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Accounting Policies of Banswara Syntex Ltd. Company
Mar 31, 2025
NOTE NO.1 OVERVIEW & MATERIAL ACCOUNTING POLICIES
A. Corporate Information
Banswara Syntex Limited (âthe Companyâ) is a Company domiciled in India and limited by shares (CIN: L24302RJ1976PLC001684). The shares of the Company are publicly traded on the National Stock Exchange of India Limited and Bombay Stock Exchange Limited. The address of the Companyâs registered office is Industrial Area, Dahod Road, Banswara Rajasthan.
The Company is a vertically integrated textile mill manufacturing man-made synthetic blended Yarn, wool and wool mixed yarn, all type of Fabrics, Jacquard Furnishing Fabrics, besides production of Readymade Garments and Made-upâs.
These Standalone Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the âActâ) and other relevant provisions of the Act.
These Standalone Financial Statements were approved for issue by Board of Directors on 15th May 2025.
B. Basis of Preparation of Standalone Financial Statement
These Standalone Financial Statements are prepared on going concern basis following accrual basis of accounting and comply in all material aspects with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto, the Companies Act, 2013.
2. Basis of measurement/Use of Estimates
(i) The Standalone Financial Statements are prepared on going concern and accrual basis under the historical cost convention except certain financial assets, financial liabilities and defined benefits plans- plan assets that are measured at fair value. The methods used to measure fair values are discussed in notes no. 53 to Standalone Financial Statements.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
(ii) The preparation of Standalone Financial Statements requires judgments, estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the Standalone Financial Statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized. Major Estimates are discussed in Part D.
3. New Standards/ Amendments and Other Changes adopted Effective 1 April 2024 or thereafter
Ministry of Corporate Affairs through its notification amends Companies (Indian Accounting Standards) Rules, 2015 to notify new standards or amend the existing standards and the such notifications during the Financial Year 2024-25 are as follows:
⢠Vide Notification G.S.R. 492 (E) dated 12th August 2024, in which Ind AS 104 on Insurance Contract was omitted and the new Indian Accounting Standard (Ind AS) 117 on Insurance Contracts has been notified. Insurance contract is defined by the Ind AS 117 as âA contract under which one party (the issuer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.â The Company does not have any contract falling under the definition of Insurance contract and hence impact of the new Ind AS is not material.
⢠Vide Notification G.S.R. 554(E) dated 9th September 2024, amendments have been made in Indian Accounting Standard (Ind AS) 116 on Leases with reference to the Sale and Lease back transactions. These transactions are where an entity (the seller lessee) transfers an asset to another entity (the buyer-lessor) and leases that asset back from the buyer-lessor. The Company does not have any contract falling under the category of Sale and Lease back transactions and hence the impact of the amendment is not material.
⢠Vide Notification G.S.R. 602(E) dated 28th September 2024, amendments have been made to enable insurer or insurance company to provide its financial statement as per Ind AS 104 for the purposes of consolidated financial statements by its parent or investor or venturer till the Insurance Regulatory and Development Authority notifies the Ind AS 117 and to revive Ind AS 104 for this purpose.
As the Company is not an insurer or and insurance company the amendment does not have any material impact.
4. New Standards/ Amendments issued but not yet effective: Ministry of Corporate Affairs through its notification amends Companies (Indian Accounting Standards) Rules, 2015 to notify new standards or amend the existing standards. During the year no new standard or modification in existing standard has been notified which will be applicable from April 1, 2025, or thereafter.
5. Functional and presentation currency
These Standalone Financial Statements are presented in Indian Rupees (INR), which is the Companyâs functional currency. All
financial information presented in INR has been rounded to the nearest Lakhs (up to two decimals), except as stated otherwise.
C. Material accounting policies
A summary of the material accounting policies applied in the preparation of the Standalone Financial Statements are as given below. These accounting policies have been applied consistently to all periods presented in the Standalone Financial Statements.
1. Property, plant &equipment1.1 Initial recognition and measurement
Property, plant and equipments (âPPEâ) are measured at cost less accumulated depreciation/amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the asset, inclusive of non-refundable taxes & duties, to the location and condition necessary for it to be capable of operating in the manner intended by management.
Freehold land is carried at cost.
When parts of an item of property, plant and equipments have different useful lives, they are recognized separately.
Spare parts are capitalized when they meet the definition of PPE, i.e. when the Company intends to use these for a period exceeding 12 months.
On transition to IND AS, the Company has elected to continue with the carrying value of all of its PPE recognized as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the PPE.
Depreciation is recognized in statement of profit and loss on Straight Line Method (SLM) over the estimated useful life of property, plant and equipment as mentioned in Schedule II of the Companies Act, 2013, except in case of Plant & Machinery where the useful life has been taken as ascertained by technical experts of the Company. The useful life of the Plant & Machinery so ascertained is ranging from 5 to 30 years on triple shift basis in certain plants. Further, considering materiality of assets costing less than Rs. 5,000 are fully depreciated in the year of purchase/acquisition. The Company provide prorata depreciation from/to the date on which asset is ready to use/ disposed off as appropriate.
Leasehold lands are amortized over the lease term unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.
Depreciation on additions to/deductions from property, plant and equipment during the year is charged on pro-rata basis from/up to the date on which the asset is available for use/disposed.
In circumstance, where a PPE is abandoned, the cumulative capitalized costs relating to the property are written off in the same period.
a. The cost of self-constructed assets includes the cost of materials & direct labour, any other costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management and borrowing costs.
b. Expenses directly attributable to construction of property, plant and equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis on the cost of related assets.
c. Capital Stores are valued at weighted average cost. Specific provision is made for likely diminution in value, where required.
3. Intangible assets and intangible assets under development 3.1.Initial recognition and measurement :
Intangible assets are measured on initial recognized at cost. Subsequent measurement is done at cost less accumulated amortization and accumulated impairment losses. Cost includes any directly attributable incidental expenses necessary to make the assets ready for its intended use.
Expenditure incurred which are eligible for capitalizations under intangible assets are carried as intangible assets under development till they are ready for their intended use.
Intangible assets having definite life are amortized on straight line method in their useful lives. For amortization, Useful life of computer software is estimated at six years and useful life of Brands is estimated at five years.
Borrowing costs that are directly attributable to the acquisition, construction/exploration/ development or erection of qualifying
assets are capitalized as part of cost of such asset until such time the assets are substantially ready for their intended use. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale. Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete.
All other borrowing costs are charged to revenue as and when incurred.
5. Investment in Equity instrument of Joint Venture and Subsidiary
Investment in equity shares of subsidiary and joint venture are accounted at cost in the Standalone Financial Statement and the same are tested for impairment in case of any indication of impairment.
Inventories are valued at the lower of cost or net realizable value.
Cost of raw material, stores spares, packing material etc. includes cost of purchase and other cost incurred in bringing the inventories to their present location and condition. Costs of purchased inventory are determined after deducting rebates and discounts. Cost is determined on weighted average cost basis.
Cost of finished goods and work-in-progress includes the cost of conversion based on normal capacity and other costs (excluding borrowing cost) incurred in bringing the inventories to their present location and condition. The cost of finished goods and work-in-progress are computed on weighted-average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Waste is valued at net realizable value.
Spare parts those does not meet definition of Property, Plant and Equipment are carried as inventory.
The diminution in the value of obsolete, unserviceable, slow moving/non-moving inventory is ascertained on review based on technical assessment, provided for, and shown as net of provision.
Transit stock are valued at cost.
Cash and cash equivalent in the balance sheet comprise cash at banks and cash on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of change in value.
Government Grants related to income are recognized in the statement of profit and loss in the same period as the related cost which they are intended to compensate are accounted for. Government Grant/subsidy related to subvention of a particular expense is deducted from that expense in the year of recognition of that Government grant/subsidy.
Government grants relating to the purchase of property, plant and equipment are included in liabilities as deferred income and are credited to Statement of Profit and Loss on straight -line basis over the expected lives of related assets and presented within other income.
9. Provisions and Contingent liabilities Provisions:-
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.
Contingent liabilities:-
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
10. Foreign currency transactions and translation
Transactions in foreign currencies are initially recorded at the functional currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Exchange differences arising on settlement or translation of monetary items are recognized in Statement of profit or loss in the year in which it arises.
Non-monetary items are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
Revenue is to be recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.
a) Income from Sale of Goods
Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts, rebates, refunds, price concessions, if any, as specified in the contracts with the customers. Revenue excludes taxes collected from customers on behalf of the government.
The Company recognizes sales return only when the goods are actually returned by the customer. Therefore, a refund liability which is included in current financial liabilities or is reduced from current financial assets, is recognized for the goods actually returned.
Revenue from sale of products are recognized at a point in time on transfer of promised product to customer upon transfer of control in an amount that reflects the consideration that the company expects to receive in exchange for those product.
b) Income from Job Work
Income from job work charges is recognised at a point in time when the control is transferred usually when the material is fully processed and dispatched to the customer.
c) Other Export Benefit/Incentives
Export benefits arising from Duty Drawback scheme, RoDTEP and other eligible export incentives are recognised on post export basis at the rate at which the entitlements accrue and is included in the ''Other Operating Income''.
For all financial instruments classified and measured at amortized cost, interest income is recorded using the effective interest rate (EIR). The EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset. Interest income is included in other income in the Statement of Profit or loss.
Dividend Income is recognized when the Company''s right to receive is established.
12. Employee Benefits12.1 Short Term Employee Benefit
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid under performance related pay if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Employee benefit that are payable after the completion of employment are Post-Employment Benefit (other than termination benefit):-
12.2.1 Defined contribution plans
Defined contribution plans are those plans in which an entity pays fixed contribution into separate entities and will have no legal or constructive obligation to pay further amounts. Provident Fund and Employee State Insurance are Defined Contribution Plans in which the Company pays a fixed contribution based on the applicable law.
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
Company pays Gratuity as per provisions of the Gratuity Act, 1972. The Companyâs net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs and the fair value of any plan assets are deducted. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Companyâs obligations and that are denominated in the same currency in which the benefits are expected to be paid.
The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a liability to the company, the present value of liability is recognized as provision for employee benefit. Any actuarial gains or losses are recognized in Other Comprehensive Income (âOCIâ) in the period in which they arise.
12.3 Other long-term employee benefits
Benefits under the Companyâs leave encashment, long-service award and economic rehabilitation scheme constitute other long term employee benefits. The Companyâs net obligation in respect of leave encashment is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Companyâs obligations. The calculation is performed using the projected unit credit method by a qualified actuary. Actuarial gains or losses are recognized in statement of profit or loss in the period in which they arise.
Provision for current tax is made as per the provision of the Income tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Management periodically evaluates positions taken in the tax return with respect to applicable tax regulations which are subject to interpretation and establishes provisions where appropriate.
Deferred tax is provided using the Balance Sheet method on temporary difference between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets and liabilities are measured based on tax rates (and tax law) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity).
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified assets for a period of time in exchange for consideration.
As a lessee (Assets taken on lease)
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognize lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
At the commencement date of the lease, the Company recognize lease liabilities measured at the present value of lease payments to be made over the contractual non cancellable lease term, for which enforceable rights is available. In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date, if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion on interest and reduced for the lease payment made.
Right-of-use
The Company recognize right-of-use assets at the commencement date of the lease (i.e., the date the underlying assets is available for use). Right-of-use are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. Perpetual Right of Use assets related to land are not depreciated but tested for impairment loss, if any.
Short-term lease and lease of low-value-assets
The Company applies the short -term lease recognition exemption to its short-term leases of Property, Plant and Equipment (i.e those leases that have lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemptions to lease that are considered of low value and is not intended for sublease. Lease payments on short-term leases and leases of low-value assets are recognized as expenses on a straightline basis over the lease term or another systematic basis if that basis is more representative of the pattern of the lesseeâs benefits.
Rental income from operating lease is recognized on straight-line basis over the term of the relevant lease except where another systematic basis is more representative of the time pattern of the benefits derived from the assets given on lease.
15. Impairment of Non-financial Assets
The carrying amounts of the Company''s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 ''Impairment of Assets''. If any such indication exists, then the asset''s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ, or âCGUâ).
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in statement of profit or loss. Impairment losses recognized in respect of CGUs are reduced from the carrying amounts of goodwill of that CGU, if any and then the assets of the CGU.
Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
16. Dividends to Share Holders
Interim dividends and Final dividends payable to a Company''s shareholders are recognized in the period in which they are approved by the shareholders'' meeting and the Board of Directors respectively.
Statement of cash flows is prepared in accordance with the indirect method prescribed in Ind AS-7 ''Statement of cash flows.
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.
Initial recognition and measurement
Financial Assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction cost that are attributable to the acquisition of the Financial Asset. However, trade receivables that do not contain a significant financing component are measured at transaction price. Transaction costs directly attributable to the acquisition of financial assets measured at fair value through profit or loss are recognized immediately in the Statement of Profit and Loss.
Subsequent measurement
For the purpose of subsequent measurement, Financial Assets are classified in four categories:
⢠Financial Assets at amortised cost
⢠Debt Instruments at fair value through Other Comprehensive Income (FVTOCI)
⢠Equity Instruments at fair value through Other Comprehensive Income (FVTOCI)
⢠Financial Assets and derivatives at fair value through profit or loss (FVTPL)
Financial Assets at amortized cost
A Financial Asset is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Financial Assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or cost that are an integral part of the EIR.
The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. Apart from the same, any income or expense arising from remeasurement of financial assets measured at amortised cost, in accordance with Ind AS 109, is recognized in the Statement of Profit and Loss. This category generally applies to trade and other receivables.
Debt Instruments at fair value through Other Comprehensive Income (FVTOCI)
A âDebt Instrumentâ is classified as at the FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The assetâs contractual cash flows represent solely payments of principal and interest (SPPI).
Debt Instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair Value movements are recognized in the Other Comprehensive Income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the Equity to the Statement of Profit and Loss.
Interest earned whilst holding FVTOCI Debt Instrument is reported as interest income using the EIR method.
Equity Instruments at fair value through Other Comprehensive Income (FVTOCI)
All equity investments in entities are measured (except equity investment in joint venture and subsidiary) at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. The Company makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable.
the company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instruments, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However the company may transfer cumulative gain or loss within the equity.
instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
Financial Assets and derivatives at fair value through profit or loss (FVTPL)
FVTPL is a residual category for financial assets. Any financial assets, which does not meet the criteria for categorization as at amortised cost or as FVToCi, is classified as at FVTPL.
This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Debt Instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss. Interest income on such instruments has been presented under interest income.
Impairment of financial assets
The Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the
a) Financial Assets that are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance
Simplified Approach
The Company follows âsimplified approachâ for recognition of impairment loss allowance on Trade Receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the Company estimates provision on trade receivables at the reporting date.
General Approach
For recognition of impairment loss on other financial assets, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12-months ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-months ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
Initial recognition and measurement
All Financial Liabilities are recognized initially at fair value and, in the case of liabilities subsequently measured at amortised cost, they are measured net of directly attributable transaction cost. In case of Financial Liabilities measured at fair value through profit or loss, transaction costs directly attributable to the acquisition of financial liabilities are recognized immediately in the Statement of Profit and Loss.
The Company''s Financial Liabilities include trade and other payables, loans and borrowings including derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
A. Financial Liabilities at fair value through profit or loss
Financial Liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through the Statement of Profit and Loss. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge
relationships as defined by Ind AS 109. Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
B. Financial Liabilities at amortised cost
Financial Liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Gains and losses are recognized in the Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or cost that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.
Derivative financial instruments
The Company uses forwards to mitigate the risk of changes in exchange rates. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are also subsequently measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss.
19. Current and non-current classification
All assets and Liabilities have been classified as current or non-current. the Company has determined its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
Deferred tax assets/liabilities are classified as non-current.
D. Major Estimates and Judgments made in preparing Standalone Financial Statements The preparation of the Company''s Standalone Financial Statements requires management to make judgements and estimates that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. These include recognition and measurement of financial instruments, estimates of useful lives and residual value of Property, Plant and Equipment and Intangible Assets, valuation of inventories, measurement of recoverable amounts of cash-generating units, measurement of employee benefits, actuarial assumptions, provisions etc.
Uncertainty about these judgments and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information. Revisions to accounting estimates are recognized prospectively in the Statement of Profit and Loss in the period in which the estimates are revised and in any future periods affected.
In the process of applying the company''s accounting policies, management has made the following judgements, which have the significant effect on the amounts recognised in the Standalone Financial Statements:
Materiality
Ind AS requires assessment of materiality by the Company for accounting and disclosure of various transactions in the Standalone Financial Statements. Accordingly, the Company assesses materiality limits for various items for accounting and disclosures and follows on a consistent basis. Overall materiality is also assessed based on various financial parameters such as Gross Block of assets, Net Block of Assets, Total Assets, Revenue and Profit Before Tax. The materiality limits are reviewed and approved by the Board.
The assessments undertaken in recognizing provisions and contingencies have been made in accordance with Ind AS 37, âProvisions, Contingent Liabilities and Contingent Assetsâ. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss. Should circumstances change following unforeseeable developments, this likelihood could alter. In the similar line, management also on the basis of best judgment and estimate determines the net realizable value of the Inventories to make necessary provision.
The key assumptions concerning the future and other key sources of estimation at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.
Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.
1. Useful life of property, plant and equipment and intangible assets
The estimated useful life of property, plant and equipment is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
Useful life of the assets other than Plant and machinery are in accordance with Schedule II of the Companies Act, 2013.
The Company reviews at the end of each reporting date the useful life of property, plant and equipment, and are adjusted prospectively, if appropriate.
Intangible assets is being amortized on straight line basis over the period of six years.
2. Post-employment benefit plans
Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, the rate of salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate and documented. However, any changes in these assumptions may have a material impact on the resulting calculations.
The Company uses estimates and judgements based on the relevant facts, circumstances, present and past experience, rulings, and new pronouncements while determining the provision for income tax. A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised.
4. Estimation of net realisable value of inventories
Inventories are stated at the lower of cost and net realisable value. In estimating the net realisable value of inventories the Company makes an estimate of future selling prices and costs necessary to make the sale.
5. Impairment of Financial Assets
The impairment provisions for trade receivables are made considering simplified approach based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation based on the companyâs past history and other factors at the end of each reporting period. In case of other financial assets, the Company applies general approach for recognition of impairment losses wherein the Company uses judgement in considering the probability of default upon initial recognition and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period.
Mar 31, 2024
C. Material accounting policies
A summary of the material accounting policies applied in the preparation of the Standalone Financial Statements are as given below. These accounting policies have been applied consistently to all periods presented in the Standalone Financial Statements.
1. Property, plant &equipment
1.1. Initial recognition and measurement
Property, plant and equipments (âPPEâ) are measured at cost less accumulated depreciation/amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the asset, inclusive of non-refundable taxes & duties, to the location and condition necessary for it to be capable of operating in the manner intended by management.
Freehold land is carried at cost.
When parts of an item of property, plant and equipments have different useful lives, they are recognized separately.
Spare parts are capitalized when they meet the definition of PPE, i.e. when the Company intends to use these for a period exceeding 12 months.
On transition to IND AS, the Company has elected to continue with the carrying value of all of its PPE recognized as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the PPE.
1.2. Depreciation
Depreciation is recognized in statement of profit and loss on Straight Line Method (SLM) over the estimated useful life of property, plant and equipment as mentioned in Schedule II of the Companies Act, 2013, except in case of Plant & Machinery where the useful life has been taken as ascertained by technical experts of the Company. The useful life of the Plant & Machinery so ascertained is ranging from 5 to 30 years on triple shift basis in certain plants. Further, considering materiality of assets costing less than ? 5,000 are fully depreciated in the year of purchase/ acquisition. The Company provide pro-rata depreciation from/to the date on which asset is ready to use/ disposed off as appropriate.
Leasehold lands are amortized over the lease term unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.
Depreciation on additions to/deductions from property, plant and equipment during the year is charged on pro-rata basis from/up to the date on which the asset is available for use/disposed.
In circumstance, where a PPE is abandoned, the cumulative capitalized costs relating to the property are written off in the same period.
2. Capital work-in-progress
a. The cost of self-constructed assets includes the cost of materials & direct labour, any other costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management and borrowing costs.
b. Expenses directly attributable to construction of property, plant and equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis on the cost of related assets.
c. Capital Stores are valued at weighted average cost. Specific provision is made for likely diminution in value, where required.
3. Intangible assets and intangible assets under development 3.1. Initial recognition and measurement :
Intangible assets are measured on initial recognized at cost. Subsequent measurement is done at cost less accumulated amortization and accumulated impairment losses. Cost includes any directly attributable incidental expenses necessary to make the assets ready for its intended use.
Expenditure incurred which are eligible for capitalizations under intangible assets are carried as intangible assets under development till they are ready for their intended use.
3.2. Amortization
Intangible assets having definite life are amortized on straight line method in their useful lives. For amortization, Useful life of computer software is estimated at six years and useful life of Brands is estimated at five years.
4. Borrowing Cost
Borrowing costs that are directly attributable to the acquisition, construction/exploration/ development or erection of qualifying assets are capitalized as part of cost of such asset until such time the assets are substantially ready for their intended use. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale. Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete.
All other borrowing costs are charged to revenue as and when incurred.
5. Investment in Equity instrument of Joint Venture and Subsidiary
Investment in equity shares of subsidiary and joint venture are accounted at cost in the Standalone Financial Statement and the same are tested for impairment in case of any indication of impairment.
Dividend from these is recognized as and when right to receive is established.
6. Inventories
Inventories are valued at the lower of cost or net realizable value.
Cost of raw material, stores spares, packing material etc. includes cost of purchase and other cost incurred in bringing the inventories to their present location and condition. Costs of purchased inventory are determined after deducting rebates and discounts. Cost is determined on weighted average cost basis.
Finished goods and work- in -progress : cost includes cost of direct material and labour and a proportion of manufacturing based on the normal operating capacity, but excluding borrowing cost. Cost is determined on weighted average cost basis
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Waste is valued at net realizable value.
Spare parts those does not meet definition of Property, Plant and Equipment are carried as inventory.
The diminution in the value of obsolete, unserviceable, slow moving/non-moving inventory is ascertained on review based on technical assessment, provided for, and shown as net of provision.
Transit stock are valued at cost.
7. Cash and Cash Equivalent
Cash and cash equivalent in the balance sheet comprise cash at banks and cash on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of change in value.
8. Government Grants
Government Grants related to income are recognized in the statement of profit and loss in the same period as the related cost which they are intended to compensate are accounted for. Government Grant/subsidy related to subvention of a particular expense is deducted from that expense in the year of recognition of that Government grant/subsidy.
Government grants relating to the purchase of property, plant and equipment are included in liabilities as deferred income and are credited to Statement of Profit and Loss on straight -line basis over the expected lives of related assets and presented within other income.
9. Provisions and Contingent liabilities Provisions:-
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.
Contingent liabilities:-
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
10. Foreign currency transactions and translation
Transactions in foreign currencies are initially recorded at the functional currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Exchange differences arising on settlement or translation of monetary items are recognized in Statement of profit or loss in the year in which it arises.
Non-monetary items are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
11. Revenue
Revenue is to be recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.
a) Income from Sale of Goods
Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts, rebates, refunds, price concessions, if any, as specified in the contracts with the customers. Revenue excludes taxes collected from customers on behalf of the government.
The Company recognizes sales return only when the goods are actually returned by the customer. Therefore, a refund liability which is included in current financial liabilities or is reduced from current financial assets, is recognized for the goods actually returned.
Revenue from sale of products are recognized at a point in time on transfer of promised product to customer upon transfer of control in an amount that reflects the consideration that the company expects to receive in exchange for those product.
b) Income from Job Work
Income from job work charges is recognised at a point in time when the control is transferred usually when the material is fully processed and dispatched to the customer.
c) Other Export Benefit/Incentives
Export benefits arising from Duty Drawback scheme, RoDTEP and other eligible export incentives are recognised on post export basis at the rate at which the entitlements accrue and is included in the ''Other Operating Income''.
Interest Income
For all financial instruments classified and measured at amortized cost, interest income is recorded using the effective interest rate (EIR). The EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset. Interest income is included in other income in the Statement of Profit or loss.
Dividend
Dividend Income is recognized when the Company''s right to receive is established.
Employee Benefits
12.1 Short Term Employee Benefit
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid under performance related pay if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
12.2 Post-Employment benefits
Employee benefit that are payable after the completion of employment are Post-Employment Benefit (other than termination benefit):-
12.2.1 Defined contribution plans
Defined contribution plans are those plans in which an entity pays fixed contribution into separate entities and will have no legal or constructive obligation to pay further amounts. Provident Fund and Employee State Insurance are Defined Contribution Plans in which the Company pays a fixed contribution based on the applicable law.
12.2.2 Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
Company pays Gratuity as per provisions of the Gratuity Act, 1972. The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs and the fair value of any plan assets are deducted. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Company''s obligations and that are denominated in the same currency in which the benefits are expected to be paid.
The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a liability to the company, the present value of liability is recognized as provision for employee benefit. Any actuarial gains or losses are recognized in Other Comprehensive Income (âOCIâ) in the period in which they arise.
12.3 Other long-term employee benefits
Benefits under the Company''s leave encashment, long-service award and economic rehabilitation scheme constitute other long term employee benefits. The Company''s net obligation in respect of leave encashment is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Company''s obligations. The calculation is performed using the projected unit credit method by a qualified actuary. Actuarial gains or losses are recognized in statement of profit or loss in the period in which they arise.
13 Taxes
Provision for current tax is made as per the provision of the Income tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Management periodically evaluates positions taken in the tax return with respect to applicable tax regulations which are subject to interpretation and establishes provisions where appropriate.
Deferred tax is provided using the Balance Sheet method on temporary difference between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets and liabilities are measured based on tax rates (and tax law) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity).
14 Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified assets for a period of time in exchange for consideration.
As a lessee (Assets taken on lease)
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognize lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
Lease Liabilities
At the commencement date of the lease, the Company recognize lease liabilities measured at the present value of lease payments to be made over the contractual non cancellable lease term, for which enforceable rights is available. In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date, if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion on interest and reduced for the lease payment made.
Right-of-use
The Company recognize right-of-use assets at the commencement date of the lease (i.e., the date the underlying assets is available for use). Right-of-use are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. Perpetual Right of Use assets related to land are not depreciated but tested for impairment loss, if any.
Short-term lease and lease of low-value-assets
The Company applies the short -term lease recognition exemption to its short-term leases of Property, Plant and Equipment (i.e those leases that have lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemptions to lease that are considered of low value and is not intended for sublease. Lease payments on short-term leases and leases of low-value assets are recognized as expenses on a straight-line basis over the lease term or another systematic basis if that basis is more representative of the pattern of the lessee''s benefits.
As a lessor
Rental income from operating lease is recognized on straight-line basis over the term of the relevant lease except where another systematic basis is more representative of the time pattern of the benefits derived from the assets given on lease.
15 Impairment of Non-financial Assets
The carrying amounts of the Company''s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 ''Impairment of Assets''. If any such indication exists, then the asset''s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ, or âCGUâ).
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in statement of profit or loss. Impairment losses recognized in respect of CGUs are reduced from the carrying amounts of goodwill of that CGU, if any and then the assets of the CGU.
Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
16 Dividends to Share Holders
Interim dividends and Final dividends payable to a Company''s shareholders are recognized in the period in which they are approved by the shareholders'' meeting and the Board of Directors respectively.
17 Statement of Cash Flows
Statement of cash flows is prepared in accordance with the indirect method prescribed in Ind AS-7 ''Statement of cash flows.
18 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.
Financial assets
Initial recognition and measurement
All Financial Assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction cost that are attributable to the acquisition of the Financial Asset. However, trade receivables that do not contain a significant financing component are measured at transaction price. Transaction costs directly attributable to the acquisition of financial assets measured at fair value through profit or loss are recognized immediately in the Statement of Profit and Loss.
Subsequent measurement
For the purpose of subsequent measurement, Financial Assets are classified in four categories:
⢠Financial Assets at amortised cost
⢠Debt Instruments at fair value through Other Comprehensive Income (FVTOCI)
⢠Equity Instruments at fair value through Other Comprehensive Income (FVTOCI)
⢠Financial Assets and derivatives at fair value through profit or loss (FVTPL)
Financial Assets at amortized cost
A Financial Asset is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Financial Assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or cost that are an integral part of the EIR.
The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. Apart from the same, any income or expense arising from remeasurement of financial assets measured at amortised cost, in accordance with Ind AS 109, is recognized in the Statement of Profit and Loss. This category generally applies to trade and other receivables.
Debt Instruments at fair value through Other Comprehensive Income (FVTOCI)
A ''Debt Instrument'' is classified as at the FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The asset''s contractual cash flows represent solely payments of principal and interest (SPPI).
Debt Instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair Value movements are recognized in the Other Comprehensive Income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the Equity to the Statement of Profit and Loss.
Interest earned whilst holding FVTOCI Debt Instrument is reported as interest income using the EIR method.
Equity Instruments at fair value through Other Comprehensive Income (FVTOCI)
All equity investments in entities are measured (except equity investment in joint venture and subsidiary) at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. The Company makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable.
If the company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instruments, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However the company may transfer cumulative gain or loss within the equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
Financial Assets and derivatives at fair value through profit or loss (FVTPL)
FVTPL is a residual category for financial assets. Any financial assets, which does not meet the criteria for categorization as at amortised cost or as FVTOCI, is classified as at FVTPL.
This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Debt Instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss. Interest income on such instruments has been presented under interest income.
Impairment of financial assets
The Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the
a) Financial Assets that are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance
Simplified Approach
The Company follows ''simplified approach'' for recognition of impairment loss allowance on Trade Receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the Company estimates provision on trade receivables at the reporting date.
General Approach
For recognition of impairment loss on other financial assets, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12-months ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-months ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
Financial liabilities
Initial recognition and measurement
All Financial Liabilities are recognized initially at fair value and, in the case of liabilities subsequently measured at amortised cost, they are measured net of directly attributable transaction cost. In case of Financial Liabilities measured at fair value through profit or loss, transaction costs directly attributable to the acquisition of financial liabilities are recognized immediately in the Statement of Profit and Loss.
The Company''s Financial Liabilities include trade and other payables, loans and borrowings including derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
A. Financial Liabilities at fair value through profit or loss
Financial Liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through the Statement of Profit and Loss. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
B. Financial Liabilities at amortised cost
Financial Liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Gains and losses are recognized in the Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or cost that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.
Derivative financial instruments
The Company uses forwards to mitigate the risk of changes in exchange rates. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are also subsequently measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss.
19. Current and non-current classification
All assets and Liabilities have been classified as current or non-current. the Company has determined its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
Deferred tax assets/liabilities are classified as non-current.
D. Major Estimates and Judgments made in preparing Standalone Financial Statements The preparation of the Company''s Standalone Financial Statements requires management to make judgements and estimates that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. These include recognition and measurement of financial instruments, estimates of useful lives and residual value of Property, Plant and Equipment and Intangible Assets, valuation of inventories, measurement of recoverable amounts of cash-generating units, measurement of employee benefits, actuarial assumptions, provisions etc.
Uncertainty about these judgments and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information. Revisions to accounting estimates are recognized prospectively in the Statement of Profit and Loss in the period in which the estimates are revised and in any future periods affected.
A. JUDGEMENTS
In the process of applying the company''s accounting policies, management has made the following judgements, which have the significant effect on the amounts recognised in the Standalone Financial Statements:
Materiality
Ind AS requires assessment of materiality by the Company for accounting and disclosure of various transactions in the Standalone Financial Statements. Accordingly, the Company assesses materiality limits for various items for accounting and disclosures and follows on a consistent basis. Overall materiality is also assessed based on various financial parameters such as Gross Block of assets, Net Block of Assets, Total Assets, Revenue and Profit Before Tax. The materiality limits are reviewed and approved by the Board.
Mar 31, 2018
A. Significant accounting policies
A summary of the significant accounting policies applied in the preparation of the financial statements are as given below. These accounting policies have been applied consistently to all periods presented in the financial statements.
The Company has elected to utilize the option under Ind AS 101 by not applying the provisions of Ind AS 16 and Ind AS 38 retrospectively and continue to use the previous GAAP carrying amount as a deemed cost under Ind AS at the date of transition to Ind AS. Therefore, the carrying amount of property, plant and equipment and intangible assets at 1st April 2016, the Company''s date of transition to Ind AS, according to the previous GAAP were maintained in transition to Ind AS.
1. Property, plant & equipment
1.1. Initial recognition and measurement
An item of property, plant and equipments recognized as an asset if and only if 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.
Items of property, plant and equipments are measured at cost less accumulated depreciation/amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the asset, inclusive of non-refundable taxes & duties, to the location and condition necessary for it to be capable of operating in the manner intended by management.
When parts of an item of property, plant and equipments have different useful lives, they are recognized separately.
Items of spare parts, stand-by equipment and servicing equipment which meet the definition of property, plant and equipment are capitalized.
1.2. Subsequent costs
Subsequent expenditure is recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably.
The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized.
The costs of the day-to-day servicing of Property, Plant and Equipment are recognized in the statement of profit and loss as incurred.
1.3. Derecognition
Property, Plant and Equipment are derecognized when no future economic benefits are expected from their use or upon their disposal. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized in the statement of profit and loss.
1.4. Depreciation
Depreciation is recognized in statement of profit and loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leasehold lands are amortized over the lease term unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.
Assets costing up to Rs. 5,000/- are fully depreciated in the year of acquisition.
Depreciation on additions to/deductions from property, plant and equipment during the year is charged on pro-rata basis from/up to the date on which the asset is available for use/disposed.
Where it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably, subsequent expenditure on a property, plant and equipment along-with its unamortized depreciable amount is charged off prospectively over the revised useful life determined by technical assessment.
In circumstance, where a property is abandoned, the cumulative capitalized costs relating to the property are written off in the same period.
2. Capital work-in-progress
The cost of self-constructed assets includes the cost of materials & direct labour, any other costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management and borrowing costs.
Expenses directly attributable to construction of property, plant and equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis on the cost of related assets.
3. Intangible assets and intangible assets under development
3.1. Initial recognition and measurement
An intangible asset is recognized if and only if it is probable that the expected future economic benefits that are attributable to the asset will flow to the company and the cost of the asset can be measured reliably.
Intangible assets acquired by the Company are measured on initial recognized at cost. Subsequent measurement is done at cost less accumulated amortization and accumulated impairment losses. Cost includes any directly attributable incidental expenses necessary to make the assets ready for its intended use.
Expenditure on development activities is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to and has sufficient resources to complete development and to use or sell the asset.
Expenditure incurred which are eligible for capitalizations under intangible assets are carried as intangible assets under development till they are ready for their intended use.
3.2. Subsequent costs
Subsequent expenditure is recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably.
3.3. Derecognition
An intangible asset is derecognized when no future economic benefits are expected from their use or upon their disposal. Gains and losses on disposal of an item of intangible assets are determined by comparing the proceeds from disposal with the carrying amount of intangible assets and are recognized in the statement of profit and loss.
3.4. Amortization
Intangible assets having definite life are amortized on straight line method in their useful lives. Useful life of computer software is estimated at five years.
4. Borrowing Cost
Borrowing costs that are directly attributable to the acquisition, construction/exploration/ development or erection of qualifying assets are capitalized as part of cost of such asset until such time the assets are substantially ready for their intended use. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale. Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Borrowing costs consist of (a) interest expense calculated using the effective interest method as described in Ind AS 109 - ''Financial Instruments'' (b) finance charges in respect of finance leases recognized in accordance with Ind AS 17 - ''Leases'' and (c) exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Income earned on temporary investment of the borrowings pending their expenditure on the qualifying assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are charged to revenue as and when incurred.
5. Investment in Joint Venture
These are Company''s Separate Financial Statements. Company has opted to show investments in Joint Venture at cost. Dividend from these is recognized as and when right to receive is established.
6. Inventories
Inventories are valued at the lower of cost and net realizable value. Cost includes cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on FIFO 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 estimated costs of completion and the estimated costs necessary to make the sale.
Spare parts other than those capitalized as Property, Plant and Equipment are carried as inventory.
The diminution in the value of obsolete, unserviceable and surplus stores & spares is ascertained on review and provided for.
Inventories of services is recognized based on stage of completion when the outcome of the transaction involving rendering of services can be estimated reliably.
7. Cash and Cash Equivalent
Cash and cash equivalent in the balance sheet comprise cash at banks and cash on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of change in value.
8. Government Grants
Government grants are recognized only when its reasonable certainty that economics benefit flow to the entities and attached conditions will be compiled with it
Government grants are recognized and shown in the balance sheet as liability and income is accrued based on the terms of schemes in the statement of profit and loss over a phased manner in consideration with scheme terms and related use of assets.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to Profit and Loss on straight -line basis over the expected lives of related assets and presented within other income.
9. Provisions , Contingent liabilities and Contingent Assets
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
Contingent assets are possible assets that arise from past events and whose existence 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. Contingent assets are disclosed in the financial statements when inflow of economic benefits is probable on the basis of judgment of management. These are assessed continually to ensure that developments are appropriately reflected in the financial statements.
10. Foreign currency transactions and translation
Transactions in foreign currencies are initially recorded at the functional currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Exchange differences arising on settlement or translation of monetary items are recognized in Statement of profit or loss in the year in which it arises.
Non-monetary items are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
11. Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company, the Company retains neither continuing managerial involvement to the degree usually associated with ownership or effective control over the goods sold, and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable and taking into account contractually defined terms of payment.
Sale of Goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, which generally coincides with dispatch. Revenue from export sales are recognized on shipment basis (i.e. Late Export Date). Revenue from the sale of goods is measured at the fair value of the consideration received or receivable including duties/taxes, net of returns and allowances, trade discounts and volume rebates.
Rendering of services
Revenue from job work charges is recognized as per term of the contract with contracts with customers based on stage of completion when the outcome of the transaction involving rendering of services can be estimated reliably.
Other Export Benefit
Export Benefits are accounted for in the year of export at net market realizable value.
Interest Income
For all financial instruments classified and measured at amortized cost, interest income is recorded using the effective interest rate (EIR). The EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the 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. Interest income is included in other income in the Statement of Profit or loss.
Dividend
Dividend Income is recognized when the Company''s right to receive is established which generally occurs when the shareholders approve the dividend.
Other Income
Other income is recognized in the statement of profit and loss when increase in future economic benefits related to an increase in an asset or a decrease of a liability has arisen that can be measured reliably
12. Employee Benefits
12.1. Short Term Employee Benefit
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid under performance related pay if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
12.2. Post-Employment benefits
Employee benefit that are payable after the completion of employment are Post-Employment Benefit (other than termination benefit). These are of two type:
12.2.1. Defined contribution plans
Defined contribution plans are those plans in which an entity pays fixed contribution into separate entities and will have no legal or constructive obligation to pay further amounts. Provident Fund and Employee State Insurance are Defined Contribution Plans in which the Company pays a fixed contribution and will have no further obligation.
12.2.2. Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
Company pays Gratuity as per provisions of the Gratuity Act, 1972. The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs and the fair value of any plan assets are deducted. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Company''s obligations and that are denominated in the same currency in which the benefits are expected to be paid.
The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a liability to the company, the present value of liability is recognized as provision for employee benefit. Any actuarial gains or losses are recognized in Other Comprehensive Income ("OCI") in the period in which they arise.
12.3 Other long-term employee benefits
Benefits under the Company''s leave encashment, long-service award and economic rehabilitation scheme constitute other long term employee benefits. The Company''s net obligation in respect of leave encashment is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Company''s obligations. The calculation is performed using the projected unit credit method. Actuarial gains or losses are recognized in statement of profit or loss in the period in which they arise. In case of funded plans, the fair value of plant asset is reduced from the gross obligation, to recognize the obligation on the net basis.
1 3. Taxes
Tax expense comprises current tax and deferred tax. Current tax expense is recognized in the statement of profit or loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized in OCI or equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted and as applicable at the reporting date, and any adjustment to tax payable in respect of previous years. Current taxes are recognized under ''Income tax payable'' net of payments on account, or under ''Tax receivables'' where there is a debit balance.
Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
Deferred tax is recognized in the statement of profit or loss except to the extent that it relates to items recognized directly in OCI or equity, in which case it is recognized in OCI or equity.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Additional income taxes that arise from the distribution of dividends are recognized at the same time that the liability to pay the related dividend is recognized.
14. Leases
14.1. As Lessee
Accounting for finance leases
Leases of Property, Plant and Equipment where the Company, as lessee has substantially all risks and rewards of ownership are classified as finance lease. On initial recognition, assets held under finance leases are recorded as Property, Plant and Equipment and the related liability is recognized under borrowings. At inception of the lease, finance leases are recorded at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability.
Accounting for operating leases
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 lease. Payments made under operating leases are recognized as an expense over the lease term.
14.2 As Lessor
At inception of an arrangement, the Company determines whether such an arrangement is or contains a lease. A specific asset is subject of a lease if fulfillment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys to the customer the right to control the use of the underlying asset. Arrangements that do not take the legal form of a lease but convey rights to customers/suppliers to use an asset in return for a payment or a series of payments are identified as either finance leases or operating leases.
Accounting for finance leases
The amounts due from lessees under finance leases are recorded in the balance sheet as financial assets, classified as finance lease receivables, at the amount of the net investment in the lease.
Accounting for operating leases
Rental income from operating leases is recognized on a straight line basis over the term of the arrangement
15. Impairment of Non-financial Assets
The carrying amounts of the Company''s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 ''Impairment of Assets''. If any such indication exists, then the asset''s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit", or "CGU").
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in statement of profit or loss. Impairment losses recognized in respect of CGUs are reduced from the carrying amounts of goodwill of that CGU, if any and then the assets of the CGU.
Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
16. Dividends
Dividends and interim dividends payable to a Company''s shareholders are recognized as changes in equity in the period in which they are approved by the shareholders'' meeting and the Board of Directors respectively.
17. Material Prior Period Errors
Material prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred. If the error occurred before the earliest prior period presented, the opening balances of assets, liabilities and equity for the earliest prior period presented, are restated.
18. Earnings Per Share
Basic earnings per equity share is computed by dividing the net profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the financial year.
Diluted earnings per equity share is computed by dividing the net profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
19. Statement of Cash Flows
Statement of cash flows is prepared in accordance with the indirect method prescribed in Ind AS-7 ''Statement of cash flows.
20. 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.
20.1. Financial assets
Initial recognition and measurement
All financial assets are recognized initially at fair value plus or minus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition or issue of the financial asset.
Subsequent measurement
Debt instruments at amortized cost
A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:
(a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
(b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the Effective Interest Rate method ("EIR"). Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit and loss. This category generally applies to trade and other receivables.
Debt instrument at FVTOCI (Fair Value through OCI)
A ''debt instrument'' is classified as at the FVTOCI if both of the following criteria are met:
(a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
(b) The asset''s contractual cash flows represent SPPI
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the OCI. However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the statement of profit and loss. On Derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the equity to statement of profit and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Debt instrument at FVTPL (Fair value through profit or loss)
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to classify a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch''). Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.
Equity investments
All equity investments in entities are measured (except equity investment joint venture) at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. The Company makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable.
If the company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instruments, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However the company may transfer cumulative gain or loss within the equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.
Equity investments in joint ventures are measured at cost.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognized (i.e. removed from the Company''s balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
- Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, debt securities, deposits, trade receivables and bank balance
- Trade receivables or any contractual right or receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18
The Company follows ''simplified approach'' for recognition of impairment loss allowance on:
Trade receivables or contract assets resulting from transactions within the scope of Ind AS 11 and Ind AS 18, if they do not contain a significant financing component
- Trade receivables or contract assets resulting from transactions within the scope of Ind AS 11 and Ind AS 18 that contain a significant financing component, if the Company applies practical expedient to ignore separation of time value of money, and
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12-month ECL.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.
Subsequent measurement
Financial liabilities are carried at amortized cost using the effective interest method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any material transaction that are any integral part of the EIR. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Derecognition
A financial liability is derecognized 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 recognized in the statement of profit or loss.
Derivative financial instruments
The Company uses forwards to mitigate the risk of changes in interest rates, exchange rates and commodity prices. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are also subsequently measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss.
21. Business Combinations
In accordance with Ind AS 101 ''First Time Adoption of Ind AS'', the Company has elected to apply Ind AS accounting for business combinations prospectively from 1st April 2016.
Business combinations in nature of acquisitions or mergers are accounted for using the purchase method under which the transferee on acquisition date, shall recognize separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest of the transferor at fair value.
Business combinations arising from transfers of interests in entities under common control (Appendix C of Ind AS 103) are accounted for at carrying value using pooling of interest method as if acquisition had occurred at the beginning of the earliest period presented or, if later, at the date that common control was established.
- The assets and liabilities acquired are recognized at the carrying amounts. No adjustments are made to reflect fair values nor new assets and liabilities recognized.
- The identity of the reserves is preserved and they appear in the transferee''s financial statements in the same form in which they are appeared in the financial statements of the transferor company.
- The difference, if any, between the consideration and the amount of share capital of the transferor entity is transferred to capital reserve.
D. Major Estimates made in preparing Financial Statements
1. Useful life of property, plant and equipment and intangible assets
The estimated useful life of property, plant and equipment is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
Useful life of the assets other than Plant and machinery are in accordance with Schedule II of the Companies Act, 2013.
The Company reviews at the end of each reporting date the useful life of property, plant and equipment, and are adjusted prospectively, if appropriate.
Intangible assets is being amortized on straight line basis over the period of five years.
2. Post-employment benefit plans
Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, the rate of salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate and documented. However, any changes in these assumptions may have a material impact on the resulting calculations.
3. Provisions and contingencies
The assessments undertaken in recognizing provisions and contingencies have been made in accordance with Ind AS 37, ''Provisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss. Should circumstances change following unforeseeable developments, this likelihood could alter.
4. Asset Held for Sale
Significant judgment is required to apply the accounting of non-current assets held for sale under Ind AS 105 ''Noncurrent Assets Held for Sale and Discontinued Operations''. In assessing the applicability, management has exercised judgment to evaluate the availability of the asset for immediate sale, management''s commitment for the sale and probability of sale within one year to conclude if their carrying amount will be recovered principally through a sale transaction rather than through continuing use.
Mar 31, 2016
A. Basis of Preparation of Financial Statements/Use of Estimates
(i) These financial statements have been prepared in compliance with the Generally Accepted Accounting Principles in India including the Accounting Standards notified under the applicable provisions of the Companies Act, 2013. The Financial Statements are prepared on accrual basis under the historical cost convention except certain revalued assets and are presented in Indian Rupees, rounded off to the nearest rupees in lacs.
(ii) The preparation of financial statements requires judgments, estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.
B. Valuation of Inventories (AS-2)
Inventories are valued at lower of cost and net realizable value. Cost is measured on First In First Out basis.
C. Cash Flow (AS-3)
Cash Flow Statement has been prepared adopting the ''Indirect method'' as prescribed under Para 18 of the Accounting Standard - 3 on ''Cash Flow Statement''
D. Depreciation (AS-6)
Depreciation has been charged on Straight Line Method (SLM) based on useful life of the assets as mentioned in Schedule II of Companies Act, 2013, except in case of Plant & machinery where the useful life has been taken as ascertained by the Independent Chartered Engineer and technical experts of the Company. The useful life of the Plant & Machinery so ascertained, is ranging from 10 to 18 years on triple shift basis as against the life of 15 years given in Part C of Schedule II of the Companies Act, 2013.
Leasehold land amortized over the period of lease.
Further, considering materiality, assets costing less than '' 5,000 are fully depreciated in the year of purchase/acquisition.
The Company provides pro-rata depreciation from/to the date on which asset is acquired or put to use/ disposed off as appropriate.
E. Revenue Recognition (AS-9)
Revenue is recognized only when risks and rewards incidental to ownership are transferred to customer, it can be reliably measured and it is reasonable to expect ultimate collection.
i) Sale of product is inclusive of excise duty, refund and other related realization but exclusive of value added tax charged.
ii) Income from Job work is accounted for on delivery of finished goods inclusive of excise duty, wherever applicable.
iii) Dividend Income is recognized when right to receive payment is established.
iv) Export Benefits are accounted for in the year of export at net market realizable value.
F. Fixed Assets (AS-10)
Value of gross block of fixed assets represents cost of acquisition, net of eligible CENVAT Credit but inclusive of non-refundable taxes & duties, expenditure on installations, attributable pre-operative expenses including borrowing cost and other identifiable directly attributable expenses to bring the assets to its working condition for its intended use less accumulated depreciation and impairment loss, if any.
However, value of gross block of fixed assets acquired up to 31.03.1985 has been stated at revalued amount as on 31.03.1986.
G. Foreign Currency Transactions (AS-11)
i) Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing on the date of the transactions.
ii) Monetary items denominated in foreign currency at the year end and not covered by forward exchange contracts are translated at year end rates and those covered by forward contracts are translated at the rate prevailing on the date of transactions as increased or decreased by the proportionate difference between the forward rate and exchange rate on the date of transactions, such difference having been recognized over the life of the contract. Foreign exchange financial instruments in hand, at the year end, are valued at mark to market, recognized loss, if any, adopting principle of prudence.
iii) Non-Monetary foreign currency items are carried at cost.
iv) Any income or expense on account of exchange difference, either on settlement or on translation, is recognized in the Statement of profit and loss.
H. Accounting for Investments (AS-13)
Long term Investments are carried at cost whereas current investments are carried at lower of cost and net realizable value. In case of long term investments, other than temporary diminution in the value of investment, is provided for.
I. Employees'' Benefits (AS-15)
i) Short-term employee benefits are recognized as an expense at undiscounted amount in the Statement of profit and loss for the year in which the related service is rendered.
ii) Post-Employment benefits : These comprise of defined contribution plans (Provident Fund) and defined benefits plans (Gratuity and Leave Encashment) retirement and other long term employee benefits which are recognized as expense in the Statement of profit and loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of retirement and other long term benefits are charged to the Statement of profit and loss.
J. Borrowing Costs (AS-16)
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
K. Taxes on Income (AS-22)
Current tax is determined as the amount of tax payable to the Taxation Authorities in respect of taxable income for the year.
Deferred tax is recognized, subject to consideration of prudence, in respect of deferred tax assets on timing differences, being difference between taxable income and accounting income that originate in one year and are capable of reversal in one or more subsequent years.
In respect of unabsorbed depreciation / carry forward of losses under the tax laws, deferred tax assets are recognized only to the extent that there is virtual certainty that future taxable income will be available against which such deferred tax assets can be realized.
L. Provision for Doubtful Debts
15% is being provided every year on amount due over a period of 6 months.
M. Impairment (AS-28)
An asset is treated as impaired if its carrying amount exceeds its recoverable value. An impairment loss is recognized in the statement of profit and loss in the year of its identification. Such loss recognized in earlier period is reversed/ updated if there is change in estimate of the recoverable amount.
N. Provisions, Contingent Liabilities and Contingent Assets
Provision is recognized in the books of account when there is a present obligation as a result of past event(s) and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
O. Except where stated, accounting policies are consistent with the generally accepted accounting principles and have been consistently applied.
Mar 31, 2014
A. System Of Accounting and Use of Estimate(AS-1)
The Company follows the mercantile system of accounting by following
accrual concept in the preparation of accounts. The preparation of
financial statements requires estimates and assumptions to be made that
affect the reported amount of assets and liabilities on the date of the
financial statements and the reported amount of revenues and expenses
during the reporting period. Difference between the actual results and
estimates are recognized in the period in which the results are
B. Valuation of Inventories (AS-2)
inventories are valued at lower of cost and net realisable value. Cost
is measured on First In First Out basis.
C. Depreciation(AS-6)
Depreciation on fixed assets is provided for on straight line method in
accordance with the provisions of section 205(2)(b) of the Companies
Act, 1956. Depreciation on additions/disposals during the year is
provided on pro-rata basis.
Consequent to changes made in schedule XIV, vide Notification No. GSR
756E dated 16.12.93, the company had revised the rate of depreciation.
The specified period had been recomputed as suggested by the Circular
dated 20.12.93 except in case of petty assets like furniture, fixture
and office equipment where it is difficult to effect the changes. While
adopting the revised rates, the Spinning Plant has been categorized as
"Continuous Process Plant" on the basis of technical opinion
D. Turnover(AS-9)
i) Turnover is inclusive of excise duty, refund and other related
realization but exclusive of value added tax charged.
ii) Job income included in turnover is accounted for on delivery of
finished goods inclusive of excise duty.
E. Benefits Receivable against Export and its Obligation(AS-9)
Unutilized credits, entitlements under Duty Entitlements Pass Book
(DEPB) schemes are accounted for in the year of Value of gross block of
fixed assets represent cost of acquisition, net of eligible CENVAT
Credit but inclusive of non- refundable taxes & duties, expenditure on
installations, attributable pre-operative expenses including borrowing
cost and other identifiable direct expenses incurred upto the date of
commencement of commercial use of the assets.
F. Fixed Assets(AS-10)
However value of gross block of fixed assets acquired upto 31.03.1985
has been stated at revalued amount as on
G. Foreign Currency Transactions(AS-11)
i) Transactions denominated in foreign currencies are normally recorded
at the exchange rate prevailing on the day of
ii) Monetary items denominated in foreign currency at the year end and
not covered by forward exchange contracts are translated at year end
rates and those covered by forward contracts are translated at the rate
ruling at the date of transactions as increased or decreased by the
proportionate difference between the forward rate and exchange rate on
the date of transactions such difference having been recognized over
the life of the contract. Foreign exchange financial instruments in
hand at the year end are valued at mark to market, recognized loss, if
any, adopting principle of
Any income or expenses on account of exchange difference either on
settlement or on translation is recognized in the Long term Investments
are carried at cost. whereas, current investments are carried at lower
of cost and net realisable value. In case of long term investments,
other than temporary diminution in the value of investment is provided
for.
I. Employees'' Benefits(AS-15)
i) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the Statement of profit
ii) Retirement and other long term employee benefits are recognized as
an expense in the Statement of profit and loss for the year in which
the employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of
retirement and other
J. Borrowing Costs (A5-16)
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that takes necessarily
substantial period of time to get ready for its intended use. All
other borrowing costs are charged to revenue.
K. Taxes on Income (AS-22)
Current tax is determined as the amount of tax payable to the Taxation
Authorities in respect of taxable income for the year. Deferred tax is
recognized, subject to consideration of prudence, in respect of
deferred tax assets, on tinning differences being difference between
taxable income and accounting income that originate in one year and are
capable of reversal in one or more subsequent years.
In respect of unabsorbed depreciation / carry forward of losses under
the lax laws, deferred tax assets are recognized only to the extent
that there is virtual certainty that future taxable income will be
available against which such deferred tax assets can be realized.
L. Provision for Doubtful Debts
15% is being provided each year on amount due over a period of 6
months.
M. Except where stated, accounting policies are consistent with the
generally accepted accounting principles and have been consistently
applied.
Mar 31, 2013
A. System of Accounting and Use of Estimates (AS-1)
The Company follows the mercantile system of accounting by following
accrual concept in the preparation of accounts. The preparation of
financial statements requires estimates and assumptions to be made that
affect the reported amount of assets and liabilities on the date of the
financial statements and the reported amount of revenues and expenses
during the reporting period. Difference between the actual results and
estimates are recognized in the period in which the results are known/
materialized.
B. Valuation of Inventories (AS-2)
Inventories are valued at lower cost and net realizable value. Cost is
measured on First In First Out basis.
C. Depreciation (AS-6)
Depreciation on fixed assets is provided for on straight line method in
accordance with the provisions of section 205(2)(b) of the Companies
Act, 1956. Depreciation on additions/disposals during the year is
provided on pro-rata basis.
Consequent to changes made in schedule XIV, vide Notification No. GSR
756E dated 16.12.93, the company had revised the rate of depreciation.
The specified period had been recomputed as suggested by the Circular
dated 20.12.93 except in case of petty assets like furniture, fixture
and office equipment where it is difficult to effect the changes. While
adopting the revised rates, the Spinning Plant has been categorized as
"Continuous Process Plant" on the basis of technical opinion obtained
by the company.
Value of leasehold land is amortized overthe period of its lease.
D. Turnover (AS-9)
i) Turnover is inclusive of excise duty, refund and other related
realization but exclusive of value added tax charged. ii) Job income
included in turnover is accounted for on delivery of finished goods
inclusive of excise duty.
E. Benefits Receivable against Export and Its Obligation (AS-9)
Unutilized credits, entitlements under Duty Entitlements Pass Book
(DEPB) schemes are accounted for in the year of export at market value.
F. Fixed Assets (AS-10)
Value of gross block of fixed assets represent cost of acquisition, net
of eligible CENVAT Credit but inclusive of non- refundable taxes &
duties, expenditure on installations, attributable pre-operative
expenses including borrowing cost and other identifiable direct
expenses incurred upto the date of commencement of commercial use of
the assets.
However value of gross block of fixed assets acquired upto 31.03.1985
has been stated at revalued amount as on 31.03.1986.
G. Foreign Currency Transactions (AS-11)
i) Transactions denominated in foreign currencies are normally recorded
at the exchange rate prevailing on the day of the transactions.
ii) Monitory items denominated in foreign currency at the year end and
not covered by forward exchange contracts are translated at year end
rates and those covered by forward contracts are translated at the rate
ruling at the date of transactions as increased or decreased by the
proportionate difference between the forward rate and exchange rate on
the date of transactions such difference having been recognized over
the life of the contract. Foreign exchange financial instruments in
hand at the year end are valued at mark to market, recognized loss, if
any, adopting principle of prudence.
Any income or expenses on account of exchange difference either on
settlement or on translation is recognized in the statement of profit
and loss.
H. Investments (AS-13)
Long term Investments are carried at cost. Whereas, current investments
are carried at lower of cost and net realizable value. In case of long
term investments, other than temporary diminution in the value of
investment is provided for.
I. Employees''Benefits (AS-15)
i) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the Statement of profit and loss for the year in
which the related service is rendered.
ii) Retirement and other long term employee benefits are recognized as
an expense in the Statement of profit and loss for the year in which
the employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of
retirement and other long term benefits are charged to the Statement of
profit and loss.
J. Borrowing Costs (AS-16)
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that takes necessarily
substantial period of time to get ready for its intended use. All
other borrowing costs are charged to revenue.
K. Taxes on Income (AS-22)
Current tax is determined as the amount of tax payable to the Taxation
Authorities in respect of taxable income for the year.
Deferred tax is recognized, subject to consideration of prudence, in
respect of deferred tax assets, on timing differences being difference
between taxable income and accounting income that originate in one year
and are capable of reversal in one or more subsequent years.
In respect of unabsorbed depreciation / carry forward of losses under
the tax laws, deferred tax assets are recognized only to the extent
that there is virtual certainty that future taxable income will be
available against which such deferred tax assets can be realized.
L. Provision for Doubtful Debts
15% is being provided each year on amount due over a period of 6
months.
M. Except where stated, Accounting Policies are consistent with the
generally accepted accounting principles and have been consistently
applied.
Mar 31, 2012
A. System of Accounting and Use of Estimates (AS-1)
The Company follows the mercantile system of accounting by following
accrual concept in the preparation of accounts. The preparation of
financial statements requires estimates and assumptions to be made that
affect the reported amount of assets and liabilities on the date of the
financial statements and the reported amount of revenues and expenses
during the reporting period. Difference between the actual results and
estimates are recognized in the period in which the results are known/
materialized.
B. Valuation of Inventories (AS-2)
Inventories are valued at lower of cost and net realizable value. Cost
is measured on First In First Out basis.
C. Depreciation (AS-6)
Depreciation on fixed assets is provided for on straight line method in
accordance with the provisions of section 205(2)(b) of the Companies
Act, 1956. Depreciation on additions/disposals during the year is
provided on pro-rata basis.
Consequent to changes made in schedule XIV, vide Notification No. GSR
756E dated 16.12.93, the company had revised the rate of depreciation.
The specified period had been recomputed as suggested by the Circular
dated 20.12.93 except in case of petty assets like furniture, fixture
and office equipment where it is difficult to effect the changes. While
adopting the revised rates, the Spinning Plant has been categorized as
"Continuous Process Plant" on the basis of technical opinion obtained
by the company.
Value of leasehold land is amortized over the period of its lease.
D. Turnover (AS-9)
i) Turnover is inclusive of excise duty, refund and other related
realization but exclusive of value added tax charged.
ii) Job income included in turnover is accounted for on delivery of
finished goods inclusive of excise duty.
E. Benefits Receivable against Export and its Obligation (AS-9)
Unutilized credits, entitlements under Duty Entitlements Pass Book
(DEPB) schemes are accounted for in the year of export at market value.
F. Fixed Assets (AS-10)
Value of gross block of fixed assets represent cost of acquisition,
including non-refundable taxes & duties, expenditure on installations,
attributable pre-operative expenses including borrowing cost and other
identifiable direct expenses incurred up to the date of commencement of
commercial use of the assets.
However value of gross block of fixed assets acquired up to 31.03.1985
has been stated at revalued amount as on 31.03.1986.
G. Foreign Currency Transactions (AS-11)
i) Transactions denominated in foreign currencies are normally recorded
at the exchange rate prevailing on the day of the transactions.
ii) Monitory items denominated in foreign currency at the year end and
not covered by forward exchange contracts are translated at year end
rates and those covered by forward contracts are translated at the rate
ruling at the date of transactions as increased or decreased by the
proportionate difference between the forward rate and exchange rate on
the date of transactions such difference having been recognized over
the life of the contract. Foreign exchange financial instruments in
hand at the year end are valued at mark to market.
Any income or expenses on account of exchange difference either on
settlement or on translation is recognized in the statement of profit
and loss.
H. Investments (AS-13)
Long term Investments are carried at cost, whereas, current investments
are carried at lower of cost and net realizable value. In case of long
term investments, other than temporary diminution in the value of
investment is provided for.
I. Employees' Benefits (AS-15)
i) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the Statement of profit and loss for the year in
which the related sen/ice is rendered.
ii) Retirement and other long term employee benefits are recognized as
an expense in the Statement of profit and loss for the year in which
the employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of
retirement and other long term benefits are charged to the Statement of
profit and loss.
J. Borrowing Costs (AS-16)
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that takes necessarily
substantial period of time to get ready for its intended use. All
other borrowing costs are charged to revenue.
K. Taxes on Income (AS-22)
Current tax is determined as the amount of tax payable to the Taxation
Authorities in respect of taxable income for the year.
Deferred tax is recognized, subject to consideration of prudence, in
respect of deferred tax assets, on timing differences being difference
between taxable income and accounting income that originate in one year
and are capable of reversal in one or more subsequent years.
In respect of unabsorbed depreciation / carry forward of losses under
the tax laws, deferred tax assets are recognized only to the extent
that there is virtual certainty that future taxable income will be
available against which such deferred tax assets can be realized.
L. Provision for Doubtful Debts
15% is being provided each year on amount due over a period of 6
months.
M. Except where stated, accounting policies are consistent with the
generally accepted accounting principles and have been consistently
applied.
Mar 31, 2011
1. System of Accounting and Use of Estimates
The Company follows the mercantile system of accounting by following
accrual concept in the preparation of accounts. The preparation of
financial statements requires estimates and assumptions to be made that
affect the reported amount of assets and liabilities on the date of the
financial statements and the reported amount of revenues and expenses
during the reporting period. Difference between the actual results and
estimates are recognized in the period in which the results are known/
materialized.
2. Fixed Assets
Value of gross block of fixed assets represent cost of acquisition,
including non-refundable taxes & duties, expenditure on installations,
attributable pre-operative expenses including borrowing cost and other
identifiable direct expenses incurred upto the date of commencement of
commercial use of the assets.
However value of gross block of fixed assets acquired upto 31.03.1985
has been stated at revalued amount as on 31.03.1986.
3. Depreciation
Depreciation on fixed assets is provided for on straight line method in
accordance with the provisions of section 205(2)(b) of the Companies
Act, 1956. Depreciation on additions/disposals during the year is
provided on pro-rata basis. Consequent to changes made in schedule
XIV, vide Notification No.GSR 756E dated 16.12.93, the company had
revised the rate of depreciation. The specified period had been
recomputed as suggested by the Circular dated 20.12.93 except in case
of petty assets like furniture, fixture and office equipment where it
is difficult to effect the changes. While adopting the revised rates,
the Spinning Plant has been categorized as "Continuous Process Planf on
the basis of technical opinion obtained by the company.
Value of leasehold land is amortized over the period of its lease.
4. Valuation of Inventories
Inventories are valued at lower of cost and net realisable value. Cost
is measured on First In First Out basis.
5. Turnover
i) Turnover are inclusive of excise duty, refund and other related
realization but exclusive of value added tax charged.
ii) Job income included in turnover is accounted for on delivery of
finished goods inclusive of excise duty.
6. Investments
Long term Investments are carried at cost. Whereas, current investments
are carried at lower of cost and net realisable value. In case of long
term investment!, otherthan temporary diminution in the value of
investment is provided for.
7. Benefits Receivable Against Export and Its Obligation
Unutilized credits, entitlements under Duty Entitlements Pass Book
(DEPB) schemes are accounted for in the year of export at market value.
8. Foreign Currency Transactions
i) Transactions denominated in foreign currencies are normally recorded
at the exchange rate prevailing on the day of the transactions.
ii) Monitory items denominated in foreign currency at the year end and
not covered by forward exchange contracts are translated at year end
rates and those covered by forward contracts are translated at the rate
ruling at the date of transactions as increased or decreased by the
proportionate difference between the forward rate and exchange rate on
the date of transactions such difference having been recognized over
the life of the contract. Foreign exchange financial instruments in
hand at the year end are valued at mark to market.
Any income or expenses on account of exchange difference either on
settlement or on translation is recognized in the profit and loss
account.
9. Employees' Benefits
i) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account for the year in
which the related service is rendered.
ii) Retirement and other long term employee benefits are recognized as
an expense in the profit and loss account for the year in which the
employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of
retirement and other long term benefits are charged to the profit and
loss account.
10. Provision For Doubtful Debts
15% is being provided each year on amount outstanding over a period of
6 months.
11. Taxes On Income
Current tax is determined as the amount of tax payable to the Taxation
Authorities in respect of taxable income for the year.
Deferred tax is recognized, subject to consideration of prudence, in
respect of deferred tax assets, on timing differences being difference
between taxable income and accounting income that originate in one year
and are capable of reversal in one or more subsequent years.
In respect of unabsorbed depreciation / carry forward of losses under
the tax laws, deferred tax assets are recognized only to the extent
that there is virtual certainty that future taxable income will be
available against which such deferred tax assets can be realized.
12. Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that takes necessarily
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.
13. Except where stated, accounting policies are consistent with the
generally accepted accounting principles and have been consistently
applied.
Mar 31, 2010
1. System of Accounting and Use of Estimates
The Company follows the mercantile system of accounting by following
accrual concept in the preparation of accounts. The preparation of
financial statements requires estimates and assumptions to be made that
affect the reported amount of assets and liabilities on the date of the
financial statements and the reported amount of revenues and expenses
during the reporting period. Difference between the actual results and
estimates are recognized in the period in which the results are known/
materialized.
2. Fixed Assets
Value of Gross Block of fixed assets represent cost of acquisition,
including non-refundable taxes & duties, expenditure on installations,
attributable pre-operative expenses including borrowing cost and other
identifiable direct expenses incurred upto the date of commencement of
commercial use of the assets.
However value of gross block of fixed assets acquired upto 31.03.1985
has been stated at revalued amount as on 31.03.1986.
3. Depreciation
Depreciation on fixed assets is provided for on straight line method in
accordance with the provisions of section 205(2)(b) of the Companies
Act, 1956. Depreciation on additions/disposals during the year is
provided on pro-rata basis.
Consequent to changes made in schedule XIV, vide Notification No. GSR
756E dated 16.12.93, the company had revised the rate of depreciation.
The specified period had been recomputed as suggested by the Circular
dated 20.12.93 except in case of petty assets like furniture, fixture
and office equipment where it is difficult to effect the changes. While
adopting the revised rates, the Spinning Plant has been categorized as
"Continuous Process Plant" on the basis of technical opinion obtained
by the company.
Value of leasehold land is amortized over the period of its lease.
4. Valuation of Inventories
Inventories are valued at Lower of Cost or Net Realisable Value. Cost
is measured on First In First Out basis.
5. Turnover
i) Turnover are inclusive of excise duty, refund and other related
realization but exclusive of value added tax charged. ii) Job income
included in turnover, is accounted for on delivery of finished goods
inclusive of excise duty.
6. Investments
Long Term Investments are carried at cost. Whereas, Current Investments
are carried at lower of Cost or Net Realisable Value. In case of Long
Term Investments, other than temporary diminution in the value of
investment is provided for.
7. Benefits Receivable Against Export and Its Obligation
Unutilized credits, entitlements under Duty Entitlements Pass Book
(DEPB) schemes are accounted for in the year of export at market value.
8. Foreign Currency Transactions
i) Transactions denominated in foreign currencies are normally recorded
at the exchange rate prevailing on the day of the transactions.
ii) Monitory items denominated in foreign currency at the year end and
not covered by forward exchange contracts are translated at year end
rates and those covered by forward contracts are translated at the rate
ruling at the date of transactions as increased or decreased by the
proportionate difference between the forward rate and exchange rate on
the date of transactions such difference having been recognized over
the life of the contract. Foreign exchange financial instruments in
hand at the year end are valued at mark to market.
Any income or expenses on account of exchange difference either on
settlement or on translation is recognized in the profit and loss
account. *
9. Employees Benefits
i) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account for the year in
which the related service is rendered.
ii) Retirement and other long term employee benefits are recognized as
an expense in the profit and loss account for the year in which the
employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of
retirement and other long term benefits are charged to the profit and
loss account.
10. Provision For Doubtful Debts
15% is being provided each year on amount outstanding over a period of
6 months.
11. Taxes on Income
Current tax is determined as the amount of tax payable to the Taxation
Authorities in respect of taxable income for the year.
Deferred tax is recognized, subject to consideration of prudence, in
respect of deferred tax assets, on timing differences being difference
between taxable income and accounting income that originate in one year
and are capable of reversal in one or more subsequent years.
In respect of unabsorbed depreciation / carry forward of losses under
the tax laws, deferred tax assets are recognized only to the extent
that there is virtual certainty that future taxable income will be
available against which such deferred tax assets can be realized.
12. Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that takes necessarily
substantial period of time to get ready for its intended use. All
other borrowing costs are charged to revenue.
13. Except where stated, accounting policies are consistent with the
generally accepted accounting principles and have been consistently
applied.
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