. Current tax is the expected tax payable/receivable on the taxable income/loss for the year using applicable tax rates at the Balance Sheet date, and any adjustment to taxes in respect of previous years. Interest income/expenses and penalties, if any, related to income tax are included in current tax expense.
Deferred tax is recognized in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. A deferred tax liability is recognized based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, by the end of the reporting period.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax assets deriving from carry forward of unused tax credits (including MAT) and unused tax losses are recognized to the extent that it is probable that future taxable profit will be available in future against which the deductible temporary differences, unused tax losses and credits can be utilized. Deferred tax relating to items recognized in other comprehensive income and directly in equity is recognized in correlation to the underlying transaction.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.
XVIII. Research and Development:
Expenditure on research and development is charged to statement of profit and loss in the year in which it is incurred, with the exception of:
- expenditure incurred in respect of major new products where the outcome of these projects is assessed as being reasonably certain as regards viability and technical feasibility. Such expenditure is capitalized and depreciated over useful life. Capital expenditure in respect of assets used for conducting research activities are capitalized under respective heads of Property Plant and Equipment. These assets are depreciated over their useful life.
XIX. Earnings per Share:
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2022
1.1 COMPANY INFORMATION:
Apcotex Industries Ltd. is one of the leading producers of Synthetic Lattices (VP Latex, Acrylic Latex, Nitrile Latex) and Synthetic Rubber (HSR, SBR) in India. The Company has one of the broadest ranges of products based on STYRENE - BUTADIENE CHEMISTRY available in the market today. Company''s product range is used, among other applications, for TYRE CORD DIPPING, PAPER/PAPER BOARD COATING, CONCRETE MODIFICATION/WATER PROOFING, PAINT EMULSIONS, TEXTILE FINISHING,HAND GLOVES etc. The various grades of Synthetic Rubber find application in products such as Footwear, Automotive components, V-belts, Conveyor belts and hoses. The Registered office of the company is situated at 49-53 Mahaveer Centre, Sector 17, Vashi, Navi Mumbai -400703.
These financial statements have been prepared in accordance with the Indian Accounting Standards (herein referred to as ''IND AS'') as notified by Ministry of Corporate Affairs pursuant to Section 133 of Companies Act 2013, read with Companies (Indian Accounting Standards) Rules 2015 (as amended).
The financial statements have been prepared and presented under historical cost convention, on accrual and going concern basis of accounting except certain financial asset and liabilities that are measured at fair value at the end of each accounting period as stated in the accounting policies below. The Accounting policies are applied consistently in presenting these financial statements.
The classification of assets and liabilities of the Company into current or non-current is based on the criterion specified in the Schedule III to the Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
The financial statements are approved by the Audit Committee and Board of Directors at their meeting held on 27th April 2022. The Board of Directors of the Company has authorized to issue the financial statements as per decision taken in their meeting held on 27th April 2022.
(a) Functional and Presentation currency:
The financial statements are prepared in Indian Rupees, which is the Functional and Presentation currency for the Company.
(b) Use of Estimates:
The preparation of Financial Statement in accordance with IND AS requires use of estimates and assumptions for some items, which might have effect on their recognition and measurement in the Balance Sheet and Statement of Profit and Loss. The actual amounts realized may differ from these estimates. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as Management becomes aware of changes in circumstances surrounding the estimates. Differences between the actual results and estimates are recognized in the period in which the results are known / materialized, and if material, their effects are disclosed in the notes to financial statements.
Estimates and assumptions are required for:
Determination of estimated useful life of tangible assets and the assessments as to which components of cost may be capitalized. Useful life of tangible fixed assets is based on life prescribed in Schedule II of the Companies Act, 2013. Assumptions also need to be made, when the Company assesses, whether an asset may be capitalized and which components of the cost of the asset may be capitalized.
ii. Recognition and measurement of defined benefit obligations:
The obligation arising from the defined benefit plan is determined on basis of actuarial assumptions. Key actuarial assumptions include discount rate, salary escalation rate, attrition rate, and life expectancy. The discount rate is determined with reference to market yields at the end of reporting period on the government bonds.
iii. Recognition of deferred tax assets:
A deferred tax asset is recognized for all the deductible temporary differences to the extent that is probable that taxable profits will be available against which the deductible temporary difference can be utilized. The management assumes that taxable profits will be available while recognizing deferred tax assets.
iv. Recognition and measurement of other provisions:
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the Balance Sheet date. The actual outflow of resources at future date may vary from the figure included in other provisions.
v. Discounting of long-term financial liabilities:
All financial liabilities are required to be measured at fair value on initial recognition. In case of financial liabilities, which are subsequently measured at amortized cost, interest is accrued using the effective interest method.
vi. Determining whether an arrangement contains a lease:
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease. At the inception or on reassessment of an arrangement that contains a lease, the Company separates payments and other consideration required by the arrangement into those for the lease and those for the other elements on the basis of their relative fair values. If the company concludes for a finance lease that it is impracticable to separate the payments reliably then an asset and a liability are recognized at an amount equal to the fair value of the underlying asset; subsequently the liability is reduced as payments are made and an imputed finance cost on the liability is recognized using the Company''s incremental borrowing rate.
vii. Fair value of financial instruments:
Derivatives are carried at fair value. Derivatives include Foreign Currency Forward Contracts and options. Fair value of Foreign Currency Forward Contracts is determined using the rates published by Reserve Bank of India / State Bank of India.
viii. Current Vs. Non-Current classification:
I. An asset is classified as current when it is:
1. Expected to be realized or intended to be sold or consumed in normal operating cycle
2. Held primarily for purpose of trading
3. Expected to be realized within twelve months after the reporting period or
4. Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non - current
II. A liability is classified as current when it is:
1. Expected to be settled in normal operating cycle
2. Held primarily for purpose of trading
3. Due to be settled within twelve months after the reporting period or
4. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are treated as non-current.
III. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
1.3 SIGNIFICANT ACCOUNTING POLICIES:
I. Property Plant and Equipment
a) Initial and subsequent recognition and CWIP:
Property Plant & Equipment are carried at the cost of acquisition or construction, less accumulated depreciation and accumulated impairment, if any. The cost of items of Property Plant & Equipment includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and other directly attributable costs related to the acquisition or construction of the respective assets. Know-how related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant asset heads.
Subsequent costs are included in the assets carrying amount or recognized as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs & maintenance are charged to profit and loss during the reporting period in which they are incurred.
Capital work-in-progress comprises of the cost of Property Plant and Equipment that are not ready for their intended use at the reporting date. Any gain or loss on de-recognition (calculated as difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the Statement of Profit and Loss when the asset is derecognized.
b) Depreciation & Amortization:
Depreciation is provided on a pro-rata basis on the straight-line method based on estimated useful life prescribed under Schedule II to the Companies Act, 2013.
c) Impairment:
The carrying amounts of the Company''s tangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets'' recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss, if any, is recognized in the Statement of Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would h ave been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior accounting periods.
The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate.
II. Intangible Assets:
a) Initial and subsequent recognition:
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment, if any.
Separately purchased intangibles are initially measured at cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. Subsequently intangible assets are carried at cost less accumulated amortization and accumulated impairment loss, if any.
The useful lives of intangible assets is assessed as either finite or infinite. Finite-life intangible assets are amortized on a straight-line basis over the period of their expected useful lives. Estimated useful lives of finite-life intangible assets is as follows:
Computer Software - 3 years
b) Amortization:
The amortization period and the amortization method for finite-life intangible assets is reviewed at each financial year end and adjusted prospectively, if appropriate.
III. Investments property
a) Initial and subsequent recognition:
Investment properties are properties that are held to earn rentals and /or for capital appreciation (including property under construction for such purposes) and not occupied by the Company for its own use.
Investment properties are measured initially at cost, including transaction costs and net of recoverable taxes. The cost includes the cost of replacing parts and borrowing costs if recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
b) Depreciation:
Depreciation on Investment property, wherever applicable, is provided on straight line basis as per useful lives prescribed in Schedule II to Companies Act, 2013.
c) De-recognition:
Investment properties are derecognized either when they have been disposed of or when they are being occupied by the Company for its own use or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of de-recognition.
Inventories are valued at lower of Cost and Net Realizable Value.
The cost is determined as follows:
a) Raw and Packing Materials are valued at cost or market value, whichever is lower, computed on weighted average basis. The cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes, which are subsequently recoverable.
b) The finished goods inventory is valued at cost or net realizable value whichever is lower. Cost includes material cost, conversion, appropriate factory overheads, any tax or duties (as applicable) and other costs incurred in bringing the inventories to their present location and condition.
c) Work-in-Process is valued at material cost and cost of conversion appropriate to their location in the manufacturing cycle.
d) Stores, Spares and consumables are valued at cost, computed on FIFO basis. The cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes that are subsequently recoverable, if any.
Slow-moving and damaged, unserviceable stocks are adequately provided wherever considered necessary.
V. Cash and Cash Equivalents:
Cash and cash equivalents for the purposes of Cash Flow Statements includes cash in hand, deposits with banks and short term highly liquid investments, which are readily convertible into cash and have original maturities of three months or less and which are subject to an insignificant risk of changes in value.
VI. Non-current Assets held for sale:
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for sale'' when all the following criteria are met:
(i) decision has been made to sell
(ii) the assets are available for immediate sale in its present condition
(iii) the assets are being actively marketed
(iv) sale has been agreed or expected to be concluded within 12 months of the Balance Sheet date Subsequently, such non-current assets and disposal groups classified as held for sale are measured at the lower of its carrying value and fair value less cost to sell. Non-current assets held for sale are not depreciated or amortized.
VII. Borrowing costs:
Borrowing costs, if any, directly attributable to the acquisition, construction or production of an qualifying asset (net of income earned on temporary deployment of funds) that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized. All other borrowing costs are charged to statement of profit and loss. Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the borrowing cost.
General Borrowing cost incurred in connection with qualifying assets is capitalized by applying the capitalization rate on the quantum of such borrowings utilized for such assets.
VIII. Revenue recognition:
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.
Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts and other incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes or other amounts collected from customers in its capacity as an agent. If the consideration in a contract includes a variable amount, the company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Dividend income is recognized in statement of profit and loss only when the right to receive payment is established, which is generally when shareholders approve dividend.
Export incentives receivable under Duty Drawback Scheme and MEIS are accounted on accrual basis.
Interest income is recognized using the effective interest rate (EIR) method.
Insurance claims are recognized post filing of the claim with the insurer.
IX. Foreign Currency Transactions:
Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing on the date of transaction. Monetary items denominated in foreign currencies at the year end are re-measured at the exchange rate prevailing on the balance sheet date. Non-monetary foreign currency items are carried at cost. Any income or expense on account of exchange difference either on settlement or on restatement is recognized in the Statement of Profit and Loss.
The Exchange Rate Difference and the forward premium on the loan taken for capital assets are being capitalized along with Interest till the date of commissioning of the said capital assets.
X. Employee Benefits:
a) Short term employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
b) Long term employee benefits:
i) Defined contribution plans:
Contributions to defined contribution schemes such as employees state insurance, labour welfare fund, superannuation scheme, employee pension scheme etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. Company''s provident fund contribution is made to a government administered fund and is charges as an expense in the Statement of Profit and Loss. The above benefits are classified as Defined Contribution Schemes as the Company has no further obligations beyond the monthly contributions.
ii) Defined benefit plans:
The Company operates a defined benefit gratuity plan, which required contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability) are recognized immediately, in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognized in profit or loss on the earlier of:
- the date of the plan amendment or curtailment or
- the date that the Company recognizes related restructuring costs
Net interest is calculated by applying the discount rate to the net defined liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of Profit and Loss:
- service costs comprising current service costs, pasts service costs, gains and losses on curtailments and non-routine settlements.
- Net Interest expense or income.
c) Termination benefits:
Termination benefits in the nature of voluntary retirement benefits or termination benefits arising from restructuring are recognized in the Statement of Profit or Loss. The Company recognizes termination benefits at the earlier of the following dates:
- when the Company can no longer withdraw the offer of these benefits
- when the company recognizes costs for restructuring that is within the scope of IND AS 37 and involves the payment of termination benefits.
The Company measures financial instruments at fair value on each Balance Sheet date. Fair value is the price that would be received to sell an asset or settle a liability in an ordinary transaction between market participants at the measurement date. The fair value measurement is based on presumption that the transaction to sell the asset or transfer the liability takes place either:
- in the principal market for the asset or liability or
- in absence of principal market, in the most advantageous market for asset or liability. The principal or the most advantageous market should be accessible to the Company.
The fair value of an asset or a liability is measured using the assumption that market participants would use when pricing an asset or liability acting in their best economic interest. The Company uses valuation techniques, that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:- Level 1 - Quoted market prices in active market for identical assets or liabilities.
- Level 2 - valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
- Level 3 - valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as whole) at the end of each reporting period.
External valuers are involved for valuation of significant assets, such as properties, unquoted financial assets etc. Involvement of independent external valuers is decided upon annually by the Company. Further such valuation is done annually at the end of the financial year and the impact if any on account of such fair valuation is taken in the annual financial statements.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
The Company''s lease asset classes primarily consist of leases for land and buildings. The Company, at the inception of a contract, assesses whether the contract is a lease or not lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a time in exchange for a consideration.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company''s incremental borrowing rate. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets (assets of less than '' 1,00,000 in value). The Company recognises the lease payments associated with these leases as an expense over the lease term.
In the comparative period, leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value
of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments and receipts under operating leases are recognised as an expense and income respectively, on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. a) Financial Assets:
i) Initial recognition and measurement:
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument.
On initial recognition, all financial assets are recognized at fair value. In case of financial assets which are recognized at Fair Value through Profit and Loss (FVTPL), its transaction costs are recognized in the statement of profit and loss. In other cases, transaction costs are attributable to the acquisition value of the financial asset are added to the value of financial asset.
Financial assets are not reclassified subsequent to their recognition, except and if and in the period the Company changes its business model for managing financial assets.
ii) Subsequent measurement:
Financial assets are subsequently classified and measured at:
- Amortized cost
- Fair value through profit and loss (FVTPL)
- Fair value through other comprehensive income (FVTOCL)
Investments in Debt Instruments:
A debt instrument is measured at amortized cost or at FVTPL. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of profit and loss.
a) Financial Assets measured at amortized cost:
Financial assets are measured at amortized cost when the asset is held within a business model, whose objective is to hold assets for collecting contractual cash flows and contractual terms of the assets are such that they give rise on specified dates to cash flows that are solely payments of principal and interest. Such financial assets are subsequently measured at amortized cost using the effective interest rate method (EIR). The EIR is the rate that discounts estimated future cash income through the expected life of financial instrument. The losses from impairment are recognized in the statement of profit and loss.
b) Financial Assets measured at fair value through OCI (FVTOCI):
Financial assets under this category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income.
c) Financial Assets measured at fair value through profit and loss:
Financial Assets under this category are measured initially as well as at each reporting date at fair value, with all changes recognized in statement of profit and loss.
Investments in Equity Instruments:
All investments in equity instruments classified under financial assets are initially measured at fair value. The Company may, on initial recognition, chooses to measure the same either at FVTOCI or FVTPL, which is done on an instrument-by-instrument basis.
Fair value changes on an equity instrument is recognized as other income in the Statement of Profit and Loss unless the Company has elected to measure irrevocably such instrument at FVTOCI. Fair value changes excluding dividends, on an equity instrument measured at FVTOCI are recognized in OCI. Amounts recognized in OCI are not subsequently reclassified to the Statement of Profit and Loss even on the sale of investment. Dividend income on the investments in equity instruments are recognized as ''other income'' in the Statement of Profit and Loss.
Investment in Subsidiary, Joint Venture and Associate
Investments in equity instruments of Subsidiaries are measured at costs. Provision for impairment loss on such investment is made only when there is a diminution in the value of investment which is other than temporary.
iii) Derecognition of Financial Assets:
A financial asset is derecognized only when the contractual rights to receive cash flows from the asset have expired or the Company has transferred the financial asset and substantially all the risks and rewards of ownership of the asset.
iv) Impairment of Financial Assets:
Expected credit losses are recognized for all financial assets subsequent to initial recognition other than financials assets in FVTPL category.
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables Company applies simplified approach which requires lifetime ECL allowances to be recognized from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analyzed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk lifetime ECL is used.
The impairment losses and reversals are recognized in Statement of Profit and Loss. b) Financial Liabilities:
i) Initial recognition and measurement:
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs, if any.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
ii) Subsequent measurement:
Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial liabilities carried at fair value through profit or losses are measured at fair value with all changes in fair value recognized in the Statement of Profit and Loss.
Loans and borrowings:
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit and loss when the liabilities are derecognized.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
iii) Derecognition:
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.
The Company enters into various derivative financial instruments to manage its exposure to interest and foreign exchange rate risks, like foreign exchange forward contracts and interest rate swaps.
Derivatives are initially recognized at fair value on the date the derivative contracts are entered into and are subsequently re-measured to their fair value (Mark to Market) at the end of each reporting period. The resulting gain or loss is recognized in the Statement of profit and loss. Company does not designate any of its derivative instruments as hedge instruments. Derivatives are carried as financial assets when fair value is positive and as financial liabilities when the fair value is negative.
XV. Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as finance cost.
Contingent Assets are not recognized but disclosed in the Financial Statements when economic inflow is probable.
XVI. Segment Information:
The Managing Director (MD) is designated as company''s Chief Operating Decision Maker (CODM). The MD reviews the company''s internal financial information for the purpose of evaluating performance and assigning resources to segments. The Company has determined the operating segment based on structure of reports reviewed by MD. The Company operates in a single primary business segment, i.e. Synthetic Lattices & Rubber.
Income tax expense for the year comprises of current tax and deferred tax, recognized in the Statement of Profit and Loss, except to the extent it is relates to a business combination, or items recognized directly in equity or in other Comprehensive Income. Current tax is the expected tax payable/receivable on the taxable income/loss for the year using applicable tax rates at the Balance Sheet date, and any adjustment to taxes in respect of previous years. Interest income/expenses and penalties, if any, related to income tax are included in current tax expense.
Deferred tax is recognized in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. A deferred tax liability is recognized based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, by the end of the reporting period.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax assets deriving from carry forward of unused tax credits (including MAT) and unused tax losses are recognized to the extent that it is probable that future taxable profit will be available in future against which the deductible temporary differences, unused tax losses and credits can be utilized. Deferred tax relating to items recognized in other comprehensive income and directly in equity is recognized in correlation to the underlying transaction.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.
XVIII. Research and Development:
Expenditure on research and development is charged to statement of profit and loss in the year in which it is incurred, with the exception of:
- expenditure incurred in respect of major new products where the outcome of these projects is assessed as being reasonably certain as regards viability and technical feasibility. Such expenditure is capitalized and depreciated over useful life. Capital expenditure in respect of assets used for conducting research activities are capitalized under respective heads of Property Plant and Equipment. These assets are depreciated over their useful life.
XIX. Earnings per Share:
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2018
1.1 Significant accounting policies:
I. Property Plant and Equipment
a) Initial and subsequent recognition and CWIP:
Freehold land is carried at carrying cost. All other items of Property Plant & Equipment are carried at the cost of acquisition or construction, less accumulated depreciation and accumulated impairment, if any. The cost of items of Property Plant & Equipment includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and other directly attributable costs related to the acquisition or construction of the respective assets. Know-how related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant asset heads.
Subsequent costs are included in the assets carrying amount or recognized as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs & maintenance are charged to profit and loss during the reporting period in which they are incurred.
Capital work-in-progres s comprises of the cost of fixed assets that are not ready for their intended use at the reporting date. Any gain or loss on de-recognition (calculated as difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the Statement of Profit and Loss when the asset is derecognized.
b) Depreciation & Amortisation:
Depreciation is provided on a pro-rata basis on the straight-line method based on estimated useful life prescribed under Schedule II to the Companies Act, 2013.
Freehold land is not depreciated.
c) Impairment:
The carrying amounts of the Companyâs tangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assetsâ recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss, if any, is recognized in the Statement of Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior accounting periods.
The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate.
Upon first time adoption of IND AS, the Company has elected to measure all its property, plant and equipment at the previous GAAP carrying amount as its deemed cost as on the date of transition to IND AS i.e. 1st April, 2016.
II. Intangible Assets:
a) Initial and subsequent recognition:
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment, if any.
Separately purchased intangibles are initially measured at cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. Subsequently intangible assets are carried at cost less accumulated depreciation and accumulated impairment loss, if any.
The useful lives of intangible assets is assessed as either finite or infinite. Finite-life intangible assets are amortised on a straight-line basis over the period of their expected useful lives. Estimated useful lives of finite-life intangible assets is as follows:
Computer software - 3 years
b) Amortization:
The amortization period and the amortization method for finite-life intangible assets is reviewed at each financial year end and adjusted prospectively, if appropriate.
Upon first time adoption of IND AS, the Company has elected to measure its intangible assets at the previous GAAP carrying amount as its deemed cost as on the date of transition to IND AS i.e. 1st April, 2016.
III. Investments property
a) Initial and subsequent recognition:
Investment properties are properties that are held to earn rentals and /or for capital appreciation (including property under construction for such purposes) and not occupied by the Company for its own use.
Investment properties are measured initially at cost, including transaction costs and net of recoverable taxes. The cost includes the cost of replacing parts and borrowing costs if recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred.
Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
b) Depreciation:
Depreciation on Investment property, wherever applicable, is provided on straight line basis as per useful lives prescribed in Schedule II to Companies Act, 2013.
c) De-recognition:
Investment properties are derecognized either when they have been disposed of or when they are being occupied by the Company for its own use or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of de-recognition.
Upon adoption of IND AS, the Company has elected to measure its investment property at the previous GAAP carrying amount as its deemed cost as on the date of transition to IND AS i.e. 1st April, 2016
IV. Inventories:
Inventories are valued at lower of Cost and Net Realizable Value.
The cost is determined as follows:
a) Raw and Packing Materials are valued at cost or market value, whichever is lower, computed on FIFO basis. The cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes, which are subsequently recoverable from the taxing authorities.
b) The finished goods inventory is valued at cost or net realizable value whichever is lower. Cost includes material cost, conversion, appropriate factory overheads, any tax or duties and other costs incurred in bringing the inventories to their present location and condition.
c) Work-in-Process is valued at material cost and cost of conversion appropriate to their location in the manufacturing cycle.
d) Stores, Spares and consumables are valued at cost, computed on FIFO basis. The cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes that are subsequently recoverable from the taxing authorities, if any.
Slow-moving and damaged, unserviceable stocks are adequately provided wherever considered necessary.
If payment for inventory is on deferred basis i.e. beyond normal credit terms, then cost is determined by discounting the future cash flows at an interest rate determined with reference to the market rates. The difference between total cost and deemed cost is recognized as interest expense over the period of financing under the effective interest method.
V. Cash and Cash Equivalents:
Cash and cash equivalents includes cash in hand, deposits with banks and short term highly liquid investments, which are readily convertible into cash and have original maturities of three months or less and which are subject to an insignificant risk of changes in value.
VI. Non current Assets held for sale:
Non-current assets or disposal groups comprising of assets and liabilities are classified as âheld for saleâ when all the following criteria are met:
(i) decision has been made to sell
(ii) the assets are available for immediate sale in its present condition
(iii) the assets are being actively marketed
(iv) sale has been agreed or expected to be concluded within 12 months of the Balance Sheet date
Subsequently, such non-current assets and disposal groups classified as held for sale are measured at the lower of its carrying value and fair value less cost to sell. Non-current assets held for sale are not depreciated or amortized.
VII. Borrowing costs:
Borrowing costs, if any, directly attributable to the acquisition, construction or production of an qualifying asset (net of income earned on temporary deployment of funds) that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized. All other borrowing costs are charged to statement of profit and loss. Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the borrowing cost.
General Borrowing cost incurred in connection with qualifying assets is capitalized by applying the capitalization rate on the quantum of such borrowings utilized for such assets.
VIII. Revenue recognition:
Timing of Recognition: Revenue from sale of goods is recognized when all the significant risks and rewards of ownership in the goods is transferred to the buyer as per the terms of contract, there is no continuing managerial involvement with the goods and the amount of revenue can be measured reliably. The Company retains no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods.
Measurement of Revenue:Revenue is measured at fair value of the consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the governments which are levied on the sales such as value added tax etc. No element of financing is deemed present as the sales are made with credit terms, which are consistent with market practices.
Revenue income from services is recognized in the accounting period in which the services are rendered.
Dividend income is recognized in statement of profit and loss only when the right to receive payment is established, which is generally when shareholders approve dividend.
Export incentives receivable under Duty Drawback Scheme are accounted on accrual basis.
Interest income is recognized using the effective interest rate (EIR) method.
Insurance claims are recognized post filing of the claim with the insurer.
IX. Foreign Currency Transactions:
Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing on the date of transaction. Monetary items denominated in foreign currencies at the year end are re-measured at the exchange rate prevailing on the balance sheet date. Non-monetary foreign currency items are carried at cost. Any income or expense on account of exchange difference either on settlement or on restatement is recognized in the Statement of Profit and Loss.
The Exchange Rate Difference and the forward premium on the loan taken for capital assets are being capitalized along with Interest till the date of commissioning of the said capital assets.
X. Employee Benefits:
a) Short term employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
b) Long term employee benefits:
i) Defined contribution plans:
Contributions to defined contribution schemes such as employees state insurance, labour welfare fund, superannuation scheme, employee pension scheme etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. Companyâs provident fund contribution is made to a government administered fund and is charged as an expense in the Statement of Profit and Loss. The above benefits are classified as Defined Contribution Schemes as the Company has no further obligations beyond the monthly contributions.
ii) Defined ben efit p lans:
The Company operates a defined benefit gratuity plan, which required contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability) are recognized immediately, in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognized in profit or loss on the earlier of:
- the date of the plan amendment or curtailment or
- the date that the Company recognizes related restructuring costs
Net interest is calculated by applying the discount rate to the net defined liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of Profit and Loss:
- service costs comprising current service costs, pasts service costs, gains and losses on curtailments and non-routine settlements.
- Net Interest expense or income.
c) Termination benefits:
Termination benefits in the nature of voluntary retirement benefits or termination benefits arising from restructuring are recognized in the Statement of Profit or Loss. The Company recognizes termination benefits at the earlier of the following dates:
- when the Company can no longer withdraw the offer of these benefits
- when the company recognizes costs for restructuring that is within the scope of IND AS 37 and involves the payment of termination benefits.
XI. Fair Value Measurement:
The Company measures financial instruments, such as derivatives at fair value at each Balance Sheet date. Fair value is the price that would be received to sell an asset or settle a liability in an ordinary transaction between market participants at the measurement date. The fair value measurement is based on presumption that the transaction to sell the asset or transfer the liability takes place either:
- in the principal market for the asset or liability or
- in absence of principal market, in the most advantageous market for asset or liability. The principal or the most advantageous market should be accessible to the Company.
The fair value of an asset or a liability is measured using the assumption that market participants would use when pricing an asset or liability acting in their best economic interest. The Company uses valuation techniques, that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted market prices in active market for identical assets or liabilities.
- Level 2 - valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable.
- Level 3 - valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservabl e.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as whole) at the end of each reporting period.
External valuers are involved for valuation of significant assets, such as properties, unquoted financial assets etc. Involvement of independent external valuers is decided upon annually by the Company. Further such valuation is done annually at the end of the financial year and the impact if any on account of such fair valuation is taken in the annual financial statements.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
XII. Leases:
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the contract lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
a) Company as a lessee: A lease is classified at the inception date as a finance lease or an operating lease.
A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease. Operating lease payments are recognized as an expense in the Statement of profit and loss as per lease terms as such payments are structured to increase in line with expected general inflation.
b) Company as a lessor: Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognized as revenues as per lease terms since such rentals are structured to increase in line with expected general inflation. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned. Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases.
XIII. Financial Instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
A) Financial Assets:
i) Initial recognition and measurement:
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument.
On initial recognition, all financial assets are recognized at fair value. In case of financial assets which are recognized at Fair Value through Profit and Loss (FVTPL), its transaction costs are recognized in the statement of profit and loss. In other cases, transaction costs are attributable to the acquisition value of the financial asset are added to the value of financial asset.
Financial assets are not reclassified subsequent to their recognition, except and if and in the period the Company changes its business model for managing financial assets.
ii) Subsequent measurement:
Financial assets are subsequently classified and measured at:
- Amortized cost
- Fair value thro ugh profit and loss (FVTPL)
- Fair value through other comprehensive income (FVTOCL)
Investments in Debt Instruments:
A debt instrument is measured at amortized cost or at FVTPL. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of profit and loss.
a) Financial Assets measured at amortized cost:
Financial assets are measured at amortized cost when the asset is held within a business model, whose objective is to hold assets for collecting contractual cash flows and contractual terms of the assets are such that they give rise on specified dates to cash flows that are solely payments of principal and interest. Such financial assets are subsequently measured at amortized cost using the effective interest rate method (EIR). The EIR is the rate that discounts estimated future cash income through the expected life of financial instrument. The losses from impairment are recognized in the statement of profit and loss.
b) Financial Assets measured at fair value through OCI (FVTOCI):
Financial assets under this category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income.
c) Financial Assets measured at fair value through profit and loss:
Financial Assets under this category are measured initially as well as at each reporting date at fair value, with all changes recognized in statement of profit and loss.
Investments in Equity Instruments:
All investments in equity instruments classified under financial assets are initially measured at fair value. The Company may, on initial recognition, irrevocably elect to measure the same either at FVTOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis.
Fair value changes on an equity instrument is recognized as other income in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVTOCI. Fair value changes excluding dividends, on an equity instrument measured at FVTOCI are recognized in OCI. Amounts recognized in OCI are not subsequently reclassified to the Statement of Profit and Loss even on the sale of investment. Dividend income on the investments in equity instruments are recognized as âother incomeâ in the Statement of Profit and Loss.
Investment in Subsidiary, Joint Venture and Associate
Investments in equity instruments of Subsidiaries are measured at costs. Provision for impairment loss on such investment is made only when there is a diminution in the value of investment which is other than temporary.
iii) Derecognition of Financial Assets:
A financial asset is derecognized only when the contractual rights to receive cash flows from the asset have expired or the Company has transferred the financial asset and substantially all the risks and rewards of ownership of the asset.
iv) Impairment of Financial Assets:
Expected credit losses are recognized for all financial assets subsequent to initial recognition other than financials assets in FVTPL category.
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date). or
- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables Company applies simplified approach which requires lifetime ECL allowances to be recognized from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analyzed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk lifetime ECL is used.
The impairment losses and reversals are recognized in Statement of Profit and Loss.
B) Financial Liabilities:
i) Initial recognition and measurement:
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
All financial liabilities are recognized initially at fair value and in the case of loans and borrowings and payables, net of directly attributable transaction costs, if any.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
ii) Subsequent measurement:
Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial liabilities carried at fair value through profit or losses are measured at fair value with all changes in fair value recognized inthe Statement of Profit and Loss.
Loans and borrowings:
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit and loss when the liabilities are derecognized.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
iii) Derecognition:
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.
XIV. Derivatives:
The Company enters into various derivative financial instruments to manage its exposure to interest and foreign exchange rate risks, like foreign exchange forward contracts and interest rate swaps.
Derivatives are initially recognized at fair value on the date the derivative contracts are entered into and are subsequently re-measured to their fair value (Mark to Market) at the end of each reporting period. The resulting gain or loss is recognized in the Statement of profit and loss. Company does not designate any of its derivative instruments as hedge instruments. Derivatives are carried as financial assets when fair value is positive and as financial liabilities when the fair value is negative.
Transaction costs incurred for such derivative instruments are charged off to Statement of Profit and Loss on initial recognition.
Fees paid for availing the loan facilities are recognized as transaction cost of the loans.
XV. Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as finance cost.
Contingent Assets are not recognized but disclosed in the Financial Statements when economic inflow is probable.
XVI. Segment Information:
The Managing Director (MD) is designated as companyâs Chief Operating Decision Maker (CODM). The MD reviews the companyâs internal financial information for the purpose of evaluating performance and assigning resources to segments. The Company has determined the operating segment based on structure of reports reviewed by MD. The Company operates in a single primary business segment, i.e. Synthetic Lattices & Rubber.
XVII. Income taxes:
Income tax expense for the year comprises of current tax and deferred tax, recognized in the Statement of Profit and Loss, except to the extent it relates to a business combination, or items recognized directly in equity or in other Comprehensive Income. Current tax is the expected tax payable/receivable on the taxable income/loss for the year using applicable tax rates at the Balance Sheet date and any adjustment to taxes in respect of previous years. Interest income/expenses and penalties, if any, related to income tax are included in current tax expense.
Deferred tax is recognized in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. A deferred tax liability is recognized based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, by the end of the reporting period.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax assets deriving from carry forward of unused tax credits (including MAT) and unused tax losses are recognized to the extent that it is probable that future taxable profit will be available in future against which the deductible temporary differences, unused tax losses and credits can be utilized. Deferred tax relating to items recognized in other comprehensive income and directly in equity is recognized in correlation to the underlying transaction.
Current tax assets and Current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.
XVIII. Research and Development:
Expenditure on research and development is charged to statement of profit and loss in the year in which it is incurred, with the exception of: - expenditure incurred in respect of major new products where the outcome of these projects is assessed as being reasonably certain as regards viability and technical feasibility. Such expenditure is capitalized and depreciated over useful life. Capital expenditure in respect of assets used for conducting research activities are capitalized under respective heads of fixed assets. These assets are depreciated over their useful life.
XIX. Earnings per Share:
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2017
Corporate Information note on business activity
Apcotex Industries Ltd. is one of the leading producers of Synthetic Lattices (VP Latex, Acrylic Latex, Nitrile Latex) and Synthetic Rubber (HSR, POLYBLEND, NBR, PNBR, SBR) in India. The Company has one of the broadest ranges of products based on STYRENE - BUTADIENE CHEMISTRY available in the market today. Company''s product range is used, among other applications, for TYRE CORD DIPPING, PAPER/PAPER BOARD COATING, CONCRETE MODIFICATION/WATER PROOFING, PAINT EMULSIONS, TEXTILE FINISHING etc. The various grades of Synthetic Rubber find application in products such as Footwear, Automotive components, V-belts, Conveyor belts and hoses.
NOTE 1 : SIGNIFICANT ACCOUNTING POLICIES
(i) Basis of Accounting:
The financial statements of the Company have been prepared on accrual basis under the historical cost convention and ongoing concern basis in accordance with the Generally Accepted Accounting Principles in India (''Indian GAAP'') to comply with the Accounting Standards specified under section 133 of The Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of The Companies Act, 2013 (''the Act'') / The Companies Act, 1956, as applicable.
The classification of assets and liabilities of the Company into current or non-current is based on the criterion specified in the Schedule III to the Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
(ii) Use of Estimates:
The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and the disclosures of contingent liabilities. Difference between actual results and the estimates are recognized in the period in which the results materialize / are known.
(iii) Property Plant & Equipment and Depreciation / Amortization
a. Property Plant & Equipment
Freehold land is carried at carrying cost. All other items of Property Plant & Equipment are carried at the cost of acquisition or construction, less accumulated depreciation and accumulated impairment, if any. The cost of items of Property Plant & Equipment includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and other directly attributable costs related to the acquisition or construction of the respective assets. Know-how related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant asset heads. Subsequent costs are included in the assets carrying amount or recognized as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs & maintenance are charged to profit and loss during the reporting period in which they are incurred.
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment, if any.
Capital work-in-progress comprises of the cost of fixed assets that are not ready for their intended use at the reporting date. Any gain or loss on de-recognition (calculated as difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the Statement of Profit and Loss when the asset is derecognized.
b. Depreciation & Amortization On Tangible Assets:
The Company has provided depreciation on basis of useful lives as prescribed in Schedule II of the Companies Act, 2013 consequent to Schedule II becoming applicable w.e.f 01st April 2014.The excess depreciation on tangible assets whose useful life is already exhausted as on 01st April 2014 is transferred to General Reserves ( net of deferred taxes ). On Intangible Assets:
Intangible assets are amortized on SLM method over the useful life, based on the economic benefits that would be derived, as per the estimates made by the management.
i. Computer Software - Written off over a period of three years
c. Impairment
The carrying amounts of the Company''s tangible and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets'' recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss, if any, is recognized in the Statement of Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior accounting periods
(iv) Borrowing Cost
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs, if any, directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized. All other borrowing costs are expensed in the period they occur.
(v) Investments
Non-current investments are valued at cost less provision for diminution in value, if the diminution is other than temporary. Current Investments are stated at lower of cost and fair value.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss. Profit or loss on sale of investments is determined on average cost basis.
(vi) Inventory
Inventories are valued at lower of Cost and Net Realizable Value.
The cost is determined as follows:
(a) Raw and Packing Materials are valued at cost or market value, whichever is lower, computed on FIFO basis. The cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes, which are subsequently recoverable from the taxing authorities.
(b) The finished goods inventory is valued at cost, or net realizable value whichever is lower. Cost includes material cost, conversion, appropriate factory overheads, any tax or duties and other costs incurred in bringing the inventories to their present location and condition.
(c) Work-in-Process is valued at material cost and cost of conversion appropriate to their location in the manufacturing cycle.
(d) Stores, Spares and consumables are valued at cost, computed on FIFO basis. The cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes that are subsequently recoverable from the taxing authorities, if any.
Slow-moving and damaged, unserviceable stocks are adequately provided wherever considered necessary.
(vii) Excise Duty :
Excise Duty paid on goods manufactured by the Company is accounted for at the time of dispatch of goods from the factories.
Excise Duty payable on goods manufactured is accrued for stocks held in factories at the year-end. Excise Duty paid/ payable on goods manufactured by the Company and remaining in stock, is included in the value of Finished Goods. Excise duty related to the difference between the closing stock and opening stock of Finished Goods is recognized in the Statement of Profit and Loss.
(viii)Transactions in foreign exchange
(a) Initial recognition:
Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction.
(b) Measurement of foreign currency items at the Balance Sheet date:
Foreign currency denominated monetary assets & liabilities of the Company are restated at the closing exchange rates. Non-monetary items are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising out of these translations are recognised in the Statement of Profit and Loss. However exchange differences relating to fixed assets have been included in the carrying amount of fixed assets.
The Exchange Rate Difference and the forward premium on the loan taken for capital assets are being capitalized along with Interest till the date of commissioning of the said capital assets.
In case of other forward exchange contracts, the difference between the transaction rate and the rate on the date of contract is recognized as exchange difference and the premium paid on forward contracts is recognized over the life of the contract. However forward exchange contract relating to fixed assets have been included in the carrying amount of fixed assets.
(ix) Forward Exchange Contracts - Hedging
The company uses forward exchange contracts to hedge it''s foreign exchange exposures relating to the underlying transactions and firm commitments. The use of these foreign exchange forward and options contracts reduce the risk or cost to the Company and the Company does not use those for trading or speculation purposes. The premium on forward contracts taken for purchase of fixed assets are capitalized as the cost of the asset and the premium on other contracts is recognized over the life of the contract in the Statement of Profit or Loss.
(x) Employees'' Benefits
(a) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
(b) Post-employment benefits:
Defined contribution plans :
Contribution towards plans like Employee State Insurance Scheme, Government administered Provident Fund and Pension Fund Scheme and Superannuation Scheme for eligible employees are made to the regulatory authorities and are classified as Defined Contribution Plans. The Company''s contribution to defined contribution plans are recognized in the Statement of Profit and Loss in the financial year to which they relate.
Defined benefit plans
The cost of providing benefit i.e. gratuity is determined using the Projected Unit Credit Method with actuarial valuation carried out as at the balance sheet date. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss. The fair value of the planned assets is reduced from the gross obligation under the defined benefit plan, to recognize the obligation on net basis.
Other long-term employee benefits
Entitlements to annual privilege leave are recognized when they accrue to employees. Privilege leave can be availed or encashed subject to a restriction on the maximum number of accumulation of leave. The Company determines the liability for such accumulated leaves using the Projected Accrued Benefit method with actuarial valuations being carried out at each Balance Sheet date.
(xi) Research and Development
(a) Capital expenditure is shown separately under respective heads of fixed assets. These assets are depreciated over their useful life.
(b) Revenue expenses are included under the respective heads of expenses.
(xii) Taxes on Income
Tax expense comprises current and deferred tax. Current tax is measured at the amount expected to be paid in accordance with the Income-tax Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence, 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. Deferred Tax assets are not recognized on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets/liabilities are reviewed at each balance sheet date. The tax effect is calculated on the accumulated timing difference at the year-end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period in which such credit can be carried forward for set-off.
(xiii) Cash & Cash Equivalent:
Cash and cash equivalents includes cash in hand, deposits with banks and short term highly liquid investments, which are readily convertible into cash and have original maturities of three months or less.
(xiv) Leases - Assets taken on operating lease
Lease rentals on assets taken on operating lease are recognized as expense in the Statement of Profit and Loss on an accrual basis over the lease term of the asset.
(xv) Revenue Recognition:
(a) Domestic sales are recognized at the point of dispatch of goods to customers, which is when risks and rewards of ownership are passed to the customers. Sales are inclusive of excise duty but net of trade discount and VAT /sales tax.
(b) Export sales are recognized based on the bill of lading except sales to Nepal which are recognized when the goods cross the Indian Territory, which is when risks and rewards of ownership are passed to the customers.
(c) Dividend income is recognized when the right to receive the same is established.
(d) Interest and other income are recognized on accrual basis.
(e) Export incentives receivable under Duty Drawback Scheme are accounted on accrual basis.
(f) Insurance claims are recognized post filing of the claim with the insurer.
(xvi) Provisions and Contingencies:
A provision is recognized when the enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present values and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
(xvii) Earnings per Share
Basic and diluted earnings per share are computed by dividing the net profit after taxes attributable to equity shareholders for the year, with the weighted number of equity shares outstanding during the year.
Mar 31, 2015
(i) Basis of Accounting:
The financial statements of the Company have been prepared on accrual
basis under the historical cost convention and ongoing concern basis in
accordance with the Generally Accepted Accounting Principles in india
('Indian GAAP') to comply with the Accounting Standards specified under
section 133 of The Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of The
Companies Act, 2013 ('the Act') / The Companies Act, 1956, as
applicable.
The classification of assets and liabilities of the Company into
current or non-current is based on the criterion specified in the
Schedule iii to the Companies Act, 2013, The Company has ascertained
its operating cycle as 12 months for the purpose of current and
non-current classification of assets and liabilities.
(ii) Use of Estimates:
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) in india requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, revenues and expenses and the disclosures of
contingent liabilities, Difference between actual results and the
estimates are recognized in the period in which the results materialize
/ are known.
(iii) Fixed Assets and Depreciation / Amortization
a. Fixed Assets
Tangible fixed assets are carried at the cost of acquisition or
construction, less accumulated depreciation and accumulated impairment,
if any, The cost of fixed assets includes taxes (other than those
subsequently recoverable from tax authorities), duties, freight and
other directly attributable costs related to the acquisition or
construction of the respective assets, Know-how related to plans,
designs and drawings of buildings or plant and machinery is capitalized
under relevant asset heads, intangible assets are recorded at the
consideration paid for acquisition of such assets and are carried at
cost less accumulated amortization and impairment, if any, Capital
work-in-progress comprises of the cost of fixed assets that are not
ready for their intended use at the reporting date, Profit or Loss on
disposal of tangible assets is recognized in the Statement of Profit
and Loss.
b. Depreciation & Amortization
On Tangible Assets:
The Company has provided depreciation on basis of useful lives as
prescribed in Schedule II of the Companies Act, 2013 consequent to
Schedule II becoming applicable w.e.f 01st April 2014,The excess
depreciation on tangible assets whose useful life is already exhausted
as on 01st April 2014 is transferred to General Reserves (net of
deferred taxes.
On Intangible Assets:
intangible assets are amortized on SLM method over the useful life,
based on the economic benefits that would be derived, as per the
estimates made by the management.
i. Computer Software - Written off over a period of three years
c. Impairment
The carrying amounts of the Company's tangible and intangible assets
are reviewed at each balance sheet date to determine whether there is
any indication of impairment, if any such indication exists, the
assets' recoverable amounts are estimated in order to determine the
extent of impairment Ioss, if any. An impairment loss is recognized
whenever the carrying amount of an asset exceeds its recoverable
amount. The impairment loss, if any, is recognized in the Statement of
Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of
the asset is increased to the revised estimate of its recoverable
amount, however subject to the increased carrying amount not exceeding
the carrying amount that would have been determined (net of
amortization or depreciation) had no impairment loss been recognized
for the asset in prior accounting periods
(iv) Borrowing Cost
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs, if any, directly attributable to the acquisition,
construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale
are capitalized. All other borrowing costs are expensed in the period
they occur.
(v) Investments
Non-current investments are valued at cost less provision for
diminution in value, if the diminution is other than temporary.
Current Investments are stated at lower of cost and fair value.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
Statement of Profit and Loss. Profit or loss on sale of investments is
determined on average cost basis.
(vi) Inventory
Inventories are valued at lower of Cost and Net Realizable Value.
The cost is determined as follows:
(a) Raw and Packing Materials are valued at cost or market value,
whichever is lower, computed on FIFO basis. The cost includes the cost
of purchase and other expenses directly attributable to their
acquisition but excludes duties and taxes, which are subsequently
recoverable from the taxing authorities.
(b) The finished goods inventory is valued at cost, or net realizable
value whichever is lower. Cost includes material cost, conversion,
appropriate factory overheads, any tax or duties and other costs
incurred in bringing the inventories to their present location and
condition.
(c) Work-in-Process is valued at material cost and cost of conversion
appropriate to their location in the manufacturing cycle.
(d) Stores, Spares and consumables are valued at cost, computed on FIFO
basis. The cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties and
taxes that are subsequently recoverable from the taxing authorities, if
any.
Slow-moving and damaged, unserviceable stocks are adequately provided
wherever considered necessary.
(vii) Excise Duty :
Excise Duty paid on goods manufactured by the Company is accounted for
at the time of dispatch of goods from the factories.
Excise Duty payable on goods manufactured is accrued for stocks held in
factories at the year-end. Excise Duty paid/ payable on goods
manufactured by the Company and remaining in stock, is included in the
value of Finished Goods. Excise duty related to the difference between
the closing stock and opening stock of Finished Goods is recognized in
the Statement of Profit and Loss.
(viii) Transactions in foreign exchange
(a) Initial recognition:
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction.
(b) Measurement of foreign currency items at the Balance Sheet date:
Foreign currency denominated monetary assets & liabilities of the
Company are restated at the closing exchange rates. Non-monetary items
are recorded at the exchange rate prevailing on the date of the
transaction. Exchange differences arising out of these translations are
recognised in the Statement of Profit and Loss. However exchange
differences relating to fixed assets have been included in the carrying
amount of fixed assets.
The Exchange Rate Difference and the forward premium on the loan taken
for capital assets are being capitalized along with Interest till the
date of commissioning of the said capital assets.
In case of other forward exchange contracts, the difference between the
transaction rate and the rate on the date of contract is recognized as
exchange difference and the premium paid on forward contracts is
recognized over the life of the contract. However forward exchange
contract relating to fixed assets have been included in the carrying
amount of fixed assets.
(ix) Forward Exchange Contracts - Hedging
The company uses forward exchange contracts to hedge it's foreign
exchange exposures relating to the underlying transactions and firm
commitments. The use of these foreign exchange forward and options
contracts reduce the risk or cost to the Company and the Company does
not use those for trading or speculation purposes. The premium on
forward contracts taken for purchase of fixed assets are capitalized as
the cost of the asset and the premium on other contracts is recognized
over the life of the contract in the Statement of Profit or Loss.
(x) Employees' Benefits
(a) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits and they are
recognized in the period in which the employee renders the related
service. The Company recognizes the undiscounted amount of short-term
employee benefits expected to be paid in exchange for services rendered
as a liability (accrued expense) after deducting any amount already
paid.
(b) Post-employment benefits:
Defined contribution plans :
Contribution towards plans like Employee State Insurance Scheme,
Government administered Provident Fund and Pension Fund Scheme and
Superannuation Scheme for eligible employees are made to the regulatory
authorities and are classified as Defined Contribution Plans. The
Company's contribution to defined contribution plans are recognized in
the Statement of Profit and Loss in the financial year to which they
relate.
Defined benefit plans
The cost of providing benefit i.e. gratuity is determined using the
Projected Unit Credit Method with actuarial valuation carried out as at
the balance sheet date. Actuarial gains and losses are recognized
immediately in the Statement of Profit and Loss. The fair value of the
planned assets is reduced from the gross obligation under the defined
benefit plan, to recognize the obligation on net basis.
Other long-term employee benefits
Entitlements to annual privilege leave are recognized when they accrue
to employees. Privilege leave can be availed or encashed subject to a
restriction on the maximum number of accumulation of leave. The Company
determines the liability for such accumulated leaves using the
Projected Accrued Benefit method with actuarial valuations being
carried out at each Balance Sheet date.
(xi) Research and Development
(a) Capital expenditure is shown separately under respective heads of
fixed assets. These assets are depreciated over their useful life.
(b) Revenue expenses are included under the respective heads of
expenses.
(xii) Taxes on Income
Tax expense comprises current and deferred tax. Current tax is measured
at the amount expected to be paid in accordance with the Income-tax
Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence,
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. Deferred Tax assets are not
recognized on unabsorbed depreciation and carry forward of losses
unless there is virtual certainty that sufficient future taxable income
will be available against which such deferred tax assets can be
realized. The carrying amount of deferred tax assets/liabilities are
reviewed at each balance sheet date. The tax effect is calculated on
the accumulated timing difference at the year-end, based on the tax
rates and laws enacted or substantially enacted on the balance sheet
date.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing evidence that the company will
pay normal income tax during the specified period in which such credit
can be carried forward for set-off.
(xiii) Cash & Cash Equivalent:
Cash and cash equivalents includes cash in hand, deposits with banks
and short term highly liquid investments, which are readily convertible
into cash and have original maturities of three months or less.
(xiv) Leases - Assets taken on operating lease
Lease rentals on assets taken on operating lease are recognized as
expense in the Statement of Profit and Loss on an accrual basis over
the lease term of the asset.
(xv) Revenue Recognition:
(a) Domestic sales are recognized at the point of dispatch of goods to
customers, which is when risks and rewards of ownership are passed to
the customers. Sales are inclusive of excise duty but net of trade
discount and VAT /sales tax.
(b) Export sales are recognized based on the bill of lading except
sales to Nepal which are recognized when the goods cross the Indian
Territory, which is when risks and rewards of ownership are passed to
the customers.
(c) Dividend income is recognized when the right to receive the same is
established.
(d) Interest and other income are recognized on accrual basis.
(e) Export incentives receivable under Duty Drawback Scheme are
accounted on accrual basis.
(f) Insurance claims are recognized post filing of the claim with the
insurer.
(xvi) Provisions and Contingencies:
A provision is recognized when the enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted
to their present values and are determined based on management estimate
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
management estimates.
Contingent Liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the Company.
(xvii) Earnings per Share
Basic and diluted earnings per share are computed by dividing the net
profit after taxes attributable to equity shareholders for the year,
with the weighted number of equity shares outstanding during the year.
(xviii) Measurement of EBITDA
The Company has elected to present earnings before interest (finance
cost), tax, depreciation and amortization (EBITDA) as a separate line
item on the face of the Statement of Profit and Loss for the year. The
Company measures EBITDA on the basis of profit / (loss) from continuing
operations.
Mar 31, 2014
(i) Basis of Accounting:
The financial statements have been prepared under the historical cost
conventions and on the ''going concern'' basis, with revenue recognized
and expenses accounted on their accrual in accordance with Generally
Accepted Accounting Principles (GAAP) in India and are in compliance
with the applicable Accounting Standards notified under the Companies
Act, 1956 ("the Act") read with General Circular 15 / 2013 dated
September 13, 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013 other relevant provisions of
Companies Act 1956.
The classification of assets and liabilities of the Company into current
or non-current is based on the criterion specified in the Revised
Schedule VI to the Companies Act, 1956. The Company has ascertained its
operating cycle as 12 months for the purpose of current and non-current
classification of assets and liabilities.
(ii) Use of Estimates:
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) in India requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, revenues and expenses and the disclosures of
contingent liabilities. Difference between actual results and the
estimates are recognized in the period in which the results materialize
/ are known.
(iii) Fixed Assets and Depreciation / Amortization
a. Fixed Assets
Tangible fixed assets are carried at the cost of acquisition or
construction, less accumulated depreciation and accumulated impairment.
The cost of fixed assets includes taxes (other than those subsequently
recoverable from tax authorities), duties, freight and other directly
attributable costs related to the acquisition or construction of the
respective assets. Know-how related to plans, designs and drawings of
buildings or plant and machinery is capitalized under relevant asset
heads.
Profit or Loss on disposal of tangible assets is recognized in the
Statement of Profit and Loss.
b. Depreciation & Amortisation On Tangible Assets:
The Company has provided depreciation :
i. On all additions up to 31.03.1994 under Written Down Value Method
and at rates specified under Schedule XIV of the Companies Act, 1956.
ii. On all additions after 31.03.1994 under Straight Line Method and
at rates specified under Schedule XIV of the Companies Act, 1956.
On Intangible Assets:
Intangible assets are amortized on SLM method over the useful life,
based on the economic benefits that would be derived, as per the
estimates made by the management.
i. Computer Software - Written off over a period of three years
ii. Technical Know - how
In respect of all additions during the year depreciation is provided
pro-rata on monthly basis.
c. Impairment
The carrying amounts of the Company''s tangible and intangible assets
are reviewed at each balance sheet date to determine whether there is
any indication of impairment. If any such indication exists, the
assets'' recoverable amounts are estimated in order to determine the
extent of impairment loss, if any. An impairment loss is recognized
whenever the carrying amount of an asset exceeds its recoverable
amount. The impairment loss, if any, is recognized in the Statement of
Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of
the asset is increased to the revised estimate of its recoverable
amount, however subject to the increased carrying amount not exceeding
the carrying amount that would have been determined (net of
amortization or depreciation) had no impairment loss been recognized
for the asset in prior accounting periods
(iv) Borrowing Cost
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs, if any, directly attributable to the acquisition,
construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale
are capitalized. All other borrowing costs are expensed in the period
they occur.
(v) Investments
Non-current investments are valued at cost less provision for
diminution in value, if the diminution is other than temporary.
Current Investments are stated at lower of cost and fair value.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
Statement of Profit and Loss. Profit or loss on sale of investments is
determined on average cost basis.
(vi) Inventory
Inventories are valued at lower of Cost and Net Realizable Value.
Raw and Packing Materials are valued at cost or market value, whichever
is lower, computed on FIFO basis. The cost includes the cost of
purchase and other expenses directly attributable to their acquisition
but excludes duties and taxes, which are subsequently recoverable from
the taxing authorities.
The finished goods inventory is valued at cost, or net realizable value
whichever is lower. Cost includes material cost, conversion,
appropriate factory overheads, any tax or duties and other costs
incurred in bringing the inventories to their present location and
condition.
Work-in-Process is valued at material cost and cost of conversion
appropriate to their location in the manufacturing cycle.
Stores, Spares and consumables are valued at cost, computed on FIFO
basis. The cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties and
taxes that are subsequently recoverable from the taxing authorities, if
any.
Damaged, unserviceable and inert stocks are adequately provided
wherever considered necessary.
(vii) Excise Duty :
Excise Duty paid on goods manufactured by the Company is accounted for
at the time of dispatch of goods from the factories.
Excise Duty payable on goods manufactured is accrued for stocks held in
factories at the year-end. Excise Duty paid/ payable on goods
manufactured by the Company and remaining in stock, is included in the
value of Finished Goods. Excise duty related to the difference between
the closing stock and opening stock of Finished Goods is recognized in
the Statement of Profit and Loss.
(viii) Transactions in foreign exchange
(a) Initial recognition:
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction.
(b) Measurement of foreign currency items at the Balance Sheet date:
Foreign currency monetary items of the Company are restated at the
closing exchange rates. Non-monetary items are recorded at the exchange
rate prevailing on the date of the transaction. Exchange differences
arising out of these translations are charged to the Statement of Profit
and Loss. However exchange differences relating to fixed assets have
been included in the carrying amount of fixed assets.
The Exchange Rate Difference and the forward premium on the loan taken
for capital assets are being capitalized along with Interest till the
date of commissioning of the said capital assets.
In case of other forward exchange contracts, the difference between the
transaction rate and the rate on the date of contract is recognized as
exchange difference and the premium paid on forward contracts is
recognized over the life of the contract. However forward exchange
contract relating to fixed assets have been included in the carrying
amount of fixed assets.
(ix) Forward Exchange Contracts - Hedging
The company uses forward exchange contracts to hedge it''s foreign
exchange exposures relating to the underlying transactions and firm
commitments. The premium on forward contracts taken for purchase of
fixed assets are capitalized as the cost of the asset and the premium on
other contracts is recognized over the life of the contract in the
Statement of Profit or Loss.
(x) Employees'' Benefits
(a) Short Term Employee Benefits:
All employee Benefits payable wholly within twelve months of rendering
the service are classifed as short term employee Benefits and they are
recognized in the period in which the employee renders the related
service. The Company recognizes the undiscounted amount of short-term
employee Benefits expected to be paid in exchange for services rendered
as a liability (accrued expense) after deducting any amount already
paid.
(b) Post-employment Benefits:
Defined contribution plans :
Defined contribution plans are Employee State Insurance Scheme for
eligible employees and Government administered Pension Fund Scheme for
all employees, Provident Fund Scheme administered by Government, and
Superannuation Scheme for eligible employees. The Company''s
contribution to Defined contribution plans are recognised in the
Statement of Profit and Loss in the financial year to which they relate.
Defined benefit plans
The cost of providing benefit i.e. gratuity is determined using the
Projected Unit Credit Method with actuarial valuation carried out as at
the balance sheet date. Actuarial gains and losses are recognized
immediately in the Statement of Profit and Loss. The fair value of the
planned assets is reduced from the gross obligation under the Defined
benefit plan, to recognize the obligation on net basis.
Other long-term employee Benefits
Entitlements to annual privilege leave are recognized when they accrue
to employees. Privilege leave can be availed or encased subject to a
restriction on the maximum number of accumulation of leave. The Company
determines the liability for such accumulated leaves using the
Projected Accrued Benefit method with actuarial valuations being carried
out at each Balance Sheet date.
(xi) Research and Development
(a) Capital expenditure is shown separately under respective heads of
fixed assets.
(b) Revenue expenses are included under the respective heads of
expenses.
(xii) Taxes on Income
Tax expense comprises current and deferred tax.
Current tax is measured at the amount expected to be paid in accordance
with the Income-tax Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence,
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. Deferred Tax assets are not
recognized on unabsorbed depreciation and carry forward of losses
unless there is virtual certainty that sufficient future taxable income
will be available against which such deferred tax assets can be
realized. The carrying amount of deferred tax assets/liabilities are
reviewed at each balance sheet date. The tax effect is calculated on
the accumulated timing difference at the year-end, based on the tax
rates and laws enacted or substantially enacted on the balance sheet
date.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing evidence that the company will
pay normal income tax during the specified period in which such credit
can be carried forward for set-off.
(xiii) Cash & Cash Equivalent:
Cash and cash equivalents includes cash in hand, deposits with banks
and short term highly liquid investments, which are readily convertible
into cash and have original maturities of three months or less.
(xiv) Leases - Assets taken on operating lease
Lease rentals on assets taken on operating lease are recognized as
expense in the Statement of Profit and Loss on an accrual basis over the
lease term of the asset.
xv) Revenue Recognition:
(a) Domestic sales are recognized at the point of dispatch of goods to
customers, which is when risks and rewards of ownership are passed to
the customers. Sales are inclusive of excise duty but net of trade
discount and VAT /sales tax.
(b) Export sales are recognized based on the bill of lading except
sales to Nepal which are recognized when the goods cross the Indian
Territory, which is when risks and rewards of ownership are passed to
the customers.
(c) Dividend income is recognized when the right to receive the same is
established.
(d) Interest and other income are recognized on accrual basis.
(e) Export incentives receivable under Duty Drawback Scheme are
accounted on accrual basis.
(f) Insurance claims are recognized post fling of the claim with the
insurer.
(xvi) Provisions and Contingencies:
A provision is recognized when the enterprise has a present obligation
as a result of past event and it is probable that an out fowl of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
their present values and are determined based on management estimate
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to refect the current
management estimates.
Contingent Liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non occurrence of one or more uncertain future events not
wholly within the control of the Company.
(xvii) Earnings per Share
Basic and diluted earnings per share are computed by dividing the net
profit after taxes attributable to equity shareholders for the year,
with the weighted number of equity shares outstanding during the year.
(xviii) Measurement of EBITDA
The Company has elected to present earnings before interest (finance
cost), tax, depreciation and amortization (EBITDA) as a separate line
item on the face of the Statement of Profit and Loss for the year. The
Company measures EBITDA on the basis of Profit / (loss) from continuing
operations.
Mar 31, 2013
(A) Basis of preparation of financial statements
(i) Basis of Accounting:
The financial statements have been prepared in accordance with
Generally Accepted Accounting Principles (GAAP) in India and presented
under the historical cost convention on accrual basis of accounting to
comply with the accounting standards prescribed in the Companies
(Accounting Standards) Rules, 2006 and with the relevant provisions of
the Companies Act, 1956.
(ii) Use of Estimates:
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) in India requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosures of contingent liabilities on
the date of financial statements and reported amounts of income and
expenses during the period.
(B) Tangible and Intangible Assets
(i) Tangible Fixed Assets
Tangible fixed assets are carried at the cost of acquisition or
construction, less accumulated depreciation and accumulated impairment.
The cost of fixed assets includes taxes (other than those subsequently
recoverable from tax authorities), duties, freight and other directly
attributable costs related to the acquisition or construction of the
respective assets. Expenses directly attributable to new manufacturing
facility during its construction period are capitalized. Know- how
related to plans, designs and drawings of buildings or plant and
machinery is capitalized under relevant asset heads. Profit or Loss on
disposal of tangible assets is recognised in the Statement of Profit
and Loss.
(ii) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment loss, if any. Profit or Loss on disposal of intangible
assets is recognised in the Statement of Profit and Loss.
(iii) Depreciation & Amortisation
1) The Company has provided depreciation
i. On all additions up to 31.03.1994 under Written Down Value Method
and at rates specified under Schedule XIV of the Companies Act, 1956.
ii. On all additions after 31.03.1994 under Straight Line Method and
at rates specified under Schedule XIV of the Companies Act, 1956.
2) In respect of all additions during the year depreciation is provided
pro-rata on monthly basis.
3) Intangible Assets -Computer Software expenses are written off over a
period of three years.
(iv) Impairment
An assessment is also done at each Balance Sheet date whether there is
any indication that an impairment loss recognised for an asset in prior
accounting periods may no longer exist or may have decreased. If any
such indication exists, the asset''s recoverable amount is estimated.
The carrying amount of the fixed asset is increased to the revised
estimate of its recoverable amount but so that the increased carrying
amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset in
prior years. A reversal of impairment loss is recognised in the
statement of Profit and Loss for the year. After recognition of
impairment loss or reversal of impairment loss as applicable, the
depreciation charge for the fixed asset is adjusted in future periods
to allocate the asset''s revised carrying amount, less its residual
value (if any), on straight line basis over its remaining useful life.
(C) Investments
Non-current investments are carried at cost. Provision for diminution
in the value of non-current investments is made only if such a decline
is other than temporary in the opinion of the management.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
Statement of Profit and Loss. Profit or loss on sale of investments is
determined on a First In First out Method.
(D) Inventory
(i) Raw and packing materials are valued at cost or market value,
whichever is lower, computed on FIFO basis. The cost includes the cost
of purchase and other expenses directly attributable to their
acquisition but excludes duties and taxes, which are subsequently
recoverable from the taxing authorities.
(ii) The finished goods inventory is valued on the principle of cost,
or market value whichever is lower. It includes material cost,
conversion and other costs incurred in bringing the inventories at
their present location and condition.
(iii) Work-in-process is valued at material cost and cost of conversion
appropriate to their location in the manufacturing cycle.
(iv) Stores, spares and consumables are valued at cost, computed on
FIFO basis. The cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties and
taxes that are subsequently recoverable from the taxing authorities, if
any
(v) Damaged, unserviceable and inert stocks are suitably depreciated.
(E) Transactions in foreign exchange
(i) Initial recognition:
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction.
(ii) Measurement of foreign currency items at the Balance Sheet date:
Foreign currency monetary items of the Company are restated at the
closing exchange rates. Non-monetary items are recorded at the exchange
rate prevailing on the date of the transaction. Exchange differences
arising out of these translations are charged to the Statement of
Profit and Loss. The Exchange Rate Difference on the loan taken for
capital assets are being capitalised along with Interest till the date
of commissioning of the said capital assets.
(F) Trade receivables
Trade receivables are stated after writing off debts considered as bad.
Adequate provision is made for debts considered doubtful.
(G) Employees'' Benefits
(i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits and they are
recognised in the period in which the employee renders the related
service. The Company recognises the undiscounted amount of short-term
employee benefits expected to be paid in exchange for services rendered
as a liability (accrued expense) after deducting any amount already
paid.
(ii) Post-employment benefits:
(a) Defined contribution plans
Defined contribution plans are Employee State Insurance Scheme for
eligible employees and Government administered Pension Fund Scheme for
all employees and Superannuation Scheme for eligible employees. The
Company''s contribution to defined contribution plans are recognised in
the Statement of Profit and Loss in the financial year to which they
relate.
(b) Defined benefit plans
(i) Provident Fund scheme
The Company makes specified monthly contributions towards Employee
Provident Fund Scheme administered by Government. The minimum interest
payable is notified by the Government every year.
(ii) Gratuity scheme
The Company operates a defined benefit gratuity plan for employees. The
Company contributes to a separate entity (a fund), towards meeting the
gratuity obligation.
(iii) Other long-term employee benefits
Entitlements to annual privilege leave are recognised when they accrue
to employees. Privilege leave can be availed or encashed subject to a
restriction on the maximum number of accumulation of leave. The Company
determines the liability for such accumulated leaves using the
Projected Accrued Benefit method with actuarial valuations being
carried out at each Balance Sheet date.
The Company presents this liability as current and non-current in the
Balance Sheet as per actuarial valuations and certificate issued by an
independent actuary.
(H) Research and Development
(i) Capital expenditure is shown separately under respective heads of
fixed assets.
(ii) Revenue expenses are included under the respective heads of
expenses.
(I) Provision for Taxation
Tax expense comprises of current tax i.e amount of tax for the period
determined in accordance with the Income Tax act ,1961 and deferred tax
charge or credit (reflecting the tax effects of timing differences
between accounting income and taxable income for the period).
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognised using the tax rates that have been
enacted or substantively enacted on or before the Balance Sheet date.
Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realized in future;
however, where there is unabsorbed depreciation or carry forward loss
under taxation laws, deferred tax assets are recognised only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed as at each Balance Sheet date to reassess
realisation.
(J) Borrowing Cost
Borrowing cost includes interest, amortisation of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs, if any, directly attributable to the acquisition,
construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale
are capitalised. All other borrowing costs are expensed in the period
they occur.
(K) Other Accounting Policies
These are consistent with generally accepted accounting practices.
(L) Leases
Assets taken on operating lease
Lease rentals on assets taken on operating lease are recognised as
expense in the Statement of Profit and Loss on an accrual basis over
the lease term.
(M) Cash & Cash Equivalent
Closing balances include balances aggregating with banks in Fixed
Deposits and Margin accounts, which are pledged against the bank
guarantees and deposits with concerned authorities, which are not
available for use by the company.
(N) Revenue Recognition
a. Domestic sales are recognized at the point of dispatch of goods to
customers, which is when risks and rewards of ownership are passed to
the customers and stated net of trade discount and exclusive of sales
tax and excise duty.
b. Export sales are recognized based on the bill of lading except
sales to Nepal which are recognized when the goods cross the Indian
Territory, which is when risks and rewards of ownership are passed to
the customers.
c. Interest and other income are recognized on accrual basis.
(O) Measurement of EBITDA
The Company has elected to present earnings before interest (finance
cost), tax, depreciation and amortization (EBITDA) as a separate line
item on the face of the Statement of Profit and Loss for the year. The
Company measures EBITDA on the basis of profit/(loss) from continuing
operations.
Mar 31, 2011
A) Basis of preparation of financial statements
The financial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting to comply
with the Accounting Standards prescribed in the Companies (Accounting
Standards) Rule 2006 and with relevant provisions of the Companies Act,
1956.
b) Method of Accounting
i. The method of accounting followed by the Company is
mercantile/accrual basis.
ii. The rights and liabilities pertaining to prior period operations
but arising in the current year, if material, are shown under Ãprior
period adjustments' in the profit and Loss Account.
c) Fixed Assets
i. The Ãgross block' of fixed assets is shown at the cost of
acquisition, which includes taxes, duties (net of MODVAT/CENVAT and
set-offs availed) and other identifable direct expenses.
ii. Leasehold lands are amortized over the period of lease.
d) Depreciation
1) The Company has provided depreciation
i. On all additions upto 31.03.1994 under Written Down Value Method
and at rates specifed under Schedule XIV of the Companies Act, 1956.
ii. On all additions after 31.03.1994 under Straight Line Method and
at rates specified under Schedule XIV of the Companies Act, 1956.
2) In respect of all additions during the year depreciation is provided
pro-rata on monthly basis.
3) Intangible Assets à Computer Software expenses are written off over
period of three years.
e) Investments
i. Short-term investments, if any, are carried at the lower of cost and
quoted/fair value, computed category wise. Long-term investments are
carried at cost. Provision for diminution in the value of the long-term
investments is made only, if such a decline is not temporary, in the
opinion of the management.
ii. Cost is arrived at by specific identification method.
f) Inventory
i. Raw and packing materials are valued at cost or market value,
whichever is lower, computed on FIFO basis. The cost includes the cost
of purchase and other expenses directly attributable to their
acquisition but excludes duties and taxes, which are subsequently
recoverable from the taxing authorities.
ii. The fnished goods inventory is valued on the principle of cost, or
market value whichever is lower. It includes material cost, conversion
and other costs incurred in bringing the inventories at their present
location and condition.
iii. Work-in-process is valued at material cost and cost of conversion
appropriate to their location in the manufacturing cycle.
iv. Stores, spares and consumables are valued at cost, computed on FIFO
basis. The cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties and
taxes that are subsequently recoverable from the taxing authorities, if
any
v. Damaged, unserviceable and inert stocks are suitably depreciated.
g) Transactions in foreign exchange
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction or at the exchange rates
under related forward exchange contracts. The realized exchange
gains/losses are recognized in the profit & Loss account. All foreign
currency current assets/liabilities are translated in rupees at the
rates prevailing on the date of balance sheet.
h) Sundry Debtors
Sundry debtors are stated after writing off debts considered as bad.
Adequate provision is made for doubtful debts, if any. Discounts due,
yet to be quantifed at the customer level are provided for under other
provisions.
i) Employees' benefits
The Company has taken Group Gratuity Policy from Life Insurance Company
for future payments of gratuities. The gratuity liability is determined
based on an actuarial valuation performed by Life Insurance Company.
Liability towards Superannuation is funded @ 15% of basic salary.
Provision for leave encashment, which is defned benefit, is made based
on an actuarial valuation carried out by an independent actuary at 31st
March 2011.
j) Research and Development
à Capital expenditure is shown separately under respective heads of
fixed assets.
à Revenue expenses are included under the respective heads of expenses.
k) Provision for Taxation
Provision for taxation is computed as per Ãtotal income' returnable
under the Income Tax Act, 1961 after taking into account available
deductions and exemptions. Deferred tax is recognized for all timing
differences between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods.
l) Borrowing Costs.
Borrowing cost directly attributable to the acquisition and
construction of qualifying assets are capitalized. Other borrowing
costs are recognized as expenses in the period, which they are
incurred.
m) Other Accounting Policies
These are consistent with generally accepted accounting practices.
n) Impairment of Fixed Assets
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
Company's fixed assets. If any indication exists, an assets recoverable
amount is estimated. An impairment loss is recognized whenever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the net selling price and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value based on an appropriate discount
factor.
Reversal of impairment losses recognised in prior years is recorded
when there is an indication that the impairment losses recognised for
the asset no longer exist or have decreased. However, the increase in
carrying amount of an asset due to reversal of an impairment loss is
recognised to the extent it does not exceed the carrying amount that
would have been determined (net of depreciation) had no impairment loss
been recognised for the asset in prior years.
o) Leases
Assets taken on lease, under which lessor effectively retains all the
risks and rewards of ownership, are classifed as operating lease.
Operating lease payments are recognized as expenses in the profit and
loss account on a straight à line basis over the lease term.
Mar 31, 2010
A) Basis of preparation of fnancial statements
The fnancial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting to comply
with the Accounting Standards prescribed in the Companies (Accounting
Standards) Rule 2006 and with relevant provisions of the Companies Act,
1956.
b) Method of Accounting
i. The method of accounting followed by the Company is
mercantile/accrual basis.
ii. The rights and liabilities pertaining to prior period operations
but arising in the current year, if material, are shown under Ãprior
period adjustmentsà in the Proft and Loss Account.
c) Fixed Assets
i. The Ãgross blockà of fxed assets is shown at the cost of
acquisition, which includes taxes, duties (net of MODVAT/CENVAT and
set-offs availed) and other identifable direct expenses.
ii. Leasehold lands are amortized over the period of lease.
d) Depreciation
1) The Company has provided depreciation
i. On all additions upto 31.03.1994 under Written Down Value Method
and at rates specifed under Schedule XIV of the Companies Act, 1956.
ii. On all additions after 31.03.1994 under Straight Line Method and
at rates specified under Schedule XIV of the Companies Act, 1956.
2) In respect of all additions during the year depreciation is provided
pro-rata on monthly basis.
3) Intangible Assets -Computer Software expenses are written off over
period of three years.
e) Investments
i. Short-term investments, if any, are carried at the lower of cost and
quoted/fair value, computed category wise. Long-term investments are
carried at cost. Provision for diminution in the value of the long-term
investments is made only, if such a decline is not temporary, in the
opinion of the management. A
ii. Cost is arrived at by specific identification method.
f) Inventory
i. Raw and packing materials are valued at cost or market value,
whichever is lower, computed on FIFO basis. The cost includes the cost
of purchase and other expenses directly attributable to their
acquisition but excludes duties and taxes, which are subsequently
recoverable from the taxing authorities.
ii. The fnished goods inventory is valued on the principle of cost, or
market value whichever is lower. It includes material cost, conversion
and other costs incurred in bringing the inventories at their present
location and condition.
iii. Work-in-process is valued at material cost and cost of conversion
appropriate to their location in the manufacturing cycle.
iv. Stores, spares and consumables are valued at cost, computed on FIFO
basis. The cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties and
taxes that are subsequently recoverable from the taxing authorities, if
any
v. Damaged, unserviceable and inert stocks are suitably depreciated.
g) Transactions in foreign exchange
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction or at the exchange rates
under related forward exchange contracts. The realized exchange
gains/losses are recognized in the Proft & Loss account. All foreign
currency current assets/liabilities are translated in rupees at the
rates prevailing on the date of balance sheet.
h) Sundry Debtors
Sundry debtors are stated after writing off debts considered as bad.
Adequate provision is made for doubtful debts, if any. Discounts due,
yet to be quantifed at the customer level are provided for under other
provisions.
i) Employeesà Benefts
The Company has taken Group Gratuity Policy from Life Insurance
Corporation of India ( LIC ) for future payments of gratuities. The
gratuity liability is determined based on an actuarial valuation
performed by LIC.
Liability towards Superannuation is funded @ 15% of basic salary.
Provision for leave encashment, which is defned beneft, is made based
on an actuarial valuation carried out by an independent actuary at 31
st March 2010.
j) Research and Development
- Capital expenditure is shown separately under respective heads of
fxed assets.
- Revenue expenses are included under the respective heads of expenses.
k) Provision for Taxation
Provision for taxation is computed as per Ãtotal incomeà returnable
under the Income Tax Act, 1961 after taking into account available
deductions and exemptions. Deferred tax is recognized for all timing
differences between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods.
l) Borrowing Costs.
Borrowing cost directly attributable to the acquisition and
construction of qualifying assets are capitalized. Other borrowing
costs are recognized as expenses in the period, which they are
incurred.
m) Other Accounting Policies
These are consistent with generally accepted accounting practices.
n) Impairment of Fixed Assets
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
CompanyÃs fxed assets. If any indication exists, an assets recoverable
amount is estimated. An impairment loss is recognized whenever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the net selling price and value in
use. In assessing value in use, the estimated future cash fows are
discounted to their present value based on an appropriate discount
factor.
Reversal of impairment losses recognised in prior years is recorded
when there is an indication that the impairment losses recognised for
the asset no longer exist or have decreased. However, the increase in
carrying amount of an asset due to reversal of an impairment loss is
recognised to the extent it does not exceed the carrying amount that
would have been determined (net of depreciation) had no impairment loss
been recognised for the asset in prior years.
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