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Accounting Policies of AYM Syntex Ltd. Company
Mar 31, 2025
Note 1A: Material Accounting Policies
This Note provides a list of the Material accounting policies
adopted in the preparation of these standalone financial
statements. These policies have been consistently applied to
all the years presented, unless otherwise stated.
1.1 Basis of Preparation of Standalone Financial
Statements
(i) Compliance with Ind AS
The standalone financial statements have been
prepared in accordance with the accounting
principles generally accepted in India and
comply in all material aspects with Indian
Accounting Standards (IND AS) notified under
Section 133 of the Companies Act, 2013 (the
Act) read with rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015,
presentation requirement of Division II of
Schedule III of the Companies Act, 2013 and
other relevant provisions of the Act as amended
from time to time.
(ii) Historical cost convention
The standalone financial statements have been
prepared on an accrual and going concern basis.
The standalone financial statements have been
prepared on a historical cost basis, except as
stated in subsequent policies for the following
items:
⢠Certain financial assets and liabilities - Fair
value
⢠Assets held for sale - Lower of cost or fair
value less cost of sale
⢠Share based payments-Fairvalue
(iii) New and amended standards adopted by the
Company
The Ministry of Corporate Affairs vide
notification dated 9 September 2024 and 28
September 2024 notified the Companies (Indian
Accounting Standards) Second Amendment
Rules, 2024 and Companies (Indian Accounting
Standards) Third Amendment Rules, 2024,
respectively, which amended/ notified certain
accounting standards (see below), and are
effective for annual reporting periods beginning
on or after 1 April 2024: Insurance contracts -
Ind AS 117; and Lease Liability in Sale and
Leaseback â Amendments to Ind AS 116 These
amendments did not have any material impact
on the amounts recognized in prior periods and
are not expected to significantly affect the
current orfuture periods.
1.2 Foreign currency translation
a) Functional and presentation currency
Items included in the standalone financial
statements of the Company are measured using
the currency of the primary economic
environment in which the Company operates
(''the functional currency''). The standalone
financial statements are presented in Indian
Rupees (INR), which is Company''s functional
and presentation currency.
b) Transactions and balances
Foreign currency transactions are translated
and recorded into the functional currency using
the exchange rates prevailing on the date of the
transaction. Foreign exchange gains and losses
resulting from the settlement of such
transactions and from the translation of
monetary assets and liabilities denominated in
foreign currencies at year end exchange rates
are generally recognised in profit or loss.
Foreign exchange differences regarded as an
adjustment to borrowing costs are presented in
the standalone statement of profit and loss,
within finance costs. All other foreign exchange
gains and losses are presented in the standalone
statement of profit and loss on a net basis within
other income or other expenses, as applicable.
Non-monetary items that are measured in
terms of historical cost in a foreign currency are
translated using the exchange rates at the dates
of the initial transaction.
Non-monetary items that are measured at fair
value in a foreign currency are translated using
the exchange rates at the date when the fair
value was determined. Translation differences
on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss.
The Company has applied the exemption from
the transition date i. e. April 1,2016 in respect of
accounting policy followed for long term foreign
currency monetary items. Accordingly, foreign
exchange differences, in respect of the long
term foreign currency items till the year ended
March 31, 2017, on account of depreciable
assets are adjusted in the cost of depreciable
assets and depreciated over the balance life of
the assets.
1.3 Revenue recognition
The Company derives revenues primarily from sale of
manufactured goods and related services. The
Company has assessed revenue contracts and
revenue is recognised upon satisfying specific
performance obligations in accordance with
provisions of contract with the customer.
It recognizes revenue when control overthe promised
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 of
those goods or services.
This is generally determined when documents of
title/goods are delivered/shipped to the customer in
accordance with the agreed terms, following which
the customer has full discretion over responsibility,
manner of distribution and price to sell the goods and
bears the risks of obsolescence and loss in relation to
the goods and there is no unfulfilled obligation that
would affect customer''s acceptance of the product.
All the foregoing occurs at a point in time upon
shipment or delivery of the documents of
title/product orgoods.
The Company considers terms of the contract in
determining the revenue. It is measured at the price
that reflects the consideration the Company expects
to be entitled to in exchange for satisfaction of the
performance obligation. The Company considers
freight, insurance and handling activities as costs to
fulfil the promise to transfer products and related
services and the customer payments for such
activities are recorded as a component of revenue.
In certain customer contracts where freight is
arranged by the Company and recovered from the
customers, the same is treated as a distinct separate
performance obligation and revenue is recognised
when such freight services are rendered. The related
shipping and handling costs incurred are included in
freight expenses when the Company is acting as
principal in the shipping and handling arrangement.
For volume discounts and pricing incentives /
concessions offered to the customers, the Company
makes estimates and provide for, based on customer
performance and sales volume, which is recorded as
deductions from revenue.
Revenue from sale of by-products are included in
revenue. Revenue from services is recognised when
the services are completed. Revenue excludes any
taxes and duties collected on behalf of the
government.
When there is uncertainty as to measurement or
ultimate collectability, revenue recognition is
postponed until such uncertainty is resolved.
The Company does not have any contracts where in
the period between the transfer of the promised
goods or services to the customer and payment by the
customer exceeds one year. As a consequence, the
Company does not adjust any of the transaction prices
for the time value of money.
A receivable is recognised when the goods are
delivered and to the extent it has an unconditional
right to consideration (i.e. only the passage of time is
required before the payment of consideration is due).
Consideration received before a related performance
obligation is satisfied or before the Company transfer
goods or services to the customer are recognised as
contract liabilities. Contract liabilities are recognised
as revenue when the Company completes its
performance obligation under the contract.
Export Incentives
Export incentives and subsidies are recognised when
there is reasonable assurance that the Company will
comply with the conditions and the incentive will be
received.
Export benefits arising from duty drawback scheme,
remission of duties and taxes on export products and
merchandise export incentive scheme are recognised
on shipment for export at the rate at which they
accrue and is included in other operating income.
1.4 IncomeTax
The income tax expense or credit for the year is the tax
payable on the current year''s taxable income based
on the applicable income tax rate adjusted by changes
in deferred income tax assets and liabilities
attributable to temporary differences and
unabsorbed tax losses.
a) Current income tax
Current income tax charge is based on taxable
profit for the year. The tax rates and tax laws
used to compute the amount are those that are
enacted or substantively enacted, at the
reporting date where the Company operates
and generates taxable income. Management
periodically evaluates positions taken in tax
returns with respect to situations in which
applicable tax regulation is subject to
interpretation and considers whether it is
probable that a taxation authority will accept an
uncertain tax treatment. It establishes
provisions where appropriate on the basis of
amounts expected to be paid to the tax
authorities.
Current tax assets and liabilities are offset when
there is a legally enforceable right to set off
current tax assets against current tax liabilities
and Company intends either to settle on a net
basis, or to realize the asset and settle the
liability simultaneously.
b) Deferred income tax
Deferred income tax is provided in full using the
liability method on temporary differences
between the tax bases of assets and liabilities
and their carrying amounts for financial
reporting purposes at the reporting date.
Deferred income tax assets are recognised to
the extent that it is probable that future taxable
income will be available against which the
deductible temporary differences, unused tax
losses, depreciation carry-forwards and unused
tax credits could be utilised.
Deferred income tax is not accounted for if it
arises from initial recognition of an asset or
liability in a transaction other than a business
combination that at the time of the transaction
affects neither accounting profit nor taxable
profit (tax loss).
Deferred tax assets and liabilities are
determined using tax rates and laws that have
been enacted or substantially enacted by the
end of the reporting period and are expected to
apply when the related deferred income tax
asset is realised or the deferred income tax
liability is settled.
The carrying amount of deferred income tax
assets is reviewed at each reporting date and
adjusted to reflect changes in probability that
sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
Deferred tax assets are recognised for all
deductible temporary differences and unused
tax losses only if it is probable that future
taxable amounts will be available to utilize those
temporary differences and losses.
Deferred tax assets and liabilities are offset
where there is a legally enforceable right to
offset current tax assets and liabilities and
where the deferred tax balances relate to the
same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a
legally enforceable right to offset and intends
either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
Current and Deferred Tax is recognised in profit
or loss, except to the extent that it relates to
items recognised in other comprehensive
income or directly in equity. In this case the tax is
also recognised in other comprehensive income
or directly in equity respectively.
Minimum Alternate Tax (''MAT'') credit
entitlement is recognised as a deferred tax asset
by crediting the standalone Statement of profit
and loss only when and to the extent there is
convincing evidence that MAT credit will
reverse in the foreseeable future and the
Company will be able to utilize the said credit
against normal tax payable during the specified
period.
1.5 Leases
As a lessee
Leases are recognised as a right-of-use (ROU) asset
and a corresponding liability at the date at which the
leased asset is available for use by the Company for all
leases except short-term leases. Contracts may
contain both lease and non-lease components. The
Company allocates the consideration in the contract
to the lease and non-lease components based on
their relative stand-alone prices. However, for leases
of real estate for which the Company is a lessee, it has
elected not to separate lease and non-lease
components and instead accounts for these as a single
lease component.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities
are recognised based on the net present value of the
following lease payments:
⢠fixed payments (including in-substance fixed
payments), less any lease incentives receivable
⢠variable lease payment that are based on an
index or a rate, initially measured using the
index or rate as at the commencement date
⢠amounts expected to be payable by the
Company under residual value guarantees
⢠the exercise price of a purchase option if the
Company is reasonably certain to exercise that
option, and
⢠payments of penalties for terminating the lease,
if the lease term reflects the Company
exercising that option.
Lease payments to be made under reasonably certain
extension options are also included in the
measurement of the liability. The lease payments are
discounted using the interest rate implicit in the lease.
If that rate cannot be readily determined, which is
generally the case for leases in the Company, the
lessee''s incremental borrowing rate at the date of
initial application is used, being the rate that the
individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to
the right-of-use asset in a similar economic
environment with similar terms, security and
conditions.
To determine the incremental borrowing rate, the
Company:
⢠where possible, uses recent third-party
financing received by the individual lessee as a
starting point, adjusted to reflect changes in
financing conditions since third party financing
was received
⢠uses a build-up approach that starts with a risk¬
free interest rate adjusted for credit risk for
leases held by Company, which does not have
recentthird party financing, and
⢠makes adjustments specific to the lease, e.g.
term, country, currency and security.
If a readily observable amortising loan rate is available
to the individual lessee (through recent financing or
market data) which has a similar payment profile to
the lease, then the Company use that rate as a starting
point to determine the incremental borrowing rate.
The Company is exposed to potential future increases
in variable lease payments based on an index or rate,
which are not included in the lease liability until they
take effect. When adjustments to lease payments
based on an index or rate take effect, the lease liability
is reassessed and adjusted against the right-of-use
asset.
Lease payments are allocated between principal and
finance cost. The finance cost is charged to profit or
loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of
the liability foreach period.
The ROU assets are measured at cost comprising the
following:
⢠initial amount of lease liability
⢠any lease payments made at or before the
commencement date less any lease incentives
received
⢠any initial direct costs, and
⢠restoration costs.
They are subsequently measured at cost less
accumulated depreciation. ROU assets are
depreciated from the commencement date over the
shorter of the asset''s useful life and the lease term on
a straight-line basis. If the company is reasonably
certain to exercise a purchase option, the right-of-use
asset is depreciated over the underlying asset''s useful
life. Lease liability and ROU assets have been
separately disclosed in the Balance Sheet and lease
payments have been classified as financing cash
flows. Payments associated with short-term leases
are recognised as an expense in profit or loss. Short¬
term leases are leases with a lease term of 12 months
orless.
1.6 Property, plant and equipment
Freehold land is carried at historical cost. All other
items of property, plant and equipment are stated at
historical cost less accumulated depreciation and
impairment losses, if any.
Historical cost includes expenditure that is directly
attributable on making the asset ready for its
intended use and location, relevant borrowing cost
for qualifying assets and present value of any
obligatory cost of decommissioning.
Subsequent costs of replacement and major
maintenance or repair (overhaul costs) are included in
an asset''s carrying amount or recognised as a
separate asset, as appropriate, only when it is
probable that future economic benefits will flow to
the Company and the cost can be measured reliably.
The carrying amount of any asset or component of an
asset replaced is derecognised when replaced.
Overhaul costs associated with major maintenance
are capitalised and depreciated overtheir useful lives.
All other repairs and maintenance are charged to
profit or loss during the reporting period in which they
are incurred.
Capital work-in-progress comprises cost and related
expenses, of property, plant and equipment that are
not yet ready for their intended use at the reporting
date.
Depreciation methods, estimated useful lives and
residual value
Freehold land is not depreciated. Leasehold
improvements are amortised over the shorter of
estimated useful life or the related lease term, unless
the entity expects to use the assets beyond the lease
term. Depreciation is calculated usingthe straight-line
method to allocate the costs, net of residual values,
over the estimated useful lives as follows:
#Useful lives determined based on technical
evaluation by the expert is equal to or lower than
those specified inthe Schedule II.
The useful lives have been determined based on
Schedule 11 of the Companies Act, 2013. The residual
values are not more than 5% of the original cost of the
assets. The assets'' residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of
each reporting period. Each component of an item of
property, plant and equipment with a cost that is
significant in relation to the total cost of that item is
depreciated separately, if its useful life differs from
that of other components of the asset.
Estimated useful lives, residual values and
depreciation methods are reviewed annually, taking
into account commercial and technological
obsolescence as well as normal wear and tear and
adjusted prospectively, if appropriate.
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from
continued use of the asset. Gains and losses on
disposal or retirement are determined as the
difference between net proceeds and the carrying
amount. These are recognised in standalone
statement of profit and loss within other expenses or
other income, as applicable.
1.7 Intangible assets
a) Intangible assets with finite useful lives:
Intangible assets with finite useful lives acquired
by the Company are measured at cost less
accumulated amortization and accumulated
impairment losses, if any. Amortization is
charged on a straight-line basis over the
estimated useful lives. The estimated useful life
and amortization method are reviewed at the
end of each annual reporting period, with the
effect of any changes in the estimate being
accounted for on a prospective basis.
b) Research and Development
Research expenditure and development
expenditure that do not meet the criteria in
Note 1.7(a) above are recognised as an expense
as incurred. Development costs previously
recognised as an expense are not recognised as
an asset in subsequent period.
c) Amortization method and period
Intangible assets comprise of computer
software and licenses which are amortised on a
straight-line basis over the expected useful life
over a period of five years.
1.8 Inventories
Raw materials and stores, goods-in-process and
finished goods
Raw materials, stores, goods-in-process and finished
goods are stated at the lower of cost and net realizable
value. Cost of raw materials comprises cost of
purchases. Cost of work-in progress and finished
goods comprises direct materials, direct labor and an
appropriate proportion of variable and fixed overhead
expenditure, the latter being allocated based on
normal operating capacity. Cost of inventories also
include all other costs incurred in bringing the
inventories to their present location and condition.
Costs are assigned to individual items of inventory on
moving weighted average basis. Costs of purchased
inventory are determined after deducting rebates and
discounts. Net realizable value is the estimated selling
price in the ordinary course of business less the
estimated costs of completion and the estimated
costs necessary to makethe sale.
1.9 Borrowing costs
General and specific borrowing costs that are directly
attributable to the acquisition, construction or
production of a qualifying asset are capitalised during
the period that is required to complete and prepare
the asset for its intended use or sale. Qualifying assets
are assets that necessarily take a substantial period of
timetoget ready fortheirintended useorsale.
Borrowing cost includes exchange differences arising
from foreign currency borrowings to the extent they
are regarded as an adjustment to the finance cost.
Investment income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the
borrowing costs eligibleforcapitalization.
Other borrowing costs are expensed in the period in
which they are incurred.
1.10 Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be settled
wholly within 12 months afterthe end of the period in
which the employees render the related service are
recognised in respect of employees'' services up to the
end of the reporting period and are rendered at the
undiscounted amount of benefits expected to be paid
when the liabilities are settled. The liabilities are
presented as current employee benefit obligations in
the balance sheet.
Other long-term employee benefit obligations
The liabilities for earned leave are not expected to be
settled wholly within 12 months after the end of the
period in which the employees render the related
service. They are therefore measured as the present
value of expected future payments to be made in
respect of services provided by employees up to the
end of the reporting period using the projected unit
credit method. The benefits are discounted using the
market yields at the end of the reporting period that
have terms approximating to the terms of the related
obligation.
Remeasurements as a result of experience
adjustments and changes in actuarial assumptions are
recognised in other comprehensive income.
The obligations are presented as current liabilities in
the balance sheet if the entity does not have an
unconditional right to defer settlement for at least
twelve months afterthe reporting period, regardless
of when the actual settlement is expected to occur.
Post-employment obligations
The Company operates the following post¬
employment schemes:
⢠Defined benefit plans such as gratuity, and
⢠Defined contribution plans such as provident
fund and superannuation fund.
a) Defined Benefit Plans
(i) Gratuity obligations
The liability or asset recognised in the
balance sheet in respect of defined
benefit gratuity plans is the present value
of the defined benefit obligation at the
end of the annual reporting period less
the fair value of plan assets. The defined
benefit cost is calculated annually by
actuaries using the projected unit credit
method.
The present value of the defined benefit
obligation denominated in IN R is
determined by discounting the estimated
future cash outflows by reference to
market yields at the end of the reporting
period on government bonds that have
terms approximating to the terms of the
related obligation. The benefits which are
denominated in currency other than INR,
the cash flows are discounted using
market yields determined by reference to
high-quality corporate bonds that are
denominated in the currency in which the
benefits will be paid, and that have terms
approximating to the terms of the related
obligation. The service cost include
current service cost, past service cost,
gains and losses on curtailments and
settlements. Changes in the present value
of the defined benefit obligation resulting
from plan amendments or curtailments
are recognised immediately in profit or
loss as past service cost.
The net interest cost is calculated by
applying the discount rate to the net
balance of the defined benefit obligation
and the fair value of plan assets. This cost
is included in employee benefit expense
in the standalone statement of profit and
loss.
Remeasurement gains and losses arising
from experience adjustments and
changes in actuarial assumptions are
recognised in the period in which they
occur, directly in other comprehensive
income. They are included in retained
earnings in the standalone statement of
changes in equity and in the balance
sheet.
Remeasurements are not reclassified to
profit and loss in the subsequent periods.
b) Defined contribution plans
(i) Provident Fund, Employee State
Insurance Corporation (ESIC) and Labour
Welfare Fund (LWF).
The Contribution towards provident fund,
ESIC, LWF for certain employees is made
to the regulatory authorities where the
Company has no further obligations. Such
benefits are classified as Defined
Contribution Schemes as the Company
does not carry any further obligations
apart from the contributions made on a
monthly basis.
(ii) Superannuation Fund
Contribution towards superannuation
fund for certain employees is made to
defined contribution scheme
administered by insurance Company
where the Company has no further
obligations. Such benefits are classified as
Defined Contribution Schemes as the
Company does not carry any further
obligations, apart from contributions
made on monthly basis.
Payment to defined contribution
retirement benefit plans are recognised
as an expense when employees have
rendered service entitling them to the
contributions.
c) Shared based payments
Employee options
The fair value of options under the AYM Syntex
Limited Employee Option scheme is recognised
as an employee benefits expense at the grant
date with a corresponding increase in equity.
The total amount to be expensed is determined
by reference to the fair value of the options
granted:
⢠including any market performance
conditions (e.g., the entity''s share price)
⢠excluding the impact of any service and
non-market performance vesting
conditions (e.g. profitability, sales growth
targets and remaining an employee of the
entity over a specified time period), and
⢠including the impact of any non-vesting
conditions (e.g. the requirement for
employees to save or holdings shares for a
specific period).
The total expense is recognised over the vesting
period, which is the period over which all the
specified vesting conditions are to be satisfied.
At the end of each period, the entity reviews its
estimates of the number of options that are
expected to vest based on the non-market
vesting and service conditions. It recognizes the
impact of the revision to original estimates, if
any, in profit or loss such that the cumulative
expense reflects the revised estimate with a
corresponding adjustment to equity-settled
employee benefits reserve.
Bonus Plan
The Company recognizes a liability and an
expense for bonus where contractually obliged
or where there is a past practice that has
created a constructive obligation.
Mar 31, 2024
General information
AYM Syntex Limited (herein referred to as "AYM" or "the Company") is public limited Company incorporated and domiciled in India. The address of its registered office is Survey No. 374/1/1, Saily, Silvassa -396230 (U.T. of Dadra & Nagar Haveli), India. The Company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Since its inception, it has grown manifold and today is amongst the largest manufacturers and exporters of Polyester Filament Yarn, Nylon Filament Yarn and Bulk Continuous Filament Yarn from India.
The standalone financial statements were authorised for issue by the board of directors on May 30,2024.
Note 1A: Material Accounting Policies
This Note provides a list of the Material accounting policies adopted in the preparation of these standalone financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
1.1 Basis of Preparation of Standalone Financial Statements(i) Compliance with Ind AS
The standalone financial statements have been prepared in accordance with the accounting principles generally accepted in India and comply in all material aspects with Indian Accounting Standards (IND AS) notified under Section 133 of the Companies Act, 2013 (the Act) read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015, presentation requirement of Division II of Schedule III of the Companies Act, 2013 and other relevant provisions of the Act as amended from time to time.
(ii) Historical cost convention
The standalone financial statements have been prepared on an accrual and going concern basis. The standalone financial statements have been prepared on a historical cost basis, except as stated in subsequent policies for the following items:
- Certain financial assets and liabilities - Fair value
- Assets held for sale - Lower of cost or fair value less cost of sale
- Share based payments-Fairvalue
(iii) New and amended standards adopted by the Company
The Ministry of Corporate Affairs had vide notification dated 31 March 2023 notified Companies (Indian Accounting Standards) Amendment Rules, 2023 which amended certain accounting standards, and are effective 1 April 2023.
Disclosure of accounting policies â amendments to Ind AS 1
Definition of accounting estimates â amendments to Ind AS 8
Deferred tax related to assets and liabilities arising from a single transaction â amendments to Ind AS 12
These amendments did not have any material impact on the amounts recognised in prior periods and are not expected to significantly affect the current orfuture periods.
1.2 Foreign currency translationa) Functional and presentation currency
Items included in the standalone financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The standalone financial statements are presented in Indian Rupees (INR), which is Company''s functional and presentation currency.
Foreign currency transactions are translated and recorded into the functional currency using the exchange rates prevailing on the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the standalone statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the standalone statement of profit and loss on a net basis within other income or other expenses, as applicable.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transaction.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
The Company has applied the exemption from the transition date i. e. April 1,2016 in respect of accounting policy followed for long term foreign currency monetary items. Accordingly, foreign exchange differences, in respect of the long term foreign currency items till the year ended March 31, 2017, on account of depreciable assets are adjusted in the cost of depreciable assets and depreciated over the balance life of the assets.
The Company derives revenues primarily from sale of manufactured goods and related services. The Company has assessed revenue contracts and revenue is recognised upon satisfying specific performance obligations in accordance with provisions of contract with the customer.
It recognizes revenue when control over the promised 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 of those goods or services.
This is generally determined when documents of title/goods are delivered/shipped to the customer in accordance with the agreed terms, following which the customer has full discretion over responsibility, manner of distribution and price to sell thegoods and bears the risks of obsolescence and loss in relation to the goods and there is no unfulfilled obligation that would affect customer''s acceptance of the product. All the foregoing occurs at a point in time upon shipment or delivery of the documents of title/product orgoods.
The Company considers terms of the contract in determining the revenue. It is measured at the price that reflects the consideration the Company expects to be entitled to in exchange for satisfaction of the performance obligation. The Company considers freight, insurance and handling activities as costs to fulfil the promise to transfer products and related
services and the customer payments for such activities are recorded as a component of revenue.
In certain customer contracts where freight is arranged by the Company and recovered from the customers, the same is treated as a distinct separate performance obligation and revenue is recognised when such freight services are rendered. The related shipping and handling costs incurred are included in freight expenses when the Company is acting as principal in the shipping and handling arrangement.
For volume discounts and pricing incentives/ concessions offered to the customers, the Company makes estimates and provide for, based on customer performance and sales volume, which is recorded as deductions from revenue. Revenue from sale of byproducts are included in revenue. Revenue from services is recognised when the services are completed. Revenue excludes any taxes and duties collected on behalf of the government.
When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. The Company does not have any contracts where in the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.
A receivable is recognised when the goods are delivered and to the extent it has an unconditional right to consideration (i.e. only the passage of time is required before the payment of consideration is due).Consideration received before a related performance obligation is satisfied or before the Company transfer goods or services to the customer are recognised as contract liabilities. Contract liabilities are recognised as revenue when the Company completes its performance obligation under the contract.
Export incentives and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions and the incentive will be received.
Export benefits arising from duty drawback scheme, remission of duties and taxes on export products and merchandise export incentive scheme are recognised on shipment for export at the rate at which they accrueand is included in other operating income.
The income tax expense or credit for the year is the tax payable on the current year''s taxable income based on the applicable income tax rate adjusted by changes in deferred income tax assets and liabilities attributable to temporary differences and unabsorbed tax losses.
Current income tax charge is based on taxable profit for the year. The tax rates and tax laws used to compute the amount are those that are enacted or substanttvely enacted, at the reporttng date where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situattons in which applicable tax regulatton is subject to interpretatton and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorittes.
Current tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and Company intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred income tax is provided in full using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporttng purposes at the reporttng date. Deferred income tax assets are recognised to the extent that it is probable that future taxable income will be available against which the deducttble temporary differences, unused tax losses, depreciatton carry-forwards and unused tax credits could be uttlised.
Deferred income tax is not accounted for if it arises from initial recognitton of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounttng profit nor taxable profit (tax loss).
Deferred tax assets and liabilities are determined using tax rates and laws that have been enacted or substantially enacted by the end of the reporttng period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
The carrying amount of deferred income tax assets is reviewed at each reporttng date and adjusted to reflect changes in probability that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets are recognised for all deducttble temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the assetand settle the liability simultaneously.
Current and Deferred Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly inequity respecttvely.
Minimum Alternate Tax (''MAT'') credit entttlement is recognised as a deferred tax asset by crediting the standalone Statement of profit and loss only when and to the extent there is convincing evidence that MAT credit will reverse in the foreseeable future and the Company will be able to utilize the said credit against normal tax payable during the specified period.
Leases are recognised as a right-of-use (ROU) asset and a corresponding liability at the date at which the leased asset is available for use by the Company for all leases except short-term leases. Contracts may contain both lease and non-lease components. The
Company allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for leases of real estate for which the Company is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities are recognised based on the net present value of the following lease payments:
⢠fixed payments (including in-substance fixed payments), less any lease incentives receivable
⢠variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date
⢠amounts expected to be payable by the Company under residual value guarantees
⢠the exercise price of a purchase option if the Company is reasonably certain to exercise that opfion, and
⢠payments of penalties for terminafing the lease, if the lease term reflects the Company exercising that opfion.
Lease payments to be made under reasonably certain extension opfions are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee''s incremental borrowing rate at the date of initial application is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and condifions.
To determine the incremental borrowing rate, the Company:
⢠where possible, uses recent third-party financing received by the individual lessee as a starfing point, adjusted to reflect changes in financing condifions since third party financing was received 1
leases held by Company, which does not have recent third party financing, and
⢠makes adjustments specific to the lease, e.g. term, country, currency and security.
If a readily observable amortising loan rate is available to the individual lessee (through recent financing or market data) which has a similar payment profile to the lease, then the Company use that rate as a starfing point to determine the incremental borrowing rate.
The Company is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability unfil they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The ROU assets are measured at cost comprising the following:
⢠initial amount of lease liability
⢠any lease payments made at or before the commencement date less any lease incentives received
⢠any initial direct costs, and
⢠restoration costs.
They are subsequently measured at cost less accumulated depreciafion. ROU assets are depreciated from the commencement date over the shorter of the asset''s useful life and the lease term on a straight-line basis. If the company is reasonably certain to exercise a purchase opfion, the right-of-use asset is depreciated overthe underlying asset''s useful life.
Lease liability and ROU assets have been separately disclosed in the Balance Sheet and lease payments have been classified as financing cash flows. Payments associated with short-term leases are recognised as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
1.6 Property, plant and equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses, if any.
Historical cost includes expenditure that is directly attributable on making the asset ready for its intended use and locatton, relevant borrowing cost for qualifying assets and present value of any obligatory cost of decommissioning.
Subsequent costs of replacement and major maintenance or repair (overhaul costs) are included in an asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits will flow to the Company and the cost can be measured reliably. The carrying amount of any asset or component of an asset replaced is derecognised when replaced. Overhaul costs associated with major maintenance are capitalised and depreciated overtheir useful lives. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Capital work-in-progress comprises cost and related expenses, of property, plant and equipment that are not yet ready for their intended use at the reporting date.
Depreciation methods, estimated useful lives and residual value
Freehold land is not depreciated. Leasehold improvements are amortised over the shorter of estimated useful life or the related lease term, unless the entity expects to use the assets beyond the lease term. Depreciation is calculated usingthe straight-line method to allocate the costs, net of residual values, over the estimated useful lives as follows:
|
Asset Useful life (years) |
|
|
Office equipment |
5 |
|
Furniture and fixtures |
10 |
|
Computer hardware and software |
3/5 |
|
Vehicles |
8 |
|
Plant and machinery1# |
7 to 25 |
|
Electrical installation |
10 |
|
Factory building |
30 |
|
Residential and otherbuildings |
60 |
|
Other buildings (carpeted roads) |
10 |
|
*Extra shift depreciation is provided. |
|
#Useful lives determined based on technical evaluation by the expert is equal to or lower than those specified in the Schedule II.
The useful lives have been determined based on Schedule 11 of the Companies Act, 2013. The residual values are not more than 5% of the original cost of the assets. The assets'' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Each component of an item of property, plant and equipment with a cost that is significant in relation to the total cost of that item is depreciated separately, if its useful life differs from that of other components of the asset.
Estimated useful lives, residual values and depreciation methods are reviewed annually, taking into account commercial and technological obsolescence as well as normal wear and tear and adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from continued use of the asset. Gains and losses on disposal or retirement are determined as the difference between net proceeds and the carrying amount. These are recognised in standalone statement of profit and loss within other expenses or other income, as applicable.
1.7 Intangible assetsa) Intangible assets with finite useful lives:
Intangible assets with finite useful lives acquired by the Company are measured at cost less accumulated amortization and accumulated impairment losses, if any. Amortization is charged on a straight-line basis over the estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.
Research expenditure and development expenditure that do not meet the criteria in Note 1.7(a) above are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in subsequent period.
c) Amortization method and period
Intangible assets comprise of computer software and licenses which are amortised on a straight-line basis over the expected useful life over a period of five years.
1.8 InventoriesRaw materials and stores, goods-in-process and finished goods
Raw materials, stores, goods-in-process and finished goods are stated at the lower of cost and net realizable value. Cost of raw materials comprises cost of purchases. Cost of work-in progress and finished goods comprises direct materials, direct labor and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated based on normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on moving weighted average basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Borrowing cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the finance cost.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in which they are incurred.
1.10 Employee benefits Short-term obligations
Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled
wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are rendered at the undiscounted amount of benefits expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in thebalancesheet.
Other long-term employee benefit obligations
The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
The Company operates the following postemployment schemes:
- Defined benefit plans such as gratuity, and
- Defined contribution plans such as provident fund and superannuation fund.
a) Defined Benefit Plans(i) Gratuity obligations
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the annual reporting period less the fair value of plan assets. The defined benefit cost is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in INR is determined by discounting the esfimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximafing to the terms of the related obligafion. The benefits which are denominated in currency other than INR, the cash flows are discounted using market yields determined by reference to high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximafing to the terms of the related obligafion.
The service cost include current service cost, past service cost, gains and losses on curtailments and settlements. Changes in the present value of the defined benefit obligafion resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligafion and the fair value of plan assets. This cost is included in employee benefit expense in the standalone statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the standalone statement of changes in equity and in the balance sheet.
Remeasurements are not reclassified to profit and loss in the subsequent periods.
(i) Provident Fund, Employee State Insurance Corporation (ESIC) and Labour Welfare Fund (LWF).
The Contribution towards provident fund, ESIC, LWF for certain employees is made to the regulatory authorities where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations apart from the contributions made on a monthly basis.
Contribution towards superannuation fund for certain employees is made to defined contribution scheme administered by insurance Company where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from contributions made on monthly basis.
Payment to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.
c) Shared based paymentsEmployee options
The fair value of options under the AYM Syntex Limited Employee Option scheme is recognised as an employee benefits expense at the grant date with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted:
⢠including any market performance conditions (e.g., the entity''s share price)
⢠excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee ofthe entity over a specified time period), and
⢠including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings shares for a specific period).
The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied. At the end of each period, the entity reviews its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss such that the cumulative expense reflects the revised estimate with a corresponding adjustment to equity-settled employee benefits reserve.
The Company recognizes a liability and an expense for bonus where contractually obliged or where there is a past practice that has created a constructive obligation.
1.11 Provisions and contingent liabilitiesa) Provisions
Provisions for legal claims, quality claims and volume discounts are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Provisions for restructuring are recognised by the Companywhen it has developed a detailed formal plan for restructuring and has raised a valid expectation in those affected that the Company will carry out the restructuring by startingto implement the plan orannouncing its main features to those affected by it. The measurement of provision for restructuring includes only direct expenditures arising from the restructuring, which are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the nominal or present value of management''s best estimate of the expenditure required, taking into account the risks and uncertainties surrounding the obligation, to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
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 or a reliable estimate of the amount cannot be made.
Contingent Assets are disclosed, where an inflow of economic benefits is probable. The Company shall not recognised a contingent asset unless the recovery is virtually certain.
Exceptional items are items of income or expense recorded in the year in which they have been determined by management as being material by their size or incidence in relation to the standalone financial statements and are presented separately within the results of the Company. The determination of which items are disclosed as exceptional items affect the presentation of profit for the year and requires a degree of judgment.
Note IB: Other Accounting Policies
This Note provides a list of the other accounting policies adopted in the preparation of these standalone financial statements. These policies have been consistently applied to all theyears presented, unless otherwise stated.
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Provision is made for any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end ofthe reporting period.
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
Government grants relattng to the purchase of property, plant and equipment are included in liabilities as deferred income and are credited to profit or loss over the periods and in proportions in which depreciatton expense on those assets is recognised.
1.16 Earnings per share Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the yearand excludingtreasury shares (Note42).
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potenttal equity shares, and the weighted average number of addittonal equity shares that would have been outstanding assuming the conversion of all diluttve potenttal equity shares.
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset''s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identtfiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generattng units). Non-flnancial assets that suffered an impairment are reviewed for
possible reversal of the impairment at the end of each reporttng period.
An impairment loss or a reversal of an impairment loss is immediately recognised in the standalone statement of profit and loss.
1.18 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 transactton rather than through conttnuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of the assets to fair value less costs to sell. A gain is recognised for any subsequent increase in fair value less costs to sell, but not in excess of any cumulattve impairment loss previously recognised. Again or loss not previously recognised by the date of the sale of the non-current assets is recognised at the date of de-recognitton.
Non-current assets are not depreciated or amortised while they are classified as held for sale.
Non-current assets classified as held for sale are presented separately from the other assets in the balancesheet.
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 enttty.
Investments and Other Financial Assetsa) Classification
The Company classifies its financial assets in the following measurement categories:
⢠Those to be measured subsequently at fair value (either through other comprehensive income, orthrough profit or loss), and
⢠Those measured at amortised cost.
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or othercomprehensive income.
For investments in debt instruments, recognition will depend on the business model in which the investment is held.
For investments in equity instruments, recognition will depend on whether the Company has made an irrevocable election at the time of initial recognih''on to account for the equity investment at fair value through other comprehensive income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the company commits to purchase or sale thefinancial asset.
At initial recognition, the Company measures a financial asset (excluding trade receivables which do not contain a significant financing component) at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/ (losses). Impairment losses are presented
as separate line item in the standalone statement of profit and loss.
⢠Fairvalue through other comprehensive income (FVOCI):
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other expenses or other incomes, as applicable. Interest income from these financial assets is included in other income using the effective interest rate method. Foreign Exchange gains and losses are presented in other gains and losses and impairment expenses in other expenses.
⢠Fairvalue through profit or loss:
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fairvalue through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the standalone statement of profit and loss within other expenses or other incomes, as applicable in the period in which it arises. Interest income from these financial assets is included in other income.
The Company measures all equity investments at fair value. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there will be no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Company''s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in the standalone statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
d) Impairment of financial assets
The Company assesses on a forward-looking basis the expected credit loss associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 39 details how the Company determines whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
e) Derecognition of financial assets revenue recognition
Afinancial asset is derecognised only when
⢠the Company has transferred the rights to receive cash flows from the financial asset or
⢠it retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in theflnancial asset.
f) Income recognition(i) Interest income
Interest income from financial assets at fair value through profit or loss is disclosed as interest income within other income. Interest income on financial assets at amortised cost and financial assets at FVOCI is calculated using the effective interest method is recognised in the standalone statement of profit and loss as part of other income.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit- impaired. For credit-impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).
Dividends are received from financial assets at fair value through profit or loss and at FVOCI. Dividends are recognised as other income in profit or loss when the right to receive payment is established. This applies even if they are paid out of pre-acquisition profits, unless the dividend clearly represents a recovery of part of the cost of the investment.
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities ofthree months or less that are readily convertible to known amounts of cash and which are subject to an insignificant riskof changes in value.
Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
Trade receivables are consideration due from customers for goods sold or services performed in the ordinary course of business. Trade receivables are recognised/measured initially at transaction price that is unconditional unless they contain significant financing components.
Financial liabilities are initially recognised at fair value, reduced by transaction costs (in case of financial liability not at fair value through profit or loss), that are directly attributable to the issue of financial liability. After initial recognition, financial liabilities are measured at amortised cost using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash outflow (including all fees paid, transaction cost, and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. At the time of initial recognition, there is no financial liability irrevocably designated as measured at fair value through profit or loss. Liabilities from finance lease agreements are measured at the lower of fair value of the leased asset or present value of minimum lease payments.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the standalone statement of profit or loss.
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it
is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in standalone Statement of profit and loss.
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.
Borrowings are classified as current liabilities unless the Company has unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the standalone financial statements for issue, not to demand payment as consequence of the breach.
These amounts represent liabilities for goods and services provided to the company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30-90 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be conttngent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company orthe counterparty.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Managing Director, who has been identified as the chief operating decision maker, assesses the financial performance and position of the Company and makes strategic decisions. Refer Note 48 for the segment information presented.
All amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest lakhs with two decimal as per the requirement of Schedule III, unless otherwise stated.
Note 2: Material accounting assumptions, estimates and judgements
The preparation of standalone financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise assumptions, estimates and judgements in applying the Company''s accounting policies. This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the standalone financial statements. Accounting estimates could change from period to period.
a) Estimation of current tax expense and deferred income tax
The calculation of the Company''s tax charge necessarily involves a degree of estimation and judgement in respect of certain items whose tax
treatment cannot be finally determined until resolution has been reached with the relevant tax authority or, as appropriate, through a formal legal process. The final resolution of some of these items may give rise to material profits/losses and/or cash flows. Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions (Refer Note 36).
The recognition of deferred income tax assets (including MAT Credit)/ liabilities is based upon management''s assessment of future taxable profits for recoverability of the deferred benefit. Expected recoverability may result from sufficient and suitable taxable profits in the future, planned transactions and planned tax optimizing measures. To determine the future taxable profits, reference is made to the latest available profit forecasts.
b) Estimation of Provisions and Contingent Liabilities.
The Company exercises judgement in measuring and recognizing provisions and the exposures to contingent liabilities which is related to pending litigation or other outstanding claims. Judgement is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual liability may be different from the originally estimated as provision (Refer Note 40).
c) Estimated useful life of Property, Plant and Equipment
Property, Plant and Equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life.
The useful lives and residual values of Company''s assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. Internal and external factors such as changes in the expected level of usage, technological developments, product life cycle, relative efficiencies and operating costs may
impact their life and the residual value of these assets. This reassessment may result in change in depreciation and amorh''zation expense and have an impact on profit in future years.
For the relafive size of the Company''s property, plant and equipment and intangible assets (Refer Note 3 and 4).
The Company writes down inventories to net realisable value based on an estimate of the realisability of inventories. Write downs on inventories are recorded where events or changes in circumstances indicate that the carrying balances may not realised. The identification of write- downs requires the use of esfimates of net selling prices, age and quality/condifion of downgraded materials/ nventories. Where the expectafion is different from the original estimate, such difference will impact the carrying value of inventories and write-downs of inventories in t
Mar 31, 2023
General information
AYM Syntex Limited (herein referred to as "AYM" or âthe Company") is public limited Company incorporated and domiciled in India. The address of its registered office is Survey No. 374/1/1, Saily, Silvassa -396230 (U.T. of Dadra & Nagar Haveli), India. The Company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Since its inception, it has grown manifold and today is amongst the largest manufacturers and exporters of Polyester Filament Yarn, Nylon Filament Yarn and Bulk Continuous Filament Yarn from India.
The standalone financial statements were authorised for issue by the board of directors on May 05, 2023.
Note 1: Significant Accounting Policies
This Note provides a list of the significant accounting policies adopted in the preparation of these standalone financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
1.1 Basis of Preparation of Standalone Financial Statements(i) Compliance with Ind AS
The standalone financial statements have been prepared in accordance with the accounting principles generally accepted in India and comply in all material aspects with Indian Accounting Standards (IND AS) notified under Section 133 of the Companies Act, 2013 (the Act) read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015, presentation requirement of Division II of Schedule III of the Companies Act, 2013 and other relevant provisions of the Act as amended from time to time.
(ii) Historical cost convention
The standalone financial statements have been prepared on an accrual and going concern basis. The standalone financial statements have been prepared on a historical cost basis, except as stated in subsequent policies for the following items:
- Certain financial assets and liabilities - Fair value
- Assets held for sale - Lower of cost or fair value less cost of sale
- Share based payments - Fair value
(iii) New and amended standards adopted by the Company
The Ministry of Corporate Affairs had vide notification dated 23 March 2022 notified Companies (Indian Accounting Standards) Amendment Rules, 2022 which amended certain accounting standards, and are effective 1 April 2022. These amendments did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
(iv) New and amended standards issued but not effective
The Ministry of Corporate Affairs has vide notification dated 31 March 2023 notified Companies (Indian Accounting Standards) Amendment Rules, 2023 (the ''Rules'') which amends certain accounting standards, and are effective 1 April 2023.
The Rules predominantly amend Ind AS 12, Income taxes, and Ind AS 1, Presentation of standalone financial statements. The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications.
These amendments are not expected to have a material impact on the company in the current or future reporting periods and on foreseeable future transactions. Specifically, no changes would be necessary as a consequence of amendments made to Ind AS 12 as the Company''s accounting policy already complies with the now mandatory treatment.
1.2 Foreign currency translationa) Functional and presentation currency
Items included in the standalone financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The standalone financial statements are presented in Indian rupees (INR), which is Company''s functional and presentation currency.
Foreign currency transactions are translated and recorded into the functional currency using the exchange rates prevailing on the date of the
transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the standalone statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the standalone statement of profit and loss on a net basis within other income or other expenses, as applicable.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of initial transaction.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
The Company has applied the exemption from the transition date i. e. April 1, 2016 in respect of accounting policy followed for long term foreign currency monetary items. Accordingly, foreign exchange differences, in respect of the long term foreign currency items till the year ended March 31, 2017, on account of depreciable assets are adjusted in the cost of depreciable assets and depreciated over the balance life of the assets.
The Company derives revenues primarily from sale of manufactured goods and related services. The Company has assessed revenue contracts and revenue is recognised upon satisfying specific performance obligations in accordance with provisions of contract with the customer.
It recognizes revenue when control over the promised 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 of those goods or services.
This is generally determined when documents of ti''tle/goods are delivered/shipped to the customer in accordance with the agreed terms, following which
the customer has full discretion over responsibility, manner of distribution and price to sell the goods and bears the risks of obsolescence and loss in relation to the goods and there is no unfulfilled obligation that would affect customer''s acceptance of the product. All the foregoing occurs at a point in time upon shipment or delivery of the documents of title/product or goods.
The Company considers terms of the contract in determining the revenue. It is measured at the price that reflects the consideration the Company expects to be entitled to in exchange for satisfaction of the performance obligation. The Company considers freight, insurance and handling activities as costs to fulfil the promise to transfer products and related services and the customer payments for such activities are recorded as a component of revenue.
In certain customer contracts where freight is arranged by the Company and recovered from the customers, the same is treated as a distinct separate performance obligation and revenue is recognised when such freight services are rendered. The related shipping and handling costs incurred are included in freight expenses when the Company is acting as principal in the shipping and handling arrangement.
For volume discounts and pricing incentives / concessions offered to the customers, the Company makes estimates and provide for, based on customer performance and sales volume, which is recorded as deductions from revenue.
Revenue from sale of by-products are included in revenue. Revenue from services is recognised when the services are completed. Revenue excludes any taxes and duties collected on behalf of the government.
When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved.
The Company does not have any contracts where in the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.
A receivable is recognised when the goods are delivered and to the extent it has an unconditional right to consideration (i.e. only the passage of time is required before the payment of consideration is due).
Consideration received before a related performance obligation is satisfied or before the Company transfer goods or services to the customer are recognised as contract liabilities. Contract liabilities are recognised as revenue when the Company completes its performance obligation under the contract.
Export incentives and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions and the incentive will be received.
Export benefits arising from duty drawback scheme, remission of duties and taxes on export products and merchandise export incentive scheme are recognised on shipment for export at the rate at which they accrue and is included in other operating income
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
Government grants relating to the purchase of property, plant and equipment are included in liabilities as deferred income and are credited to profit or loss over the periods and in proportions in which depreciation expense on those assets is recognised.
The income tax expense or credit for the year is the tax payable on the current year''s taxable income based on the applicable income tax rate adjusted by changes in deferred income tax assets and liabilities attributable to temporary differences and unabsorbed tax losses.
Current income tax charge is based on taxable profit for the year. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Current tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and Company intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred income tax is provided in full using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred income tax assets are recognised to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilised.
Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
Deferred tax assets and liabilities are determined using tax rates and laws that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
The carrying amount of deferred income tax assets is reviewed at each reporting date and adjusted to reflect changes in probability that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and Deferred Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity respectively.
Minimum Alternate Tax (''MAT'') credit entttlement is recognised as a deferred tax asset by credittng the standalone Statement of profit and loss only when and to the extent there is convincing evidence that MAT credit will reverse in the foreseeable future and the Company will be able to uttlize the said credit against normal tax payable during the specified period.
1.6 Leases
As a lessee
Leases are recognised as a right-of-use (ROU) asset and a corresponding liability at the date at which the leased asset is available for use by the Company for all leases except short-term leases. Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract to the lease and non-lease components based on their relattve stand-alone prices. However, for leases of real estate for which the Company is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities are recognised based on the net present value of the following lease payments:
⢠fixed payments (including in-substance fixed payments), less any lease incenttves receivable 1
⢠amounts expected to be payable by the Company under residual value guarantees
⢠the exercise price of a purchase optton if the Company is reasonably certain to exercise that optton, and
⢠payments of penalties for terminattng the lease, if the lease term reflects the Company exercising that optton.
Lease payments to be made under reasonably certain extension opttons are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee''s incremental borrowing rate at the date of inittal application is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and condittons.
To determine the incremental borrowing rate, the Company:
⢠where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing condittons since third party financing was received
⢠uses a build-up approach that starts with a riskfree interest rate adjusted for credit risk for leases held by Company, which does not have recent third party financing, and
⢠makes adjustments specific to the lease, e.g. term, country, currency and security.
If a readily observable amortising loan rate is available to the individual lessee (through recent financing or market data) which has a similar payment profile to the lease, then the Company use that rate as a starting point to determine the incremental borrowing rate.
The Company is exposed to potenttal future increases in variable lease payments based on an index or rate, which are not included in the lease liability unttl they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The ROU assets are measured at cost comprising the following:
⢠initial amount of lease liability
⢠any lease payments made at or before the commencement date less any lease incentives received
⢠any inifi''al direct costs, and
⢠restoration costs.
They are subsequently measured at cost less accumulated depreciation. ROU assets are depreciated from the commencement date over the shorter of the asset''s useful life and the lease term on a straight-line basis. If the company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset''s useful life. Lease liability and ROU assets have been separately disclosed in the Balance Sheet and lease payments have been classified as financing cash flows. Payments associated with short-term leases are recognised as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
1.7 Property, plant and equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less accumulated depreciafi''on and impairment losses, if any.
Historical cost includes expenditure that is directly attributable on making the asset ready for its intended use and location, relevant borrowing cost for qualifying assets and present value of any obligatory cost of decommissioning.
Subsequent costs of replacement and major maintenance or repair (overhaul costs) are included in an asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits will flow to the Company and the cost can be measured reliably. The carrying amount of any asset or component of an asset replaced is derecognised when replaced. Overhaul costs associated with major maintenance
are capitalised and depreciated over their useful lives. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Capital work-in-progress comprises cost and related expenses, of property, plant and equipment that are not yet ready for their intended use at the reporfi''ng date.
Depreciation methods, estimated useful lives and residual value
Freehold land is not depreciated. Leasehold improvements are amortised over the shorter of estimated useful life or the related lease term, unless the entity expects to use the assets beyond the lease term. Depreciation is calculated using the straight-line method to allocate the costs, net of residual values, over the estimated useful lives as follows:
|
Asset Useful life (years) |
|
|
Office equipment |
5 |
|
Furniture and fixtures |
10 |
|
Computer hardware and software |
3/5 |
|
Vehicles |
8 |
|
Plant and machinery1# |
7 to 25 |
|
Electrical installation |
10 |
|
Factory building |
30 |
|
Residential and other buildings |
60 |
|
Other buildings (carpeted roads) |
10 |
|
*Extra shift depreciation is provided. |
|
#Useful lives determined based on technical evaluation by the expert is equal to or lower than those specified in the Schedule II.
The useful lives have been determined based on Schedule II of the Companies Act, 2013. The residual values are not more than 5% of the original cost of the assets. The assets'' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Each component of an item of property, plant and equipment with a cost that is significant in relation to the total cost of that item is depreciated separately, if its useful life differs from that of other components of the asset.
Estimated useful lives, residual values and depreciation methods are reviewed annually, taking into account commercial and technological obsolescence as well as normal wear and tear and
adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from continued use of the asset. Gains and losses on disposal or retirement are determined as the difference between net proceeds and the carrying amount. These are recognised in standalone statement of profit and loss within other expenses or other income, as applicable.
1.8 Intangible assetsa) Intangible assets with finite useful lives:
Intangible assets with finite useful lives acquired by the Company are measured at cost less accumulated amortization and accumulated impairment losses, if any. Amortization is charged on a straight-line basis over the estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.
Research expenditure and development expenditure that do not meet the criteria in Note 1.8(a) above are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in subsequent period.
c) Amortization method and period
Intangible assets comprise of computer software and licenses which are amortised on a straight-line basis over the expected useful life over a period of five years.
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets (cash-generating units). Nonfinancial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
An impairment loss or a reversal of an impairment loss is immediately recognised in the standalone statement of profit and loss.
1.10 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 a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of the assets to fair value less costs to sell. A gain is recognised for any subsequent increase in fair value less costs to sell, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current assets is recognised at the date of de-recognition.
Non-current assets are not depreciated or amortised while they are classified as held for sale.
Non-current assets classified as held for sale are presented separately from the other assets in the balance sheet.
Raw materials and stores, goods-in-process and finished goods
Raw materials, stores, goods-in-process and finished goods are stated at the lower of cost and net realizable value. Cost of raw materials comprises cost of purchases. Cost of work-in progress and finished goods comprises direct materials, direct labor and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated based on normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on moving weighted average basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.
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.
Investments and Other Financial Assetsa) Classification
The Company classifies its financial assets in the following measurement categories:
⢠Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
⢠Those measured at amortised cost.
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income.
For investments in debt instruments, recognition will depend on the business model in which the investment is held.
For investments in equity instruments, recognition will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the company commits to purchase or sale the financial asset.
At initial recognition, the Company measures a financial asset (excluding trade receivables
which do not contain a significant financing component) at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses). Impairment losses are presented as separate line item in the standalone statement of profit and loss.
⢠Fair value through other comprehensive income (FVOCI):
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from
equity to profit or loss and recognised in other expenses or other incomes, as applicable. Interest income from these financial assets is included in other income using the effective interest rate method. Foreign Exchange gains and losses are presented in other gains and losses and impairment expenses in other expenses.
⢠Fair value through profit or loss:
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the standalone statement of profit and loss within other expenses or other incomes, as applicable in the period in which it arises. Interest income from these financial assets is included in other income.
The Company measures all equity investments at fair value. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there will be no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Company''s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in the standalone statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
d) Impairment of financial assets
The Company assesses on a forward-looking basis the expected credit loss associated with its assets carried at amorfi''sed cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 40 details how the Company determines whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
e) Derecognition of financial assets revenue recognition
A financial asset is derecognised only when
⢠the Company has transferred the rights to receive cash flows from the financial asset or
⢠it retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
f) Income recognition (i) Interest income
Interest income from financial assets at
fair value through profit or loss is disclosed as interest income within other income. Interest income on financial assets at amortised cost and financial assets at FVOCI is calculated using the effective interest method is recognised in the standalone statement of profit and loss as part of other income.
Interest income is calculated by applying the effecfi''ve interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit- impaired. For credit-impaired financial assets the effecfi''ve interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).
Dividends are received from financial assets at fair value through profit or loss and at FVOCI. Dividends are recognised as other income in profit or loss when the right to receive payment is established. This applies even if they are paid out of pre-acquisition profits, unless the dividend clearly represents a recovery of part of the cost of the investment.
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
Trade receivables are consideration due from customers for goods sold or services performed in the ordinary course of business. Trade receivables are recognised/measured initially at transaction price that is unconditional unless they contain significant financing components.
Financial liabilitiesa) Measurement:
Financial liabilities are initially recognised at fair value, reduced by transaction costs (in case of financial liability not at fair value through profit or loss), that are directly attributable to the issue of financial liability. After initial recognition, financial liabilities are measured at amortised cost using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash outflow (including all fees paid, transaction cost, and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. At the time of initial recognition, there is no financial liability irrevocably designated as measured at fair value through profit or loss. Liabilities from finance lease agreements are measured at the lower of fair value of the leased asset or present value of minimum lease payments.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the standalone statement of profit or loss.
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any noncash assets transferred or liabilities assumed, is recognised in standalone Statement of profit and loss.
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.
Borrowings are classified as current liabilities unless the Company has unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the standalone financial statements for issue, not to demand payment as consequence of the breach.
These amounts represent liabilities for goods and services provided to the company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30-90 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
f) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Borrowing cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the finance cost.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
Other borrowing costs are expensed in the period in which they are incurred.
1.14 Employee benefits Short-term obligations
Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are rendered at the undiscounted amount of benefits expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
Other long-term employee benefit obligations
The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least
twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
The Company operates the following postemployment schemes:
- Defined benefit plans such as gratuity, and
- Defined contribution plans such as provident fund and superannuation fund.
a) Defined Benefit Plans(i) Gratuity obligations
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the annual reporting period less the fair value of plan assets. The defined benefit cost is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The benefits which are denominated in currency other than INR, the cash flows are discounted using market yields determined by reference to high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. The service cost include current service cost, past service cost, gains and losses on curtailments and settlements. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the standalone statement of profit and loss.
Remeasurement gains and losses arising from
experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the standalone statement of changes in equity and in the balance sheet.
Remeasurements are not reclassified to profit and loss in the subsequent periods.
(i) Provident Fund, Employee State Insurance Corporation (ESIC) and Labour Welfare Fund (LWF).
The Contribution towards provident fund, ESIC, LWF for certain employees is made to the regulatory authorities where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations apart from the contributions made on a monthly basis.
Contribution towards superannuation fund for certain employees is made to defined contribution scheme administered by insurance Company where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from contribution made on monthly basis.
Payment to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.
c) Shared based payments Employee options
The fair value of options under the AYM Syntex Limited Employee Option scheme is recognised as an employee benefits expense at the grant date with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted:
⢠including any market performance conditions (e.g., the entity''s share price)
⢠excluding the impact of any service and
non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period), and
⢠including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings shares for a specific period).
The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied. At the end of each period, the entity reviews its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss such that the cumulative expense reflects the revised estimate with a corresponding adjustment to equity-settled employee benefits reserve.
The Company recognizes a liability and an expense for bonus where contractually obliged or where there is a past practice that has created a constructive obligation.
1.15 Provisions and contingent liabilities a) Provisions
Provisions for legal claims, quality claims and volume discounts are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions for restructuring are recognised by the Company when it has developed a detailed formal plan for restructuring and has raised a valid expectation in those affected that the Company will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of provision for restructuring includes only direct expenditures arising from the restructuring, which are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the nominal or present value of management''s best estimate of the expenditure required, taking into account the risks and uncertainties surrounding the obligation, to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
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 or a reliable estimate of the amount cannot be made.
Contingent Assets are disclosed, where an inflow of economic benefits is probable. The Company shall not recognised a contingent asset unless the recovery is virtually certain.
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Provision is made for any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
1.18 Earnings per share Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares (Note 43).
Diluted earnings per share adjusts the figures used in the determinatton of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with diluttve potential equity shares, and the weighted average number of addittonal equity shares that would have been outstanding assuming the conversion of all diluttve potenttal equity shares.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The Managing Director, who has been identified as the chief operating decision maker, assesses the financial performance and position of the Company and makes strategic decisions. Refer Note 49 for the segment information presented.
Exceptional items are items of income or expense recorded in the year in which they have been determined by management as being material by their size or incidence in relation to the standalone financial statements and are presented separately within the results of the Company. The determination of which items are disclosed as exceptional items affect the presentation of profit for the year and requires a degree of judgment.
All amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest lakhs with two decimal as per the requirement of Schedule III, unless otherwise stated.
Note 2: Significant accounting assumptions, estimates and judgements
The preparation of standalone financial statements requires the use of accounting estimates which, by definition, will
seldom equal the actual results. Management also needs to exercise assumptions, estimates and judgements in applying the Company''s accounting policies. This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the standalone financial statements. Accounting estimates could change from period to period.
a) Estimation of current tax expense and deferred income tax
The calculation of the Company''s tax charge necessarily involves a degree of estimation and judgement in respect of certain items whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority or, as appropriate, through a formal legal process. The final resolution of some of these items may give rise to material profits/losses and/or cash flows. Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions (Refer Note 36).
The recognition of deferred income tax assets (including MAT Credit)/ liabilities is based upon management''s assessment of future taxable profits for recoverability of the deferred benefit. Expected recoverability may result from sufficient and suitable taxable profits in the future, planned transactions and planned tax optimizing measures. To determine the future taxable profits, reference is made to the latest available profit forecasts.
b) Estimation of Provisions and Contingent Liabilities.
The Company exercises judgement in measuring and recognizing provisions and the exposures to contingent liabilities which is related to pending litigation or other outstanding claims. Judgement is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual liability may be different from the originally estimated as provision (Refer Note 40).
c) Estimated useful life of Property, Plant and Equipment
Property, Plant and Equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company''s assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. Internal and external factors such as changes in the expected level of usage, technological developments, product life cycle, relative efficiencies and operating costs may impact their life and the residual value of these assets. This reassessment may result in change in depreciation and amortization expense and have an impact on profit in future years. For the relative size of the Company''s property, plant and equipment and intangible assets (Refer Note 3 and 4).
The Company writes down inventories to net realisable value
Mar 31, 2018
Note 1: Significant Accounting Policies
This Note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
1.1 Basis of Preparation of Financial Statements
a. Compliance with IND-AS
The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
The financial statements up to year ended March 31, 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act (âPrevious GAAPâ).
These financial statements are the first financial statements of the Company under Ind AS. Refer Note 49 for an explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
The date of transition to Ind AS is April 1, 2016. Refer Note 49 for the first time adoption exemptions availed by the Company.
Reconciliations and explanations for the effect of the transition from Previous GAAP to Ind AS on the Companyâs Balance Sheet, Statement of Profit and Loss and Cash Flow Statement are provided in Note 49.
b. Historical Cost Convention
The financial statements have been prepared on an accrual and going concern basis. The financial statements have been prepared on a historical cost basis, except for the following:
- Certain financial assets and liabilities that is measured at fair value as stated in subsequent policies;
- Assets held for sale - measured at lower of cost or fair value less cost to sell.
1.2 Foreign Currency Translation
a. Functional and Presentation Currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). The financial statements are presented in Indian rupees (R), which is Companyâs functional and presentation currency.
b. Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss on a net basis within other expenses or other income, as applicable.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of initial transaction.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
1.3 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade allowances, rebates, value added tax and amounts collected on behalf of third parties.
The Company recognizes revenue from sale of goods when:
a. The Company has transferred to the buyer the significant risk and reward of ownership of goods;
b. The Company retains neither continuing managerial involvement to the degree usually associated with the ownership nor effective control over the goods sold;
c. The amount of revenue can be reliably measured;
d. It is probable that future economic benefits associated with the transaction will flow to the Company and
e. The cost incurred or to be incurred in respect of the transaction can be measured reliably.
The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Export sales are accounted for on the basis of date of bill of lading. Consignment sales are recognized on confirmation from consignee/ consignment agent.
Revenue from services is recognized when the services are completed.
1.4 Other Income
Dividend income is recognized when right to receive the dividend is established. Interest income is recognized on a time proportion basis, taking into consideration the amount outstanding and the applicable interest rate except interest income from customers which is accounted on receipt basis.
1.5 Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Grants related to assets are government grants whose primary condition is that an entity qualifying for them should purchase, construct or otherwise acquire long-term assets. Grants related to income are government grants other than those related to assets.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented either under âother operating incomeâ or are deducted in reporting the related expense. The presentation approach is applied consistently to all similar grants.
Government grants relating to the purchase of property, plant and equipment are included in liabilities as deferred income and are credited to profit or loss over the periods and in proportions in which depreciation expense on those assets is recognized.
Export Benefits: In case of sale made by the Company as support manufacturer, export benefits arising from Duty Drawback scheme are recognised on export of such goods in accordance with the agreed terms and conditions with customers. In case of direct exports made by the Company, export benefits arising from DEPB, Duty Drawback scheme, Merchandise Export Incentive Scheme, Focus Market Scheme and Focus Product Scheme are recognised on shipment of direct exports.
1.6 Income Tax
The income tax expense or credit for the year is the tax payable on the current yearâs taxable income based on the applicable income tax rate adjusted by changes in deferred income tax assets and liabilities attributable to temporary differences and to unused tax losses.
Current and deferred income tax is recognized in the Statement of Profit and Loss except to the extent it relates to items recognized directly in equity or other comprehensive income, in which case it is recognized in equity or other comprehensive income respectively.
a. Current Income Tax
Current income tax charge is based on taxable profit for the year. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Current tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and Company intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
b. Deferred Income Tax
Deferred income tax is provided in full using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred income tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilized.
Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
The carrying amount of deferred income tax assets is reviewed at each reporting date and adjusted to reflect changes in probability that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to off-set and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and Deferred Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity respectively.
Minimum Alternate Tax (âMATâ) credit entitlement is recognized as a deferred income tax asset by crediting the Statement of Profit and Loss only when and to the extent there is convincing evidence that the Company will be able to avail the said credit against normal tax payable during the period of fifteen succeeding assessment years, if it is probable that MAT credit will reverse in the foreseeable future and taxable profit will be available against which the deferred income tax asset can be utilised.
Dividend distribution tax paid on the dividends is recognised consistently with the presentation of the transaction that creates the income tax consequence. Dividend distribution tax is charged to Statement of Profit and Loss if the dividend itself is charged to statement of profit and loss. If the dividend is recognised in equity, the presentation of dividend distribution tax is recognised in equity.
1.7 Leases
Leases of property, plant and equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the leaseâs inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
1.8 Property, Plant And Equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the assetâs carrying amount or recognised as a 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 derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Capital work-in-progress comprises cost of property, plant and equipment and related expenses that are not yet ready for their intended use at the reporting date.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at April 1, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Depreciation methods, estimated useful lives and residual value
Freehold land is not depreciated. Leasehold improvements are amortised over the shorter of estimated useful life or the related lease term. Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives as follows:
Assets individually costing RS. 5000 or less are depreciated fully in the year of acquisition.
The useful lives have been determined based reporting period.
Appropriate.
As assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other expenses or other income, as applicable.
1.9 Intangible Assets
a. Intangible Assets with Finite Useful Lives
Intangible assets with finite useful lives acquired by the Company are measured at cost less accumulated amortization and accumulated impairment losses. Amortization is charged on a straight-line basis over the estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.
b. Research and Development
Research expenditure and development expenditure that do not meet the criteria in Note 1.9(a) above are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in subsequent period.
c. Amortisation Methods and Periods
Intangible assets comprise of computer software which is amortized on a straight-line basis over its expected useful life over a period of five year
d. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of intangible assets recognised as at April 1, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.
1.10 Impairment of Assets
Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
1.11 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 a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of the assets to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less cost to sell of an assets, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the noncurrent assets is recognised at the date of derecognition.
Non-current assets are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
1.12 Inventories
Raw materials and stores, work in progress, and finished goods
Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost of raw materials comprises cost of purchases. Cost of work-in progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on moving average basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
1.13 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.
Investments and Other Financial Assets
a. Classification
The Company classifies its financial assets in the following measurement categories:
- Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
- Those measured at amortised cost.
The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income.
For investments in debt instruments, recognition will depend on the business model in which the investment is held.
For investments in equity instruments, recognition will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
b. Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
i. Debt Instruments:
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
- Amortised Cost:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in other income using the effective interest rate method.
- Fair Value Through Other Comprehensive Income (FVOCI): â
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other expenses or other incomes, as applicable. Interest income from these financial assets is included in other income using the effective interest rate method. Foreign Exchange gains and losses are presented in other gains and losses and impairment expenses in other expenses.
- Fair Value Through Profit or Loss:
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other expenses or other incomes, as applicable in the period in which it arises. Interest income from these financial assets is included in other income.
ii. Equity Instruments:
The Company subsequently measures all equity investments at fair value. Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there will be no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Companyâs right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
c. Impairment of Financial Assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 38 details how the Company determines whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
d. Derecognition of Financial Assets Revenue Recognition
A financial asset is derecognised only when
- The Company has transferred the rights to receive cash flows from the financial asset or
- Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
e. Income Recognition
i. Interest Income
Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
ii. Dividends
Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
f. Cash and Cash Equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purpose of statement of cash flows, cash and cash equivalents includes outstanding bank overdraft, if any, shown within current liabilities in statement of financial position and which are considered as integral part of Companyâs cash management policy.
g. Trade Receivable
Trade receivable are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
Financial Liabilities
a. Measurement
Financial liabilities are initially recognised at fair value, reduced by transaction costs (in case of financial liability not at fair value through profit or loss), that are directly attributable to the issue of financial liability. After initial recognition, financial liabilities are measured at amortised cost using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash outflow (including all fees paid, transaction cost, and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. At the time of initial recognition, there is no financial liability irrevocably designated as measured at fair value through profit or loss. Liabilities from finance lease agreements are measured at the lower of fair value of the leased asset or present value of minimum lease payments.
b. Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
c. Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in Statement of profit and loss .
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.
Borrowings are classified as current liabilities unless the Company has unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a longterm arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as consequence of the breach.
d. Trade and Other Payables
These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
Financial Guarantee Contracts
a. Derivatives and Hedging Activities
In order to hedge its exposure to foreign exchange, interest rate, and commodity price risks, the Company enters into forward, option, swap contracts and other derivative financial instruments. The Company does not hold derivative financial instruments for speculative purposes.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period.
b. Derivatives that are not Designated as Hedges
The Company enters into derivative contracts to hedge risks which are not designated as hedges. Such contracts are accounted for at fair value through profit or loss.
c. Embedded Derivatives
Derivatives embedded in a host contract that is an asset within the scope of Ind AS 109 are not separated. Financial assets with embedded derivatives are considered in their entirety whendetermining whether their cash flows are solely payment of principal and interest.
Derivatives embedded in all other host contract are separated only if the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host and are measured at fair value through profit or loss. Embedded derivatives closely related to the host contracts are not separated.
d. Embedded Foreign Currency Derivatives
Embedded foreign currency derivatives are not separated from the host contract if they are closely related. Such embedded derivatives are closely related to the host contract, if the host contract is not leveraged, does not contain any option feature and requires payments in one of the following currencies:
- The functional currency of any substantial party to that contract
- The currency in which the price of the related good or service that is acquired or delivered is routinely denominated in commercial transactions around the world, or
- A currency that is commonly used in contracts to purchase or sell non-financial items in the economic environment in which the transaction takes place (i.e. relatively liquid and stable currency)
Foreign currency embedded derivatives which do not meet the above criteria are separated and the derivative is accounted for at fair value through profit and loss. The Company currently does not have any such derivatives which are not closely related.
e. Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
1.14 Borrowing Costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
Other borrowing costs are expensed in the period in which they are incurred.
1.15 Short-Term Obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
Other Long-Term Employee Benefit Obligations
The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
Post-Employment Obligations
The Company operates the following postemployment schemes:
- Defined benefit plans such as gratuity, and
- Defined contribution plans such as provident fund and superannuation fund.
a. Defined Benefit Plans
i. Gratuity Obligations
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The benefits which are denominated in currency other than INR, the cash flows are discounted using market yields determined by reference to high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Remeasurements are not reclassified to profit and loss in the subsequent periods.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
b. Defined Contribution Plans
i. Provident Fund, Employee State Insurance Corporation (ESIC) and Labour Welfare Fund (LWF).
The Contribution towards provident fund, ESIC, LWF for certain employees is made to the regulatory authorities where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations apart from the contributions made on a monthly basis.
ii. Superannuation Fund
Contribution towards superannuation fund for certain employees is made to defined contribution scheme administered by insurance Company where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from contribution made on monthly basis.
Bonus Plan
The Company recognises a liability and an expense for bonuses. The Company recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
1.16 Provisions and Contingent Liabilities
a. Provisions
Provisions for legal claims, service warranties, volume discounts and returns are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions for restructuring are recognised by the Company when it has developed a detailed formal plan for restructuring and has raised a valid expectation in those affected that the Company will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
The measurement of provision for restructuring includes only direct expenditures arising from the restructuring, which are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.
b. Contingent Liabilities
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 nonoccurrence 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 or a reliable estimate of the amount cannot be made.
c. Contingent Assets
Contingent Assets are disclosed, where an inflow of economic benefits is probable. An entity shall not recognise a contingent asset unless the recovery is virtually certain.
1.17 Contributed Equity
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
1.18 Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
1.19 Earnings Per Share
Basic Earnings Per Share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares. (Note 41)
Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
1.20 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The managing director, who has been identified as the chief operating decision maker, assesses the financial performance and position of the Company and makes strategic decisions. Refer Note 48 for the segment information presented.
1.21 Rounding of Amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs with two decimal as per the requirement of Schedule III, unless otherwise stated.
1.22 New Standards/ Amendments to Existing Standards Issued but Not Yet Adopted
Following are the amendments to existing standards which have been issued by The Ministry of Corporate Affairs (âMCAâ) that are not effective for the reporting period and have not been early adopted by the Company:
Ind AS 115- Revenue from contracts with customers
Ind AS 115 âRevenue from contracts with customersâ deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entityâs contracts with customers.
Revenue is recognised when a customer obtains control of a promised good or service and thus has the ability to direct the use and obtain the benefits from the good or service in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard replaces Ind AS 18 Revenue and Ind AS 11 Construction contracts and related appendices.
A new five-step process must be applied before revenue can be recognised:
1. Identify contracts with customers
2. Identify the separate performance obligation
3. Determine the transaction price of the contract
4. Allocate the transaction price to each of the separate performance obligations, and
5. Recognise the revenue as each performance obligation is satisfied.
The new standard is mandatory for financial years commencing on or afteRs. 1 April 2018 and early application is not permitted. The standard permits either a full retrospective or a modified retrospective approach for the adoption.
Ind AS 21- Foreign Currency Transactions and Advance Consideration
The MCA has notified Appendix B to Ind AS 21, Foreign currency transactions and advance consideration. The appendix clarifies how to determine the date of transaction for the exchange rate to be used on initial recognition of a related asset, expense or income where an entity pays or receives consideration in advance for foreign currency-denominated contracts.
For a single payment or receipt, the date of the transaction should be the date on which the entity initially recognises the non-monetary asset or liability arising from the advance consideration (the prepayment or deferred income/contract liability). If there are multiple payments or receipts for one item, date of transaction should be determined as above for each payment or receipt.
The appendix can be applied:
- Retrospectively for each period presented applying Ind AS 8;
- Prospectively to items in scope of the appendix that are initially recognised
- On or after the beginning of the reporting period in which the appendix is first applied (i.e. 1 April 2018 for entities with March year-end); or
- From the beginning of a prior reporting period presented as comparative information (i.e. 1 April 2017 for entities with March year-end).
Ind AS 40- Investment Property (Transfers of Investment Property)
The amendments clarify that transfers to, or from, investment property can only be made if there has been a change in use that is supported by evidence. A change in use occurs when the property meets, or ceases to meet, the definition of investment property. A change in intention alone is not sufficient to support a transfer. The list of evidence for a change of use in the standard was recharacterised as a nonexhaustive list of examples and scope of these examples have been expanded to include assets under construction/development and not only transfer of completed properties.
The amendment provides two transition options. Entities can choose to apply the amendment:
- Retrospectively without the use of hindsight; or
- Prospectively to changes in use that occur on or after the date of initial application (i.e. 1 April 2018 for entities with March year-end). At that date, an entity shall reassess the classification of properties held at that date and, if applicable, reclassify properties to reflect the conditions that exist as at that date.
Ind AS 12- Income Taxes (Recognition of Deferred Tax Assets on Unrealised Losses)
The amendments clarify the accounting for deferred taxes where an asset is measured at fair value and that fair value is below the assetâs tax base. They also clarify certain other aspects of accounting for deferred tax assets set out below:
- A temporary difference exists whenever the carrying amount of an asset is less than its tax base at the end of the reporting period.
- The estimate of future taxable profit may include the recovery of some of an entityâs assets for more than its carrying amount if it is probable that the entity will achieve this. For example, when a fixed-rate debt instrument is measured at fair value, however, the entity expects to hold and collect the contractual cash flows and it is probable that the asset will be recovered for more than its carrying amount.
- Where the tax law restricts the source of taxable profits against which particular types of deferred tax assets can be recovered, the recoverability of the deferred tax assets can only be assessed in combination with other deferred tax assets of the same type.
- Tax deductions resulting from the reversal of deferred tax assets are excluded from the estimated future taxable profit that is used to evaluate the recoverability of those assets. This is to avoid double counting the deductible temporary differences in such assessment. An entity shall apply the amendments to Ind AS 12 retrospectively in accordance with Ind AS 8. However, on initial application of the amendment, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity.
Mar 31, 2014
I) Basis of preparation of financial statements
The financial statements of the Company have been prepared on going
concern basis in accordance with generally accepted accounting
principles in India (Indian GAAP). The Company has prepared these
financial statements to comply in all material respect with accounting
standards notifed under the Companies (Accounting Standards) Rules,
2006, (as amended) and the relevant provisions of the Companies Act,
1956 read with general circular 8/2014 dated 4 April 2014 issued by
Ministry of Corporate Affairs. The financial statements have been
prepared on accrual basis and under the historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of the previous year.
ii) Use of estimates
The preparation of the financial statements requires the management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent liabilities as at the
date of the financial statements and the reported amount of revenue and
expenses of the year. The estimates and assumptions used in the
accompanying financial statements are based upon management''s evaluation
of the relevant facts and circumstances as of the date of the financial
statements. The examples of such estimates include the useful life of
the tangible and intangible assets, allowance for doubtful
debts/advances, future obligations in respect of retirement benefit plan
etc. Actual results could differ from those estimates and in such case
the difference is recognised when known or materialised.
iii) Tangible and intangible assets
a) Tangible assets are stated at original cost of acquisition /
installation (net of cenvat credit availed) net of accumulated
depreciation, amortization and impairment losses except freehold land
which is carried at cost. Cost includes cost of acquisition,
construction and installation, taxes, duties, freight, other incidental
expenses related to the acquisition, trial run expenses (net of
revenue) and pre-operative expenses including borrowing costs incurred
during pre-operational period.
b) Tangible assets which are not ready for their intended use on
reporting date are carried as capital work-in-progress at cost,
comprising direct cost and related incidental expenses.
c) Intangible assets are carried at cost, net of accumulated
amortization and impairment loss, if any.
iv) Depreciation/amortization on tangible and intangible assets
a) Depreciation on tangible assets is provided on Straight Line Method
at the rates prescribed in Schedule XIV to the Companies Act, 1956.
Depreciation on both Partially Oriented Yarn (POY) and Bulk Continuous
Filament Yarn (BCF) Plant and Machinery is charged as continuous
process plant based on technical opinion taken by the Company/Expert.
b) Intangible assets are amortized on a straight-line basis over its
expected useful life as estimated by the management.
v) Impairment of tangible and intangible assets
At each balance sheet date, the Company reviews the carrying amount of
tangible and intangible assets to determine whether there is any
indication that those assets suffered impairment loss. If any such
indication exists, the recoverable amount of the assets is estimated in
order to determine the extent of impairment loss. The recoverable
amount is higher of the net selling price and value in use, determined
by discounting the estimated future cash flows expected from the
continuing use of the asset to their present value.
vi) Borrowing costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets are capitalized as part of cost of such assets. All
other borrowing costs are charged to revenue.
vii) Revenue recognition
a) Revenue from sale of goods is recognized on transfer of significant
risks and rewards of ownership to the customers, which is generally on
dispatch of goods. Export Sales are accounted for on the basis of date
of bill of lading. Gross Sales include excise duty and adjustments for
price variations and is net of value added tax. Consignment sales are
recognized on confirmation from consignee.
b) Export benefits: Duty Drawback, Focus Market and Focus Product are
accounted on accrual basis.
c) Revenue from Services is recognized when the services are completed.
d) Dividend income is recognized when the right to receive the dividend
is established.
e) Interest income is recognized on a time proportion basis taking into
account outstanding amount and the applicable interest rate except
interest income from customers which is accounted on receipt basis.
viii) Operating lease
Lease of assets under which all the risks and rewards of ownership are
effectively retained by the lessor are classified as operating lease.
Lease payments under operating leases are recognized as an expense on
accrual basis in accordance with the respective lease agreements.
ix) Investments
a) Investments, which are readily realisable and are intended to be
held for not more than one year from the date on which such investments
are made, are classified as current investments. All other investments
are classified as long-term investments.
b) Long-term investments are valued at cost less provision for
diminution other than temporary, in the value of such investments.
Current investments are valued at lower of cost and fair value.
x) Inventories
Inventories are valued at lower of cost and net realizable value. The
basis of determining cost for various categories of inventories is as
follows:
a) Raw materials, Stores and spares, Colour and chemicals and Packing
materials: Moving weighted average basis.
b) Goods-in-process  Cost of materials plus labour and other
production overheads.
c) Finished goods  Cost of materials plus labour, production overheads
and excise duty on such goods. xi) Accounting for taxes on income
a) Current tax is determined as the amount of tax payable in respect of
taxable income for the year computed as per the provisions of the
Income Tax Act, 1961.
b) Deferred tax is recognized subject to consideration of prudence, on
timing difference, 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 and measured using relevant
enacted tax rates.
xii) Employee benefits
a) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the statement of Profit and loss of the year in
which the related services are rendered.
b) Post employment and other long-term benefits are recognized as an
expense in the statement of Profit and loss of the year in which the
employee has rendered services. The expense is recognized at the
present value of the amounts payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long-term benefits are recognized in the statement
of Profit and loss.
c) Payments to Defined contribution retirement benefit schemes are
charged as expense as and when they fall due. xiii) Foreign currency
transactions
a) Transactions in foreign currency are accounted at the exchange rate
prevailing on the date of such transactions. Current monetary assets
and liabilities are translated at the exchange rate prevailing at the
reporting date. Non-monetary items are carried at cost.
b) In respect of forward contracts assigned to the foreign currency
assets and liabilities as at balance sheet date, the proportionate
premium / discount for the period up to the date of balance sheet is
recognized in the statement of Profit and loss. The exchange difference
measured by the change rate between the inception of forward contract
and date of balance sheet is applied on foreign currency amount of the
forward contract and is recognized in the statement of Profit and loss.
c) Gains or losses arising on remittance / translations at the year-
end are credited / debited to the statement of Profit and loss except
treatment as per amendment to AS-11 effective till 31 March 2020 (Refer
note 37).
xiv) Earnings per share
Basic earnings per share is computed and disclosed using the weighted
average number of equity shares outstanding during the year. Dilutive
earnings per share is computed and disclosed using the weighted average
number of equity and dilutive equity equivalent shares outstanding
during the year, except when the results would be anti-dilutive.
xv) Provisions, contingent liabilities and contingent assets
a) Contingent liabilities are disclosed in respect of possible
obligations that arise from past events but their existence will be
confirmed by the occurrence or non-occurrence of one or more uncertain
future events. A provision is made when it is probable that an outflow
of resources embodying economic benefits will be required to settle an
obligation and in respect of which a reliable estimate can be made.
Provision is not discounted and is determined based on best estimate
required to settle the obligation at the year end date.
b) Contingent Assets are not recognized or disclosed in the financial
statements.
(a) Term loans from banks except (g) & (h) below, are secured by way of
frst charge on immovable and movable assets of the Company, both
present and future, ranking pari passu and also secured by second
charge on current assets subject to prior charge in favour of banks for
working capital facilites.
(b) Term loan of Rs. 1,239.57 lacs (Rs. Nil) from Central Bank of India
carries interest @ 13.00% p.a.and is repayable in 28 quarterly
instalments commencing from 28 February 2016.
(c) Term loan of Rs. 4,147.61 lacs (Rs. 3,007.03 lacs) from Industrial
Development Bank of India carries interest @ 12.50 % p.a.and is
repayable in 28 stepped-up quarterly instalments ranging from 2.50% to
4.75% per quarter of disbursed loan amount commencing from 01 April
2014.
(d) Converted rupee term loan of Rs. 105.88 lacs (Rs.526.30 lacs) from
State Bank of Bikaner and Jaipur carries interest @ 13.50% p.a. and is
repayable in single instalment on 15 April 2014.
(e) Rupee term loan of Rs. 1,130.32 lacs (Rs. Nil) from State Bank of
Bikaner and Jaipur carries interest @ 13.50% p.a.and is repayable in 13
stepped-up quarterly instalments ranging from 3.06% to 5.10% of
disbursed loan amount.
(f) Term loan of Rs. 885.54 lacs (Rs. 1,987.76 lacs) from State Bank of
Bikaner and Jaipur carries interest @ LIBOR 4.00% p.a. and is repayable
in 7 stepped-up quarterly instalments ranging from 5.10% to 5.73% of
disbursed loan amount.
(g) Term loan of Rs. 1,500.00 lacs (Rs. Nil) from State Bank of Bikaner and
Jaipur is secured by frst charge, ranking pari passu, by way of
hypothecation of company''s raw materials, goods-in-process, fnished
goods, stores, spares and book debts and second charge, ranking pari
passu, on fixed assets (immovebale) of the company. It carries interest
@ 13.50 % p.a.and is repayable in 6 quarterly instalments of Rs.250
lacs each starting from 31 December 2014.
(h) Converted rupee term loan of Rs. 625 lacs (Rs. 1,786.42 lacs) from
State Bank of Bikaner and Jaipur is secured by frst charge ranking pari
passu by way of hypothecation of company''s raw materials,
goods-in-process, fnished goods, stores, spares, book debts and other
current assets and second charge, ranking pari passu, on fixed assets
(immoveable) of the company. It carries interest @ 12.50% p.a. and is
repayable in 2 quarterly equal instalments of Rs. 312.50 lacs.
(i) Term loan of Rs. 4,341.22 lacs (Rs. 2,879.96 lacs) from Bank of Baroda,
Dubai carries interest @ LIBOR 4.25% p.a. and is repayable in 28
quarterly instalments ranging from 2.5% to 4.75% of disbursed loan
amount commencing from 30 June 2014.
Notes forming part of the financial statements
( Rs. in Lacs ) (j) Term loan of Rs. Nil (Rs. 92.47 lacs) from Bank of Baroda
carrying interest @ 13.25% p.a. has been fully repaid during the year.
(k) Term loan of Rs. Nil (Rs. 87.00 lacs) from State Bank of India carrying
interest @ 14.15% p.a. has been fully repaid during the year.
(l) Term loan of Rs. Nil (Rs. 76.67 lacs) from State Bank of Bikaner and
Jaipur carrying interest @ 13.90% p.a. has been fully repaid during the
year.
(m) Buyer''s credit from bank of Rs. Nil (Rs.1,099.00 lacs) carrying
interest @ LIBOR 2.50% p.a. has been fully repaid during the year.
Mar 31, 2013
I) Basis of preparation of financial statements
The financial statements are prepared in accordance with the Indian
Generally Accepted Accounting Principles ("GAAP") as a going concern
under the historical cost convention on an accrual basis and comply in
all material aspects with accounting standards under section 211(3C),
Companies (Accounting Standards) Rules, 2006, the provisions of
Companies Act, 1956 and guidelines issued by the Securities and
Exchange Board of India (SEBI).
ii) Use of estimates
The preparation of the financial statements requires the management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent liabilities as at the
date of the financial statements and the reported amount of revenue and
expenses of the year. Actual results could differ from those estimates.
Any revision of such accounting estimate is recognized prospectively in
current and future periods.
iii) Tangible and intangible assets
a) Tangible assets are stated at original cost of acquisition /
installation (net of cenvat credit availed) net of accumulated
depreciation, amortization and impairment losses. Cost includes cost of
acquisition, construction and installation, taxes, duties, freight,
other incidental expenses related to the acquisition, trial run
expenses (net of revenue) and borrowing cost incurred during
pre-operational period.
b) Capital work-in-progress comprises cost of tangible assets and
related expenses that are not yet ready for their intended use at the
reporting date.
c) Cost of Software includes license fees, cost of implementation and
system integration and capitalized as intangible assets in the year in
which the relevant software is put to use.
iv) Depreciation/amortization on tangible and intangible assets
a) Depreciation on tangible assets is provided on Straight Line Method
at the rates prescribed in Schedule XIV to the Companies Act, 1956.
Depreciation on Partially Oriented Yarn (POY) Plant and Machinery is
charged as continuous process plant based on expert''s opinion.
b) Software is amortized over a period of five years from the date of
its use based on management''s estimate of useful life.
v) Impairment of tangible and intangible assets
At each balance sheet date, the Company reviews the carrying amount of
tangible and intangible assets to determine whether there is any
indication that those assets suffered impairment loss. If any such
indication exists, the recoverable amount of the assets is estimated in
order to determine the extent of impairment loss. The recoverable
amount is higher of the net selling price and value in use, determined
by discounting the estimated future cash flows expected from the
continuing use of the asset to their present value.
vi) Borrowing costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets are capitalized as part of cost of such assets. All
other borrowing costs are charged to revenue.
vii) Revenue recognition
a) Revenue from sale of goods is recognized on transfer of significant
risks and rewards of ownership to the customers, which is generally on
dispatch of goods. Export Sales are accounted for on the basis of date
of bill of lading. Gross Sales include excise duty and adjustments for
price variations and is net of value added tax. Consignment sales are
recognized on confirmation from consignee.
b) Export benefits: Duty Drawback, Focus Market and Focus Product are
accounted on accrual basis.
c) Revenue from Services is recognized when the services are completed.
d) Dividend income is recognized when the right to receive the dividend
is established.
e) Interest income is recognized on a time proportion basis taking into
account outstanding amount and the applicable interest rate.
viii) Operating lease
Lease of assets under which all the risks and rewards of ownership are
effectively retained by the lessor are classified as operating lease.
Lease payments under operating leases are recognized as an expense on
accrual basis in accordance with the respective lease agreements.
ix) Investments
Investments intended to be held for more than a year, from the date of
acquisition, are classified as long-term and are stated at cost.
Provision for diminution in value of long-term investments is made to
recognize a decline other than temporary in nature. Current investments
are stated at cost or fair value, whichever is lower.
x) Inventories
Inventories are valued at lower of cost and net realizable value. The
basis of determining cost for various categories of inventories is as
follows:
a) Raw materials, Stores and Spares and Colour and Chemicals, Packing
Materials: Moving weighted average basis.
b) Goods in process and finished goods  Cost of direct materials,
labour and other manufacturing expenses.
c) Excise duty liabilty is included in the valuation of closing
inventory of finished goods.
xi) Accounting for taxes on income
a) Current tax is determined as the amount of tax payable in respect of
taxable income for the year computed as per the provisions of the
Income Tax Act, 1961.
b) Deferred tax is recognized subject to consideration of prudence, on
timing difference, 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 and measured using relevant
enacted tax rates.
xii) Employee benefits
a) Short- term employee benefits are recognized as an expense at the
undiscounted amount in the statement of profit and loss of the year in
which the related services are rendered.
b) Post employment and other long- term benefits are recognized as an
expense in the statement of profit and loss of the year in which the
employee has rendered services. The expense is recognized at the
present value of the amounts payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long-term benefits are recognized in the statement
of profit and loss.
c) Payments to defined contribution retirement benefit schemes are
charged as expense as and when they fall due.
xiii) Foreign currency transactions
a) Foreign exchange transactions are converted into Indian Rupees at
the prevailing rate on the date of transactions. Current monetary
assets and liabilities are translated at the exchange rate prevailing
on the last day of the year. Non monetary items are carried at cost.
b) In respect of forward contracts assigned to the foreign currency
assets and liabilities as at balance sheet date, the proportionate
premium / discount for the period up to the date of balance sheet is
recognized in the statement of profit and loss. The exchange difference
measured by the change rate between the inception of forward contract
and date of balance sheet is applied on foreign currency amount of the
forward contract and is recognized in the statement of profit and loss.
c) Gains and losses on account of difference in foreign exchange rate
on settlement / translation attributable to fixed assets (acquired
prior to 1 April 2004) are adjusted to the carrying amount of the
respective assets. In case of fixed assets acquired in foreign currency
after 1 April 2004, the gains and losses on account of difference in
foreign exchange rate on settlement / translation are recognized in the
statement of profit and loss, except treatment as per amendment to
AS-11 effective till 31 March 2020.
xiv) Provisions, contingent liabilities and contingent assets
a) Contingent liabilities are disclosed in respect of possible
obligations that arise from past events but their existence will be
confirmed by the occurrence or non-occurrence of one or more uncertain
future events. A provision is made when it is probable that an outflow
of resources embodying economic benefits will be required to settle an
obligation and in respect of which a reliable estimate can be made.
Provision is not discounted and is determined based on best estimate
required to settle the obligation at the year end date.
b) Contingent assets are not recognized or disclosed in the financial
statements.
xv) Earnings per share
Basic earnings per share is computed and disclosed using the weighted
average number of equity shares outstanding during the year. Dilutive
earnings per share is computed and disclosed using the weighted average
number of equity and dilutive equity equivalent shares outstanding
during the year, except when the results would be anti-dilutive.
Mar 31, 2012
I) Basis of preparation
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles ("GAAP") under the
historical cost convention on an accrual basis and comply in all
material aspects with accounting standards notified under section 211
(3C), Companies (Accounting Standards) Rules, 2006, the provisions of
Companies Act, 1956.
ii) Use of estimates
The preparation of the financial statements requires the management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent liabilities as at the
date of the financial statements and the reported amount of revenue and
expenses of the year. Actual results could differ from those estimates.
Any revision of such accounting estimate is recognized prospectively in
current and future periods.
iii) Tangible and intangible assets
a) Tangible fixed assets are stated at original cost of acquisition /
installation (net of cenvat credit availed) net off accumulated
depreciation, amortization and impairment losses. Cost includes cost of
acquisition, construction and installation, taxes, duties, freight,
other incidental expenses related to the acquisition, trial run
expenses (net of revenue) and borrowing cost incurred during
pre-operational period.
b) Capital work-in-progress comprises cost of fixed assets and related
expenses that are not yet ready for their intended use at the reporting
date.
c) Cost of Software includes license fees, cost of implementation and
system integration and capitalized as intangible assets in the year in
which the relevant software is put to use.
iv) Depreciation/amortization on tangible and intangible assets
a) Depreciation on tangible fixed assets is provided on Straight Line
Method at the rates prescribed in Schedule XIV to the Companies Act,
1956. Depreciation on Partially Oriented Yarn (POY) Plant and Machinery
is charged as continuous process plant based on expert's opinion.
b) Software is amortized over a period of five years from the date of
its use based on management's estimate of useful life.
v) Impairment of tangible and intangible assets
At each balance sheet date, the Company reviews the carrying amount of
fixed assets to determine whether there is any indication that those
assets suffered impairment loss. If any such indication exists, the
recoverable amount of the assets is estimated in order to determine the
extent of impairment loss. The recoverable amount is higher of the net
selling price and value in use, determined by discounting the estimated
future cash flows expected from the continuing use of the asset to
their present value.
vi) Borrowing costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets are capitalized as part of cost of such assets. All
other borrowing costs are charged to revenue.
vii) Revenue recognition
a) Revenue from sale of goods is recognized on transfer of significant
risks and rewards of ownership to the customers, which is generally on
dispatch of goods. Export Sales are accounted for on the basis of date
of bill of lading. Gross Sales include excise duty and adjustments for
price variations and is net of value added tax. Consignment sales are
recognized on confirmation from consignee.
b) Export benefits: Duty Entitlement Pass Book (DEPB), Focus Market and
Focus Product are accounted on accrual basis.
c) Revenue from Services is recognized when the services are completed.
d) Dividend income is recognized when the right to receive the dividend
is established.
e) Interest income is recognized on a time proportion basis taking into
account outstanding amount and the applicable interest rate.
viii) Operating lease
Lease of assets under which all the risks and rewards of ownership are
effectively retained by the lessor are classified as operating lease.
Lease payments under operating leases are recognized as an expense on
accrual basis in accordance with the respective lease agreements.
ix) Investments
Investments intended to be held for more than a year, from the date of
acquisition, are classified as long-term and are stated at cost.
Provision for diminution in value of long-term investments is made to
recognize a decline other than temporary in nature. Current investments
are stated at cost or fair value, whichever is lower.
x) Inventories
Inventories are valued at lower of cost and net realizable value. The
basis of determining cost for various categories of inventories is as
follows:
a) Raw materials, Stores and Spares and Colour and Chemicals, Packing
Materials: Moving weighted average basis.
b) Goods in process and finished goods - Cost of direct materials,
labour and other manufacturing expenses.
c) Excise duty liabilty is included in the valuation of closing
inventory of finished goods.
xi) Accounting for taxes on income
a) Current tax is determined as the amount of tax payable in respect of
taxable income for the year computed as per the provisions of the
Income Tax Act, 1961.
b) Deferred tax is recognized subject to consideration of prudence, on
timing difference, 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 and measured using relevant
enacted tax rates.
xii) Employee benefits
a) Short- term employee benefits are recognized as an expense at the
undiscounted amount in the statement of profit and loss of the year in
which the related services are rendered.
b) Post employment and other long- term benefits are recognized as an
expense in the statement of profit and loss of the year in which the
employee has rendered services. The expense is recognized at the
present value of the amounts payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long-term benefits are recognized in the statement
of profit and loss.
c) Payments to defined contribution retirement benefit schemes are
charged as expense as and when they fall due.
xiii) Foreign currency transaction
a) Foreign exchange transactions are converted into Indian Rupees at
the prevailing rate on the date of transactions. Current monetary
assets and liabilities are translated at the exchange rate prevailing
on the last day of the year. Non monetary items are carried at cost.
b) In respect of forward contracts assigned to the foreign currency
assets and liabilities as at balance sheet date, the proportionate
premium / discount for the period up to the date of balance sheet is
recognized in the statement of profit and loss. The exchange difference
measured by the change rate between the inception of forward contract
and date of balance sheet is applied on foreign currency amount of the
forward contract and is recognized in the statement of profit and loss.
c) Gains and losses on account of difference in foreign exchange rate
on settlement / translation attributable to fixed assets (acquired
prior to 1 April 2004) are adjusted to the carrying amount of the
respective assets. In case of fixed assets acquired in foreign currency
after 1 April 2004, the gains and losses on account of difference in
foreign exchange rate on settlement / translation are recognized in the
statement of profit and loss, except treatment as per amendment to
AS-11 effective till 31 March 2020.
xiv) Provisions, contingent liabilities and contingent assets
a) Contingent liabilities are disclosed in respect of possible
obligations that arise from past events but their existence will be
confirmed by the occurrence or non-occurrence of one or more uncertain
future events. A provision is made when it is probable that an outflow
of resources embodying economic benefits will be required to settle an
obligation and in respect of which a reliable estimate can be made.
Provision is not discounted and is determined based on best estimate
required to settle the obligation at the year end date.
b) Contingent assets are not recognized or disclosed in the financial
statements.
xv) Earnings per share
Basic earnings per share is computed and disclosed using the weighted
average number of equity shares outstanding during the year. Dilutive
earnings per share is computed and disclosed using the weighted average
number of equity and dilutive equity equivalent shares outstanding
during the year, except when the results would be anti-dilutive.
Mar 31, 2011
A) Basis of Accounting
The financial statements have been prepared under the Historical Cost
Convention on accrual basis and in accordance with the generally
accepted accounting principles (GAAP) and Accounting Standards as
specified in Companies (Accounting Standards) Rules, 2006 as prescribed
by the Central Government.
b) Use of Estimates
The preparation of the financial statements in accordance with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent liabilities as at the
date of the financial statements and the reported amount of revenue and
expenses of the year. Actual results could differ from those estimates.
Any revision of such accounting estimate is recognized prospectively in
current and future periods.
c) Fixed Assets
(i) Fixed assets are stated at original cost of acquisition /
installation (net of cenvat credit availed) net of accumulated
depreciation, amortization and impairment losses except freehold land
which is carried at cost. The cost of fixed assets includes cost of
acquisition, construction and installation, taxes, duties, freight,
other incidental expenses related to the acquisition, trial run
expenses (net of revenue) and borrowing cost incurred during pre-
operational period.
(ii) Cost of Software includes license fees, cost of implementation and
system integration and capitalized as intangible assets in the year in
which the relevant software is put to use.
d) Depreciation
(i) Depreciation on fixed assets is provided on Straight Line Method at
the rates prescribed in Schedule XIV to the Companies Act, 1956.
Depreciation on POY Plant and Machinery is charged as continuous
process plant based on expert's opinion.
(ii) Depreciation on the addition on account of increase/decrease in
rupee liability on realignment of foreign currency Loan is provided
prospectively.
(iii) Software is amortized over a period of five years from the date
of its use based on management's estimate of useful life.
e) Impairment of Assets
If the carrying amount of fixed assets exceeds the recoverable amount
on the reporting date, the carrying amount is reduced to the
recoverable amount. The recoverable amount is measured as the higher of
the net selling price and value in use determined by the present value
of estimated future cash flows. An impairment loss is charged to the
profit and loss account in the year in which an asset is identified as
impaired.
f) Borrowing Costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets are capitalized as part of the cost of such assets.
All other borrowing costs are charged to revenue.
g) Revenue Recognition
(i) Revenue from sale of goods is recognized on transfer of significant
risks and rewards of ownership to the customers, which is generally on
dispatch of goods. Export Sales are accounted for on the basis of date
of bill of lading. Gross Sales include excise duty, exchange rate
variations related to exports and is net of value added tax.
Consignment sales are recognized on confirmation from consignee.
(ii) Export benefits are accounted on accrual basis.
(iii) Dividend income is recognized when the right to receive the
dividend is unconditional.
h) Operating Lease
Lease of assets under which all the risks and rewards of ownership are
effectively retained by the lessor have been classified as operating
leases. Lease payments under operating leases are recognized as an
expense on accrual basis in accordance with the respective lease
agreement.
i) Investments
Investments intended to be held for more than a year, from the date of
acquisition, are classified as long-term investments and are carried at
cost. However, provision for diminution in value of long-term
investments is made to recognize a decline other than temporary.
Current investments are stated at cost or fair value whichever is
lower.
j) Inventories
(i) Inventories are valued at lower of cost and Net Realizable value.
(ii) The basis for determining cost for various categories of
inventories is as follows:
Work / Goods in Process : Cost of Direct Material, Labour and
and Finished Goods other Manufacturing Overheads
Raw materials, Stores
and Spares and : Moving weighted average basis
Colour and Chemicals,
Packing materials
(iii) Excise duty is added in the Closing Inventory of Finished Goods
k) Accounting for Taxes on Income
(i) Current tax is determined as the amount of tax payable in respect
of taxable income of the year computed as per Income Tax Act, 1961.
(ii) Deferred tax is recognized subject to consideration of prudence,
on timing difference, being the difference between taxable income and
accounting income that originate in one period and is capable of
reversal in one or more subsequent periods and measured using
prevailing enacted or substantively enacted tax rates.
l) Employee Benefits
(i) Short term employee benefits are recognized as an expense at the
undiscounted amount in the Profit and Loss account of the year in which
the related service is rendered.
(ii) Post employment and other long term benefits are recognized as an
expense in the profit and loss account of the year in which the
employee has rendered services. The expense is recognized at the
present value of the amounts payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long-term benefits are charged to the Profit and
Loss account.
(iii) Payments to defined contribution retirement benefit schemes are
charged as expenses as and when they fall due.
m) Foreign Currency Transaction
(i) Foreign exchange transactions are converted into Indian Rupees at
the prevailing rate on the date of transactions. Current monetary
assets and liabilities are translated at the exchange rate prevailing
on the last day of the year. Non monetary items are carried at cost.
(ii) In respect of forward contracts assigned to the foreign currency
assets and liabilities as at balance sheet date, the proportionate
premium / discount for the period up to the date of balance sheet is
recognized in the profit and loss account. The exchange difference
measured by the change rate between the inception of forward contract
and date of balance sheet is applied on foreign currency amount of the
forward contract and is recognized in the profit and loss account.
(iii) Gains and losses on account of difference in foreign exchange
rate on settlement / translation attributable to fixed assets (acquired
prior to 1 April 2004) are adjusted to the carrying amount of the
respective assets. In case of fixed assets acquired in foreign currency
after 1 April 2004, the gains and losses on account of difference in
foreign exchange rate on settlement / translation are recognized in the
profit and loss account, except treatment as per amendment to AS-11
effective till 31 March 2012 (Refer note 17(b)).
Mar 31, 2010
A) Basis of Accounting
The fnancial statements have been prepared under the Historical Cost
Convention on the basis of going concern and in accordance with the
accounting standards referred to in Section 211(3C) of the Companies
Act 1956.
b) Use of Estimates
The preparation of the fnancial statements in accordance with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent liabilities as at the
date of the fnancial statements and the reported amount of revenue and
expenses of the year. Actual results could differ from those
estimates. Any revision of such accounting estimate is recognized
prospectively in current and future periods.
c) Fixed Assets
(i) Fixed assets are stated at original cost of acquisition /
installation (net of cenvat credit availed) net of accumulated
depreciation, amortization and impairment losses except land which is
carried at cost. The cost of fxed assets includes cost of acquisition,
taxes, duties, freight, other incidental expenses related to the
acquisition, construction and installation including trial run expenses
(net of revenue) and borrowing cost incurred during preoperational
period.
(ii) The cost of Software includes license fees, cost of implementation
and system integration and capitalized as intangible assets in the year
in which the relevant software is put to use.
d) Depreciation
(i) Depreciation on fxed assets is provided on Straight Line Method at
the rates prescribed in Schedule XIV to the Companies Act, 1956.
Depreciation on POY Plant and Machinery is charged as continuous
process plant based on expertÃs opinion.
(ii) Depreciation on the addition on account of increase/decrease in
rupee liability on realignment of foreign currency Loan is provided
prospectively.
(iii) Capitalized cost of software is amortized over a period of fve
years.
e) Impairment of Assets
If the carrying amount of fxed assets exceeds the recoverable amount on
the reporting date, the carrying amount is reduced to the recoverable
amount. The recoverable amount is measured as the higher of the net
selling price and value in use determined by the present value of
estimated future cash fows. An impairment loss is charged to the proft
and loss account in the year in which an asset is identifed as
impaired.
f) Borrowing Costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets are capitalized as part of the cost of such assets.
All other borrowing costs are charged to revenue.
g) Revenue Recognition
(i) Sale of goods is recognised when the risks and rewards of ownership
are passed on to the customers, which is generally on dispatch. Export
sales are accounted for on the basis of date of bill of lading. Gross
Sales include excise duty and is net of Value Added Tax. Consignment
sales are recognized on confrmation from consignee.
(ii) Export benefts are accounted on accrual basis.
h) Operating Lease
Lease of assets under which all the risks and rewards of ownership are
effectively retained by the lessor have been classifed as operating
leases. Lease payments under operating leases are recognized as an
expense on accrual basis in accordance with the respective lease
agreement.
i) Investments
Investments intended to be held for more than a year, from the date of
acquisition, are classifed as long-term investments and are carried at
cost. However, provision for diminution in value of investments is made
to recognize a decline other than temporary.
j) Inventories
(i) Inventories are valued at lower of cost or Net Realizable value.
(ii) The basis for determining cost for various categories of
inventories is as follows:
Work / Goods in Process : Cost of Direct Material, Labour and other
and Finished Goods Manufacturing Overheads
Raw materials, Stores
and Spares and : Moving weighted average basis
Colour and Chemicals,
Packing materials
(iii) Excise duty is added in the Closing Inventory of Finished Goods
k) Accounting for Taxes on Income
(i) Current tax is determined as the amount of tax payable in respect
of taxable income of the year computed as per Income Tax Act, 1961.
(ii) Deferred tax is recognized subject to consideration of prudence,
on timing difference, being the difference between taxable income and
accounting income that originate in one period and is capable of
reversal in one or more subsequent periods and measured using
prevailing enacted or substantively enacted tax rates.
l) Employee Benefts
(i) Short term employee benefts are recognized as an expense at the
undiscounted amount in the Proft and Loss account of the year in which
the related service is rendered.
(ii) Post employment and other long term benefts are recognized as an
expense in the proft and loss account of the year in which the employee
has rendered services. The expense is recognized at the present value
of the amounts payable determined using actuarial valuation techniques.
Actuarial gains and losses in respect of post employment and other
long- term benefts are charged to the Proft and Loss account.
(iii) Payments to defned contribution retirement beneft schemes are
charged as expenses as and when they fall due.
m) Foreign Currency Transaction
(i) Foreign currency transactions are recorded at the exchange rate
prevailing on the date of such transactions. Current monetary assets
and liabilities in foreign currency as at the Balance Sheet date are
translated at the exchange rates prevailing at the date of Balance
Sheet. Gains and losses arising on account of difference in foreign
exchange rates on settlement / translation of current monetary assets
and liabilities are recognized in the Proft and Loss Account.
(ii) In respect of forward contracts assigned to the foreign currency
assets and liabilities as at balance sheet date, the proportionate
premium / discount for the period up to the date of balance sheet is
recognized in the proft and loss account. The exchange difference
measured by the change rate between the inception of forward contract
and date of balance sheet is applied on foreign currency amount of the
forward contract and is recognized in the proft and loss account.
(iii) Gains and losses on account of difference in foreign exchange
rate on settlement / translation attributable to fxed assets (acquired
prior to 1 April 2004) are adjusted to the carrying amount of the
respective assets. In case of fxed assets acquired in foreign currency
after 1 April 2004, the gains and losses on account of difference in
foreign exchange rate on settlement / translation are recognized in the
proft and loss account, except as per amendment to AS-11 (Refer note
16(b)).
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
More Information on AYM Syntex Ltd.
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AYM Syntex Ltd. Tools
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AYM Syntex Ltd. Company Details
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Company History
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AYM Syntex Ltd. Key Financial Ratios
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AYM Syntex Ltd. Results
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AYM Syntex Ltd. Financial Data
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AYM Syntex Ltd. Reports
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AYM Syntex Ltd. Corporate Announcements
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