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Accounting Policies of DCM Shriram Industries Ltd. Company
Mar 31, 2025
1 Corporate Information
DCM Shriram Industries Limited (the âCompanyâ) is a Public Limited Listed Company having CIN L74899DL1989PLC035140 incorporated in India and having its registered office at Kanchenjunga Building, 18, Barakhamba Road, New Delhi - 110001. The Company is primarily engaged in production and sale of sugar, alcohol, power, chemicals and industrial fibers.
2 Basis of preparation of standalone financial statements
a) Statement of compliance
These Standalone Financial Statements (âStandalone Financial Statementsâ) of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) 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, as applicable. The accounting policies are applied consistently in the financial statements.
These Standalone Financial Statements of the Company for the year ended March 31, 2025, are approved by the Companyâs Audit Committee and by the Board of Directors on 29 May 2025.
b) Functional and presentation currency
These standalone financial statements are presented in Indian Rupees (INR), which is also the Companyâs functional currency. All amounts are in Rupees lakhs with two decimal points rounded-off to the nearest thousands, unless otherwise stated.
c) Basis of measurement
The standalone financial statements have been prepared on an accrual basis and under the historical cost convention, except for the following items:
|
Items |
Measurement basis |
|
Derivative financial instruments |
Fair value through profit and loss (FVTPL) |
|
Net defined benefit (asset)/ liability |
Fair value of plan assets less present value of defined benefit obligations |
|
Investments in Mutual Funds |
Fair value through profit and loss (FVTPL) |
Fair value is the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated, using another valuation technique. In determining the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
d) Critical accounting estimates and judgements
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Financial reporting results rely on the estimate of the effect of certain matters that are inherently uncertain. Future events rarely develop exactly as forecast and the best estimates require adjustments, as actual results may differ from these estimates under different assumptions or conditions. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. The management believes that the estimates used in preparation of these financial statements are prudent and reasonable. 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.
In particular, information about significant areas of estimation/ uncertainty and judgements in applying accounting policies that have the most significant effects on the standalone financial statements includes:
- Recognition and estimation of tax expense including deferred tax- Note 2A(g) and 38.
- Assessment of useful life of property, plant and equipment and intangible assets- Note 2A(b) and (c).
- Estimation of obligations relating to employee benefits: key actuarial assumptions - Note 2A(h)
- Valuation of inventories- Note 2A(d)
- Fair value measurement of financial instruments- Note 2A(q)
- Lease classification- Note 2A(n)
- Determination of right of use (ROU) assets and liabilities; incremental borrowing rate and lease term- Note 2A(n)
- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of outflow of resources- Note 2A(i)
- Impairment of financial assets- Note 2A(q)
- Impairment of non-financial assets- Note 2A(k))
2A. Material accounting policies
a) Operating cycle
Based on the nature of products/ activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
An asset is classified as current when it satisfies any of the following criteria:
- It is expected to be realised in, or is intended for sale or consumption in, the Companyâs normal operating cycle,
- It is held primarily for the purpose of being traded,
- It is expected to be realised within 12 months after the reporting date, or
- It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the following criteria:
- It is expected to be settled in the Companyâs normal operating cycle,
- It is held primarily for the purpose of being traded,
- It is due to be settled within 12 months after the reporting date, or
- The Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Deferred Tax Assets and Liabilities are classified as non-current only.
b) Property, plant and equipment (PPE)
(i) Recognition and measurement
All items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation/ amortization and accumulated impairment losses, if any.
Cost of acquisition or construction of property, plant and equipment comprises its purchase price including import duties and non-refundable purchase taxes after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and, for assets that necessarily take a substantial period of time to get ready for their intended use, finance costs. The cost of an item of property, plant and equipment shall be recognised as an assets 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. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Capital work-in-progress is stated at cost, net of impairment loss, if any.
The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition and location for their intended use, and the estimated cost of dismantling and removing the items and restoring the site on which they are located. Interest cost incurred for constructed assets is capitalised up to the date the asset is ready for its intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been used for the asset.
When parts of an item of property, plant and equipment having significant cost have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognized.
The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no further economic benefit is expected from its use and disposal. Assets retired from active use and held for disposal are generally stated at the lower of their net book value and net realizable value. Any gains or losses arising on disposal of property, plant and equipment are recognized in the Statement of Profit and Loss. Incomes and expenses related to the incidental operations not necessary to bring the item to the location and the condition necessary for it to be capable of operating in the manner intended by management are recognized in the Statement of Profit and Loss.
Once classified as held-for-sale, property, plant and equipment are no longer depreciated. Gains or losses arising from de-recognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Standalone Statement of Profit and Loss when the asset is derecognized. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, as appropriate.
(ii) Transition to IND AS
The cost of property, plant and equipment as of April 01, 2016, the Companyâs date of transition to Ind AS, was determined with reference to its carrying value recognised as per the previous GAAP (deemed cost).
(iii) Subsequent expenditure
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 Company and the cost of the item can be measured.
(iv) Depreciation
Depreciation is provided on a pro-rata basis using the straight-line method as per the useful lives prescribed in Schedule II to the Companies Act, 2013. Leasehold improvements are amortised on a straight line basis over the unexpired period of lease. Leasehold land (being in the nature of perpetual lease) and freehold land are not depreciated.
Depreciation methods, useful lives and residual values are reviewed in each financial year, and changes, if any, are accounted for prospectively.
The estimated useful lives are as mentioned below:
|
Type of asset |
Useful lives (in years) |
|
Leasehold improvements |
Lease term |
|
Buildings |
5-60 years |
|
Plant and equipment |
10-40 years |
|
Vehicles |
8-10 years |
|
Office equipment |
5 years |
|
Furniture and fixtures |
10 years |
c) Intangible assets
(i) Recognition and initial measurement
Intangible assets acquired separately are measured on initial recognition at cost. The cost of an intangible asset comprises its purchase price including duties and taxes and any costs directly attributable to making the assets ready for their intended use. An intangible asset is recognised only if it is probable that future economic benefits attributable to the asset will flow to the Company. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in the Statement of Profit and Loss when the asset is derecognised.
(ii) Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.
(iii) Amortisation
Intangible assets, being computer software are amortised in the Statement of Profit and Loss over the estimated useful life of five years using the straight line method.
The amortisation method and the useful lives of intangible assets are reviewed annually and adjusted, as necessary.
d) Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is ascertained on a âweighted averageâ basis.
Cost includes direct materials, labour, freight inwards, other direct cost, a proportion of manufacturing overheads based on normal operating capacity, net of refundable duties, levies and taxes, wherever applicable.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs, necessary to make the sale.
Assessment of net realisable value is made at each reporting date. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realisable value because of changed economic circumstances, the amount so written-down is adjusted in terms of policy as stated above.
Appropriate adjustments are made to the carrying value of damaged, slow moving and obsolete inventories based on managementâs current best estimate.
The cost of production (including cost of conversion) of joint products is allocated on such joint products based on a rational and consistent basis, i.e., relative realisable values at the separation point, when the products become separately identifiable.
By-products are valued at estimated net realizable value.
The comparison of cost and net realisable value is made on an item-by-item basis.
The net realisable value of work-in-progress is determined with reference to the selling price of related finished goods. Raw materials, component and other supplies held for use in production of finished products are not written down below cost except in cases, when a decline in the price of materials indicates that the cost of the finished products shall exceeds the net realisable value.
e) Revenue from contract with customers
i. Sale of goods
Revenue from sale of goods is recognised at the point in time when control of products is transferred to the customer. Amounts disclosed as revenue are net of returns and allowances, trade discounts and rebates. The Company collects Goods and services tax on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from the revenue. At contract inception, the Company assesses the goods or services promised in a contract with a customer and identify, as a performance obligation, each promise to transfer to the customer.
Revenue from contracts with customers is recognized when control of goods or services are transferred to customers and the Company retains neither continuing managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold. The timing of the transfer of control of products to customers at the time of dispatch, during shipment or receipt of goods by the customers which vary based on individual terms of the sales agreements.
Revenue is measured based on the transaction price, which is the consideration, adjusted for variable consideration such as volume discounts, cash discounts, etc., as specified in the contract with the customer. Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made.
Contract asset is the entityâs right to consideration in exchange for goods or services that the entity has transferred to the customer. A contract asset becomes a receivable when the entityâs right to consideration is unconditional, which is the case when only the passage of time is required before payment of the consideration is due.
Contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is received or due, whichever is earlier. Contract liabilities are recognised as revenue when the Company performs under the contract.
ii. Rendering of services
Revenue from rendering of services are recognised over a period of time as and when underline services are performed as the customer simultaneously receives and consumes the benefit provided by the Companyâs performance. Payment for the service rendered is
received as per the credit terms in the agreements with the customers. Where the credit period is short term, no financing component is considered. Job work is recognized upon full completion of the job work.
iii. Income from Renewable Energy Certificates (RECs)
Income from Renewable Energy Certificates (RECs) is recognised at estimated realisable value on confirmation of RECs by the concerned authorities.
Use of significant judgements in revenue recognition:
- Judgement is required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, price concessions and incentives. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. The Company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations.
- The Companyâs performance obligation under revenue contracts, is satisfied at a point in time and judgement is exercised in determining the same.
f) Interest and dividend income
Interest income are reported on an accrual basis using the effective interest method, when the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding. Dividends income from investments is recognised when the shareholderâs right to receive payment has been established.
g) Income tax
Income tax expense comprises current and deferred tax. It is recognised in Statement of Profit and Loss except to the extent that it relates to a business combination, or items recognised directly in equity or in Other Comprehensive Income (OCI).
⢠Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received after considering uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Current tax is recognised in Statement of Profit or Loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current tax is also recognised in other comprehensive income or directly in equity respectively. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
⢠Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that effects neither accounting nor taxable profit or loss at the time of the transaction;
- temporary differences related to freehold land and investments in subsidiaries, to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets (DTA) include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
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 realised simultaneously.
Minimum Alternative Tax (MAT) Credit
In case of tax payable as Minimum Alternative Tax (âMATâ) under the provisions of the Income-tax Act, 1961, the credit available under the Act in respect of MAT paid is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognised as a deferred tax asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists.
h) Employee benefits
i) Short-term benefits
All employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. 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, if the Company has a present legal or constructive obligation to pay the amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
ii) Defined contribution plans
The defined contribution plans, i.e., provident fund (administered through Regional Provident Fund Office), superannuation fund and employee state insurance corporation are postemployment benefit plans under which a Company pays fixed contributions and will have no legal and constructive obligation to pay further amounts. Obligations for contributions to
defined contribution plans are recognised as an employee benefit expense in the Statement of Profit and Loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
iii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. 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 the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
Gratuity
The Company provides for gratuity, a defined benefit plan (the Gratuity Plan) covering all eligible employees. In accordance with The Payment of Gratuity Act, 1972, the Gratuity plan provides a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment. These are funded by the Company and are managed by the Life Insurance Corporation of India (LIC).
The calculation of defined benefit obligation is performed by a qualified actuary separately for each plan using the projected unit credit method, which recognises each year of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the present value of estimated future cash flows. The discount rate used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.
Remeasurements, comprising actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contribution to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (âpast service costâ or âpast service gainâ) or the gain or loss on curtailment is recognised immediately in Statement of Profit and Loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in the Statement of Profit and Loss.
When benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in the Statement of Profit and Loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.
Provident fund (other than those made to the Regional Provident Fund Office of the Government)
Provident Fund Contributions other than those made to the Regional Provident Fund Office of the Government which are made to the Trusts administered by the Company are accounted for on the basis of actuarial valuation. The interest rate payable to the members of the Trust is not considered to be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and, Miscellaneous Provisions Act, 1952 and shortfall, if any, based on actuarial estimate by an approved actuary, is made good by the Company.
iv) Other long-term employee benefits
Benefits under the Companyâs privilege leaves and medical leaves are other long term employee benefits. The Companyâs net obligation in respect of privilege leave and medical leave are the amount of future benefits that employees have earned in return for their service in the current and prior periods. The benefit is discounted to determine its present value. The obligation is measured on the basis of an actuarial valuation using the projected unit credit method.
Re-measurements are recognised in Statement of Profit and Loss in the period in which they arise.
i) Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the Statement of Profit and Loss over the period necessary to match them with the costs that they are intended to compensate, and presented within other income (operating or non-operating, as appropriate) other than export benefits which are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
A government grant that becomes receivable as compensation for expenses or losses incurred in a previous period, is recognised in profit or loss of the period in which it becomes receivable.
j) Foreign currency transactions and translation
The management has determined the currency of the primary economic environment in which the Company operates, i.e., functional currency, to be Indian Rupees (INR). The financial statements are presented in INR which is Companyâs functional and presentational currency.
Monetary and non-monetary transactions in foreign currencies are initially recorded in the functional currency of the Company at the exchange rates at the dates of the transactions or at an average rate if the average rate approximates the actual rate at the date of the transaction.
Monetary foreign currency assets and liabilities remaining unsettled on reporting date are translated at the rates of exchange prevailing on reporting date. Gains/ losses arising on account of realisation/ settlement of foreign exchange transactions and on translation of monetary foreign currency assets and liabilities are recognised in the Statement of Profit and Loss.
Non-monetary items measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
The derivative financial instruments such as forward exchange contracts to hedge its risk associated with foreign currency fluctuations are stated at fair value. Any gains or losses arising from changes in fair value are taken directly to Statement of Profit or Loss.
k) Impairment of non-financial assets
The carrying amounts of the Companyâs non-financial assets (other than inventories and deferred tax assets) are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 âImpairment of Assetsâ. If any such indication exists, then the assetâs recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is greater of its value in use and its fair value less costs to sell. 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). In determining fair value less costs of disposal, recent market transactions are considered. If no such transactions can be identified, an appropriate valuation model is used.
The Companyâs corporate assets (e.g., central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined in relation to the CGU to which a corporate asset belongs.
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 the Statement of Profit and Loss. Impairment losses recognized in respect of CGUs are reduced from the carrying amounts of the assets of the CGU.
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 assetâs 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.
l) Provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, as appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
A provision for onerous contract is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligation under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on assets associated.
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.
The Company does not recognise a contingent liability but discloses its existence in the financial statements.
Contingent assets are neither recognised nor disclosed in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.
m) Borrowing cost
Borrowing costs that are directly attributable to the acquisition, construction or erection of qualifying assets are capitalised as part of cost of such asset until such time that 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.
When the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the borrowing costs incurred are capitalized. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalization of the borrowing costs is computed based on the weighted average cost of general borrowing that are outstanding during the period and used for the acquisition of the qualifying asset.
Capitalisation 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 interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
All other borrowing costs are recognised as an expense in the year in which they are incurred.
n) Leases
Company as a lessee
The Company recognizes a Right of Use (RoU) asset at cost and corresponding lease liability, except for leases with term of less than twelve months (short term) and low-value assets in accordance with Ind AS 116, âLeasesâ. The Company assesses whether a contract contains a lease, at the inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
- the contract involves the use of an identified asset
- the Company has substantially all of the economic benefits from use of the asset through the period of the lease and the Company has the right to direct the use of the asset.
The cost of the right-of-use assets comprises the amount of the initial measurement of the lease liability, any lease payments made at or before the inception date of the lease plus any initial direct costs, etc. Subsequently, the right-of-use asset is measured at cost less any accumulated depreciation and accumulated impairment losses, if any. The right-of-use asset is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use assets unless the lease transfers ownership of the underlying asset to the Company by the end of the lease term or the cost of the right-of-use asset reflects that the Company will exercise a purchase option. The estimated useful life of the right-of-use assets are determined on the same basis as those of property, plant and equipment. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset
belongs. For lease liabilities at the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate is readily determined. If that rate is not readily determined, the lease payments are discounted using the incremental borrowing rate. For short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the lease term. The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities include these options when it is reasonably certain that they will be exercised. The Company uses a single discount rate to a portfolio of leases with similar characteristics.
Company as a lessor
At the inception of the lease, the Company classifies each of its leases as either an operating lease or a finance lease. The Company recognises lease income as and when due as per terms of agreements. The respective leased assets are included in the financial statements based on their nature.
o) Earnings per share (EPS)
Basic earnings / (loss) per share are calculated by dividing the net profit or loss for the year attributable to the shareholders of the Company by the weighted average number of equity shares outstanding at the end of the reporting period. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus / rights issue, if any, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earning per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
p) Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM).
In accordance with Ind AS 108 - âOperating Segmentsâ, the operating segments used to present segment information are identified on the basis of internal reports used by the Companyâs Management to allocate resources to the segments and assess their performance.
The Executive Committee, primarily comprising Chairman and Managing Director, Whole Time Directors, Business Heads, Chief Financial Officer and Company Secretary, is collectively the Companyâs âChief Operating Decision Makerâ or âCODMâ within the meaning of Ind AS 108. All operating segmentsâ operating results are reviewed regularly by the CODM to make decisions about resources to be allocated to the segments and assess their performance. Refer Note 39 for segment information.
Based on âManagement Approachâ, as defined in Ind AS 108 -Operating Segments, the Chief Operating Decision Maker evaluates the Companyâs performance and allocates the resources based on an analysis of various performance indicators by business segments. Inter segment sales and transfers are reflected at market prices.
Unallocable items include general corporate income and expense items which are not allocated to any business segment.
Segment policies:
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the standalone financial statements of the Company as a whole. Common allocable costs are allocated to each segment on an appropriate basis.
q) 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.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Company has an established control framework with respect to the measurement of fair values. It regularly reviews significant inputs and valuation adjustments.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values used in preparing these financial statements is included in the respective notes.
Initial recognition and measurement
With the exception of trade receivables that do not contain a significant financing component, the Company initially measures financial asset at its fair value, in the case of a financial asset not at fair value through profit or loss, net of transaction costs. Trade receivables do not contain a significant financing component and are measured at the transaction price determined under Ind AS 115. Refer to the accounting policies in section 2A (e) Revenue recognition.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets of the Company are classified in three categories:
a) At amortised cost
b) At fair value through profit and loss (FVTPL)
c) At fair value through other comprehensive income (FVTOCI)
Financial Asset is measured at 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.
After initial measurement, such 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 costs that are an integral part of the EIR. The EIR amortisation is included in other income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. This category generally applies to trade and other receivables.
All those financial assets that are not classified as measured at amortised cost or FVTOCI, are measured at FVTPL. This includes all derivative financial assets and current investments in mutual funds. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVTOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Equity investments
All equity investments in the scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are measured at fair value through profit and loss.
For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in other comprehensive income. 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 instrument, excluding dividends, are recognised in other comprehensive income. This cumulative gain or loss is not reclassified to Statement of Profit and Loss on disposal of such instruments.
Investments representing equity interest in subsidiary and associate are carried at cost less any provision for impairment.
Impairment of financial assets
The Company recognizes loss allowances for expected credit losses on:
- Financial assets measured at amortized cost; and
- Financial assets measured at FVTOCI - debt instruments.
Loss allowance for trade receivables is measured at an amount equal to lifetime ECL. For all financial assets with contractual cash flows other than trade receivable, ECLs are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of ECLs (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is recognised as an impairment gain or loss in the Statement of Profit and Loss.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Companyâs historical experience and informed credit assessment, that includes forward-looking information.
At each reporting date, the Company assesses whether financial assets carried at amortised cost and debt securities at FVTOCI are credit-impaired. A financial asset is âcredit-impairedâ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:
⢠significant financial difficulty of the debtor;
⢠a breach of contract such as a default or being more than 180 days past due;
⢠it is probable that the debtor will enter bankruptcy or other financial reorganisation; or
⢠the disappearance of an active market for a security because of financial difficulties.
With regard to trade receivable, the Company has applied the simplified approach for initial recognition of expected lifetime losses.
Financial liabilities
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for- trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in the Statement of Profit and Loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in the Statement of Profit and Loss. Any gain or loss on derecognition is also recognised in the Statement of Profit and Loss.
Offsetting
Financial assets and financial liabilities are offset and the net amount is presented in the Balance Sheet only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the assets and settle the liabilities simultaneously.
Derecognition
(i) Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its Balance Sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
(ii) Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in the Statement of Profit and Loss.
r) Cash and cash equivalents
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
s) Research and development
Expenditure on research activities is recognized in the Statement of Profit and Loss as incurred.
Development expenditure is capitalized as part of cost of the resulting intangible asset 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. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated amortisation and any accumulated impairment losses, if any.
t) Dividend
The Company recognises a liability to make cash distributions to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
u) Goods and services tax input credit
Goods and services tax input credit is recognised in the books of account in the period in which the
Mar 31, 2024
1 Corporate Information
DCM Shriram Industries Limited (the âCompanyâ) is a Public Limited Listed Company having CIN L74899DL1989PLC035140 incorporated in India and having its registered office at Kanchenjunga Building, 18, Barakhamba Road, New Delhi - 110001. The Company is primarily engaged in production and sale of sugar, alcohol, power, chemicals and industrial fibers.
2 Basis of preparation of standalone financial statements
a) Statement of compliance
These Standalone Financial Statements (âStandalone Financial Statementsâ) of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) 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, as applicable. The accounting policies are applied consistently in the financial statements.
These Standalone Financial Statements of the Company for the year ended March 31,2024, are approved by the Companyâs Audit Committee and by the Board of Directors on 27 May 2024.
b) Functional and presentation currency
These standalone financial statements are presented in Indian Rupees (INR), which is also the Companyâs functional currency. All amounts are in Rupees lakhs with two decimal points rounded-off to the nearest thousands, unless otherwise stated.
c) Basis of measurement
The standalone financial statements have been prepared on an accrual basis and under the historical cost convention, except for the following items:
|
Items |
Measurement basis |
|
Derivative financial instruments |
Fair value through profit and loss (FVTPL) |
|
Net defined benefit (asset)/ liability |
Fair value of plan assets less present value of defined benefit obligations |
|
Investments in Mutual Funds |
Fair value through profit and loss (FVTPL) |
Fair value is the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated, using another valuation technique. In determining the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
d) Critical accounting estimates and judgements
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Financial reporting results rely on the estimate of the effect of certain matters that are inherently uncertain. Future events rarely develop exactly as forecast and the best estimates require adjustments, as actual results may differ from these estimates under different assumptions or conditions. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. The management believes that the estimates used in preparation of these financial statements are prudent and reasonable. 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.
In particular, information about significant areas of estimation/ uncertainty and judgements in applying accounting policies that have the most significant effects on the standalone financial statements includes:
- Recognition and estimation of tax expense including deferred tax- Note 2A(g) and 38.
- Assessment of useful life of property, plant and equipment and intangible assets- Note 2A(b) and (c).
- Estimation of obligations relating to employee benefits: key actuarial assumptions - Note 2A(h)
- Valuation of inventories- Note 2A(d)
- Fair value measurement of financial instruments- Note 2A(q)
- Lease classification- Note 2A(n)
- Determination of right of use (ROU) assets and liabilities; incremental borrowing rate and lease term- Note 2A(n)
- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of outflow of resources- Note 2A(i)
- Impairment of financial assets- Note 2A(q)
- Impairment of non-financial assets- Note 2A(k)
2A. Material accounting policies
a) Operating cycle
Based on the nature of products/ activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
An asset is classified as current when it satisfies any of the following criteria:
- It is expected to be realised in, or is intended for sale or consumption in, the Companyâs normal operating cycle,
- It is held primarily for the purpose of being traded,
- It is expected to be realised within 12 months after the reporting date, or
- It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the following criteria:
- It is expected to be settled in the Companyâs normal operating cycle,
- It is held primarily for the purpose of being traded,
- It is due to be settled within 12 months after the reporting date, or
- The Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Deferred Tax Assets and Liabilities are classified as non-current only.
(i) Recognition and measurement
All items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation/ amortization and accumulated impairment losses, if any.
Cost of acquisition or construction of property, plant and equipment comprises its purchase price including import duties and non-refundable purchase taxes after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and, for assets that necessarily take a substantial period of time to get ready for their intended use, finance costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Capital work-in-progress is stated at cost, net of impairment loss, if any.
The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition and location for their intended use, and the estimated cost of dismantling and removing the items and restoring the site on which they are located. Interest cost incurred for constructed assets is capitalised up to the date the asset is ready for its intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been used for the asset.
When parts of an item of property, plant and equipment having significant cost have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognized.
The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no further economic benefit is expected from its use and disposal. Assets retired from active use and held for disposal are generally stated at the lower of their net book value and net realizable value. Any gains or losses arising on disposal of property, plant and equipment are recognized in the Statement of Profit and Loss. Incomes and expenses related to the incidental operations not necessary to bring the item to the location and the condition necessary for it to be capable of operating in the manner intended by management are recognized in the Statement of Profit and Loss.
Once classified as held-for-sale, property, plant and equipment are no longer depreciated. Gains or losses arising from de-recognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Standalone Statement of Profit and Loss when the asset is derecognized. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, as appropriate.
(ii) Transition to IND AS
The cost of property, plant and equipment as of April 01, 2016, the Companyâs date of transition to Ind AS, was determined with reference to its carrying value recognised as per the previous GAAP (deemed cost).
(iii) Subsequent expenditure
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.
(iv) Depreciation
Depreciation is provided on a pro-rata basis using the straight-line method as per the useful lives prescribed in Schedule II to the Companies Act, 2013. Leasehold improvements are amortised on a straight line basis over the unexpired period of lease. Leasehold land (being in the nature of perpetual lease) and freehold land are not depreciated.
Depreciation methods, useful lives and residual values are reviewed in each financial year, and changes, if any, are accounted for prospectively.
The estimated useful lives are as mentioned below:
|
Type of asset |
Useful lives (in years) |
|
Leasehold improvements |
Lease term |
|
Buildings |
5-60 years |
|
Plant and equipment |
10-40 years |
|
Vehicles |
8-10 years |
|
Office equipment |
5 years |
|
Furniture and fixtures |
10 years |
c) Intangible assets
(i) Recognition and initial measurement
Intangible assets acquired separately are measured on initial recognition at cost. The cost of an intangible asset comprises its purchase price including duties and taxes and any costs directly attributable to making the assets ready for their intended use. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in the Statement of Profit and Loss when the asset is derecognised.
(ii) Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.
(iii) Amortisation
Intangible assets, being computer software are amortised in the Statement of Profit and Loss over the estimated useful life of five years using the straight line method.
The amortisation method and the useful lives of intangible assets are reviewed annually and adjusted, as necessary.
d) Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is ascertained on a âweighted averageâ basis.
Cost includes direct materials, labour, freight inwards, other direct cost, a proportion of manufacturing overheads based on normal operating capacity, net of refundable duties, levies and taxes, wherever applicable.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs, necessary to make the sale.
Assessment of net realisable value is made at each reporting date. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realisable value because of changed economic circumstances, the amount so written-down is adjusted in terms of policy as stated above.
Appropriate adjustments are made to the carrying value of damaged, slow moving and obsolete inventories based on managementâs current best estimate.
The cost of production (including cost of conversion) of joint products is allocated on such joint products based on a rational and consistent basis, i.e., relative realisable values at the separation point, when the products become separately identifiable.
By-products are valued at estimated net realizable value.
The comparison of cost and net realisable value is made on an item-by-item basis.
e) Revenue recognition
i. Sale of goods
Revenue from sale of goods is recognised at the point in time when control of products is transferred to the customer. Amounts disclosed as revenue are net of returns and allowances, trade discounts and rebates. The Company collects Goods and services tax on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from the revenue. At contract inception, the Company assesses the goods or services promised in a contract with a customer and identify, as a performance obligation, each promise to transfer to the customer.
Revenue from contracts with customers is recognized when control of goods or services are transferred to customers and the Company retains neither continuing managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold. The timing of the transfer of control of products to customers at the time of dispatch, during shipment or receipt of goods by the customers which vary based on individual terms of the sales agreements.
Revenue is measured based on the transaction price, which is the consideration, adjusted for variable consideration such as volume discounts, cash discounts, etc., as specified in the contract with the customer. Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made.
Contract asset is the entityâs right to consideration in exchange for goods or services that the entity has transferred to the customer. A contract asset becomes a receivable when the entityâs right to consideration is unconditional, which is the case when only the passage of time is required before payment of the consideration is due.
Contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is received or due, whichever is earlier. Contract liabilities are recognised as revenue when the Company performs under the contract.
ii. Rendering of services
Revenue from rendering of services are recognised over a period of time as and when underline services are performed as the customer simultaneously receives and consumes the benefit provided by the Companyâs performance. Payment for the service rendered is
received as per the credit terms in the agreements with the customers. Where the credit period is short term, no financing component is considered. Job work is recognized upon full completion of the job work.
iii. Income from Renewable Energy Certificates (RECs)
Income from Renewable Energy Certificates (RECs) is recognised at estimated realisable value on confirmation of RECs by the concerned authorities.
Use of significant judgements in revenue recognition:
- Judgement is required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, price concessions and incentives. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. The Company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations.
- The Companyâs performance obligation under revenue contracts, is satisfied at a point in time and judgement is exercised in determining the same.
f) Interest and dividend income
Interest income are reported on an accrual basis using the effective interest method, when the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding. Dividends income from investments is recognised when the shareholderâs right to receive payment has been established.
g) Income tax
Income tax expense comprises current and deferred tax. It is recognised in Statement of Profit and Loss except to the extent that it relates to a business combination, or items recognised directly in equity or in Other Comprehensive Income (OCI).
⢠Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received after considering uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Current tax is recognised in Statement of Profit or Loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current tax is also recognised in other comprehensive income or directly in equity respectively. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
⢠Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that effects neither accounting nor taxable profit or loss at the time of the transaction;
- temporary differences related to freehold land and investments in subsidiaries, to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets (DTA) include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
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 realised simultaneously.
Minimum Alternative Tax (MAT) Credit
In case of tax payable as Minimum Alternative Tax (âMATâ) under the provisions of the Income-tax Act, 1961, the credit available under the Act in respect of MAT paid is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognised as a deferred tax asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists.
h) Employee benefits
i) Short-term benefits
All employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. 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, if the Company has a present legal or constructive obligation to pay the amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
ii) Defined contribution plans
The defined contribution plans, i.e., provident fund (administered through Regional Provident Fund Office), superannuation fund and employee state insurance corporation are postemployment benefit plans under which a Company pays fixed contributions and will have no legal and constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in the Statement of Profit and Loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
iii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. 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 the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
Gratuity
The Company provides for gratuity, a defined benefit plan (the Gratuity Plan) covering all eligible employees. In accordance with The Payment of Gratuity Act, 1972, the Gratuity plan provides a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment. These are funded by the Company and are managed by the Life Insurance Corporation of India (LIC).
The calculation of defined benefit obligation is performed by a qualified actuary separately for each plan using the projected unit credit method, which recognises each year of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the present value of estimated future cash flows. The discount rate used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.
Remeasurements, comprising actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contribution to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (âpast service costâ or âpast service gainâ) or the gain or loss on curtailment is recognised immediately in Statement of Profit and Loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in the Statement of Profit and Loss.
When benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in the
Statement of Profit and Loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.
Provident fund Mother than those made to the Regional Provident Fund Office of the Government)
Provident Fund Contributions other than those made to the Regional Provident Fund Office of the Government which are made to the Trusts administered by the Company are accounted for on the basis of actuarial valuation. The interest rate payable to the members of the Trust is not considered to be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and, Miscellaneous Provisions Act, 1952 and shortfall, if any, based on actuarial estimate by an approved actuary, is made good by the Company.
iv) Other long-term employee benefits
Benefits under the Companyâs privilege leaves and medical leaves are other long term employee benefits. The Companyâs net obligation in respect of privilege leave and medical leave are the amount of future benefits that employees have earned in return for their service in the current and prior periods. The benefit is discounted to determine its present value. The obligation is measured on the basis of an actuarial valuation using the projected unit credit method.
Re-measurements are recognised in Statement of Profit and Loss in the period in which they arise.
i) Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the Statement of Profit and Loss over the period necessary to match them with the costs that they are intended to compensate, and presented within other income (operating or non-operating, as appropriate) other than export benefits which are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
A government grant that becomes receivable as compensation for expenses or losses incurred in a previous period, is recognised in profit or loss of the period in which it becomes receivable.
j) Foreign currency transactions and translation
The management has determined the currency of the primary economic environment in which the Company operates, i.e., functional currency, to be Indian Rupees (INR). The financial statements are presented in INR which is Companyâs functional and presentational currency.
Monetary and non-monetary transactions in foreign currencies are initially recorded in the functional currency of the Company at the exchange rates at the dates of the transactions or at an average rate if the average rate approximates the actual rate at the date of the transaction.
Monetary foreign currency assets and liabilities remaining unsettled on reporting date are translated at the rates of exchange prevailing on reporting date. Gains/ losses arising on account of realisation/ settlement of foreign exchange transactions and on translation of monetary foreign currency assets and liabilities are recognised in the Statement of Profit and Loss.
Non-monetary items measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
The derivative financial instruments such as forward exchange contracts to hedge its risk associated with foreign currency fluctuations are stated at fair value. Any gains or losses arising from changes in fair value are taken directly to Statement of Profit or Loss.
k) Impairment of non-financial assets
The carrying amounts of the Companyâs non-financial assets (other than inventories and deferred tax assets) are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 âImpairment of Assetsâ. If any such indication exists, then the assetâs recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is greater of its value in use and its fair value less costs to sell. 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). In determining fair value less costs of disposal, recent market transactions are considered. If no such transactions can be identified, an appropriate valuation model is used.
The Companyâs corporate assets (e.g., central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined in relation to the CGU to which a corporate asset belongs.
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 the Statement of Profit and Loss. Impairment losses recognized in respect of CGUs are reduced from the carrying amounts of the assets of the CGU.
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 assetâs 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.
l) Provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, as appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
A provision for onerous contract is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligation under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on assets associated.
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.
The Company does not recognise a contingent liability but discloses its existence in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.
However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.
m) Borrowing cost
Borrowing costs that are directly attributable to the acquisition, construction or erection of qualifying assets are capitalised as part of cost of such asset until such time that 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.
When the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the borrowing costs incurred are capitalized. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalization of the borrowing costs is computed based on the weighted average cost of general borrowing that are outstanding during the period and used for the acquisition of the qualifying asset.
Capitalisation 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 interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
All other borrowing costs are recognised as an expense in the year in which they are incurred.
n) Leases
Company as a lessee
The Company recognizes a Right of Use (RoU) asset at cost and corresponding lease liability, except for leases with term of less than twelve months (short term) and low-value assets in accordance with Ind AS 116, âLeasesâ. The Company assesses whether a contract contains a lease, at the inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
- the contract involves the use of an identified asset
- the Company has substantially all of the economic benefits from use of the asset through the period of the lease and the Company has the right to direct the use of the asset.
The cost of the right-of-use assets comprises the amount of the initial measurement of the lease liability, any lease payments made at or before the inception date of the lease plus any initial direct costs, etc. Subsequently, the right-of-use asset is measured at cost less any accumulated depreciation and accumulated impairment losses, if any. The right-of-use asset is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use assets unless the lease transfers ownership of the underlying asset to the Company by the end of the lease term or the cost of the right-of-use asset reflects that the Company will exercise a purchase option. The estimated useful life of the right-of-use assets are determined on the same basis as those of property, plant and equipment. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs. For lease liabilities at the commencement date, the Company measures the lease
liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate is readily determined. If that rate is not readily determined, the lease payments are discounted using the incremental borrowing rate. For short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the lease term. The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities include these options when it is reasonably certain that they will be exercised. The Company uses a single discount rate to a portfolio of leases with similar characteristics.
Company as a lessor
At the inception of the lease, the Company classifies each of its leases as either an operating lease or a finance lease. The Company recognises lease income as and when due as per terms of agreements. The respective leased assets are included in the financial statements based on their nature.
o) Earnings per share (EPS)
Basic earnings / (loss) per share are calculated by dividing the net profit or loss for the year attributable to the shareholders of the Company by the weighted average number of equity shares outstanding at the end of the reporting period. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus / rights issue, if any, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earning per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
p) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM).
In accordance with Ind AS 108 - âOperating Segmentsâ, the operating segments used to present segment information are identified on the basis of internal reports used by the Companyâs Management to allocate resources to the segments and assess their performance.
The Executive Committee, primarily comprising Chairman and Managing Director, Whole Time Directors, Business Heads, Chief Financial Officer and Company Secretary, is collectively the Companyâs âChief Operating Decision Makerâ or âCODMâ within the meaning of Ind AS 108. All operating segmentsâ operating results are reviewed regularly by the CODM to make decisions about resources to be allocated to the segments and assess their performance. Refer Note 39 for segment information.
Based on âManagement Approachâ, as defined in Ind AS 108 -Operating Segments, the Chief Operating Decision Maker evaluates the Companyâs performance and allocates the resources based on an analysis of various performance indicators by business segments. Inter segment sales and transfers are reflected at market prices.
Unallocable items include general corporate income and expense items which are not allocated to any business segment.
Segment policies:
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the standalone financial statements of the Company as a whole. Common allocable costs are allocated to each segment on an appropriate basis.
q) 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.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Company has an established control framework with respect to the measurement of fair values. It regularly reviews significant inputs and valuation adjustments.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values used in preparing these financial statements is included in the respective notes.
Initial recognition and measurement
With the exception of trade receivables that do not contain a significant financing component, the Company initially measures financial asset at its fair value, in the case of a financial asset not at fair value through profit or loss, net of transaction costs. Trade receivables do not contain a significant financing component and are measured at the transaction price determined under Ind AS 115. Refer to the accounting policies in section 2A (e) Revenue recognition.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets of the Company are classified in three categories:
a) At amortised cost
b) At fair value through profit and loss (FVTPL)
c) At fair value through other comprehensive income (FVTOCI)
Financial Asset is measured at 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.
After initial measurement, such 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 costs that are an integral part of the EIR. The EIR amortisation is included in other income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. This category generally applies to trade and other receivables.
All those financial assets that are not classified as measured at amortised cost or FVTOCI, are measured at FVTPL. This includes all derivative financial assets and current investments in mutual funds. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVTOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Equity investments
All equity investments in the scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are measured at fair value through profit and loss.
For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in other comprehensive income. 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 instrument, excluding dividends, are recognised in other comprehensive income. This cumulative gain or loss is not reclassified to Statement of Profit and Loss on disposal of such instruments.
Investments representing equity interest in subsidiary and associate are carried at cost less any provision for impairment.
Impairment of financial assets
The Company recognizes loss allowances for expected credit losses on:
- Financial assets measured at amortized cost; and
- Financial assets measured at FVTOCI - debt instruments.
Loss allowance for trade receivables is measured at an amount equal to lifetime ECL. For all financial assets with contractual cash flows other than trade receivable, ECLs are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of ECLs (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is recognised as an impairment gain or loss in the Statement of Profit and Loss.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Companyâs historical experience and informed credit assessment, that includes forward-looking information.
At each reporting date, the Company assesses whether financial assets carried at amortised cost and debt securities at FVTOCI are credit-impaired. A financial asset is âcredit-impairedâ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:
⢠significant financial difficulty of the debtor;
⢠a breach of contract such as a default or being more than 180 days past due;
⢠it is probable that the debtor will enter bankruptcy or other financial reorganisation; or
⢠the disappearance of an active market for a security because of financial difficulties.
With regard to trade receivable, the Company has applied the simplified approach for initial recognition of expected lifetime losses.
Financial liabilities
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for- trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in the Statement of Profit and Loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in the Statement of Profit and Loss. Any gain or loss on derecognition is also recognised in the Statement of Profit and Loss.
Offsetting
Financial assets and financial liabilities are offset and the net amount is presented in the Balance Sheet only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the assets and settle the liabilities simultaneously.
Derecognition
(i) Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its Balance Sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
(ii) Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in the Statement of Profit and Loss.
r) Cash and cash equivalents
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
s) Research and development
Expenditure on research and development activities is recognized in the Statement of Profit and Loss as incurred.
Development expenditure is capitalized as part of cost of the resulting intangible asset 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. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated amortisation and any accumulated impairment losses, if any.
t) Dividend
The Company recognises a liability to make cash distributions to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
u) Goods and services tax input credit
Goods and services tax input credit is recognised in the books of account in the period in which the supply of goods or service received is recognised and when there is no uncertainty in availing/ utilising the credits.
Expenses and assets are recognised net of the goods and services tax/value added taxes paid, except:
1. When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable.
2. When receivables and payables are stated with the amount of tax included, the net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet.
v) Assets held for sale
Mar 31, 2023
The Directors have pleasure in presenting the Annual Report and the Audited Financial Statements of your Company for the year ended 31st March 2023 together with the Reports of the Auditors and the Board of Directors thereon.
Economic scenario
As the pandemic receded a war broke out in Europe in February 2022. As a result, prices of food, fuel and fertilizer rose sharply due to the impact on supply chains. Inflation rates accelerated, central banks of advanced countries struggled to respond with monetary policy tightening to address the situation. In the second half of 2022, commodity prices, which had peaked, declined giving relief from the acute pressure situation. As 2023 rolled in, China, which has a huge influence on world economy, opened up swiftly reversing its zero covid policy. These augured well for the world economy. However, an earthquake of severe magnitude struck Turkiye and Syria on 6th February, 2023 inflicting unimaginable devastation and misery on those two countries particularly on Turkey. Over 50,000 people lost their lives. This also had an adverse impact on the economy which was in the path of recovery. The comity of nations stepped in, in unison to extend relief to the affected people.
Despite the adversities, India has stood out as a beacon of hope for the world. Buoyancy in GST and other revenue streams are indicators of a robust recovery in most of the sectors. Emphasis given to capital expenditure in the previous budgets have started yielding results.
The year was special for India, which celebrated 75th year of its Independence. The Country became the world''s 5th largest economy measured in Dollars. In fiscal year 2023 India has seen growth at 7%, making it the fastest growing large economy. India achieved a GDP growth of 6.9% in the year 2022-23 as per World Bank, slightly lower than the projections. The momentum is encouraging.
It is another jewel in the crown of the Country that it has been named the President of the G-20 nations. The Group represents 75% of the world GDP and 66% of the world population. The Country has an enormous responsibility and stellar role in channelizing the members of the Group to address issues facing the world particularly that of climate change, health and world peace.
MSMEs and startups are a thrust area for the governments at Central and State levels. The potential of the sector to generate employment and to contribute to GDP is extremely high. The level of digitalization achieved by the Country, particularly in monetary transactions, is a matter of envy for any of the so-called developed countries.
In this year India attained one more distinction as it has become the most populous country in the world, overtaking China. 68% of the population, according to reports comprises of working group of 15-64 years. While higher population can be a constraint factor on resources it can also be a blessing in disguise if channelized appropriately to contribute to the growth story.
It is a matter of satisfaction that despite the slowdown post covid, geopolitical conflicts and the devastating earthquake in Turkey and Syria, the Company maintained its performance at satisfactory levels.
Financial Summary
The Company achieved a turnover of Rs.2367 cr against Rs.2146 cr. in the previous year. The gross profit at Rs.126.19 cr against is in line with the previous year''s Rs.124.75 cr. Net profit was Rs. 60.26 cr compared to Rs.65.74 cr. in the previous year.
Appropriation and Dividend
The Board of Directors had recommended an interim dividend of Re.1.00 (50%) per equity share of Rs.2 for the year 2022-23 in the Board meeting held on 14.02.2023, which was paid in March 2023. Interest rates are going up and the economy may decelerate. Considering this, need for conserving resources for debt servicing and possible expansion / modernization of operations, as a conservative measure, the Board of Directors did not recommend any final dividend for the year.
The closing balance of the retained earnings of the Company, after accounting for the interim dividend for the year 2022-23, amounting to Rs.498.97 cr, was carried forward in the P & L Account which includes the net profit of Rs. 60.26 cr. for the year 2022-23. The Dividend Distribution Policy of the Company as approved by the Board is available on the Company''s website at the following web link: https://dcmsr.com/wp-content/uploads/2022/08/Dividend-Distribution-Policy.pdf
Auditorsâ Report
There are no qualifications, reservation, or adverse remarks or disclaimer in the Auditorsâ Reports to the Members on the Annual Financial Statements for the year ended on 31.03.2023.
The Auditors have not reported any fraud pursuant to Section 143(12) of the Companies Act, 2013.
Secretarial Audit Report
M/s. Chandrasekaran Associates, Company Secretaries, carried out the Secretarial Audit for the year 202223 pursuant to Section 204 of the Companies Act, 2013. A copy of their Report in Form MR-3 as per Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure - 1. There is no qualification in the Report.
THE STATE OF COMPANYâS AFFAIRS
Sugar
The global sugar market attained a consumption volume of about 178.52 million tons in 2022. The market is expected to reach 189.50 million tons by 2028, at a growth rate (CAGR) of 1% during 2023-28. Currently, with the abatement of Covid, the food and beverages sector has again become major driver of sugar consumption and is expected to create a positive impact on global sugar Industry.
Although the sugar market remains saturated in developed economies, such as North America and Western Europe, it is showing promising growth in the emerging regions. Driven by rising disposable income, urbanization, and changing food habits the demand for sugar-based products in developing markets such as India, China and Middle East is showing strong growth.
As per the latest estimates India is expected to produce 33 million tons of sugar in the current season (October 2022 - September 2023) after accounting for reduction of 4.0 million tons of sugar diverted towards ethanol, as against 27.5 million tons of estimated domestic consumption of sugar.
As a measure to balance the price stability of sugar in the Country and the financial position of sugar mills, Government of India has allowed export of 6 million tones Sugar in the season (October 22- September 23) against 11 million tons in the previous season. In the Sugar Export Policy for Sugar Season 2022-23 Government has announced sugar mill-wise export quota for all sugar mills in the Country, based on average production of sugar mills in last three years and average production of sugar in the Country in last three years.
By allowing sugar exports, Government has protected the interest of cane farmers and sugar mills, since mills will be able to take benefit of favourable international sugar price scenario, which will help in timely payment of cane dues of farmers in current sugar season 2022-23. This will also reduce working capital costs of mills due to reduction in sugar stocks.
Another focus area is production of ethanol in the Country, which is a priority area to reduce dependence on fuel imports and support green and renewable energy movement. Higher ethanol prices encouraged sugar factories to divert more sugar towards ethanol. Diversion of sugar towards ethanol production during Ethanol Supply Year (ESY) 2022-23 is expected to be 4.5 million tones.
The Government is encouraging sugar mills and distilleries to enhance their distillation capacities and is supporting them to avail loans from banks. For such loans, interest subvention at 6% or 50% of the interest charged by the banks, whichever is less, is subsidized by the Government.
In the last 6 years, the Central Government has taken multiple and timely initiatives in sugar sector, enabling sugar mills to stand on their own and become a self-sustaining sector. During Sugar Season 2022-23, sugar mills were not given any subsidy for sugar production/marketing and even in the current season, sugar sector is expected to perform well even without any financial support from Government of India in the form of subsidy.
Facilitating diversion of sugar to ethanol production and export of surplus sugar as per availability, Government of India has taken care of interest of about 5 crore sugarcane farmer families as well as 5 lakh sugar mill workers along with a whole ecosystem of sugar sector, including ethanol distilleries, taking the industry on a growth trajectory.
Daurala Sugar works successfully Exported Sugar Quota of 43798 ton allocated to it for the sugar season 2223 till March 2023. Probability of Government allowing further exports beyond 6 million tons is quite remote. Till April 2023 the international sugar prices were continuously showing an upward trend and hovering around USD 670 per MT for white London Sugar#5.
Last year, DSW has changed its process from Sulphitation to Defco Remelt Phosphatation. This year, the Unit has carried out some jobs to further stabilize the process and for energy conservation. The new process is running stably.
During FY 22-23, DSW produced 2.178 lakh MT of sugar by crushing 23.18 lakh MT cane. The sugar recovery is 9.40% after diversion of around 4 lakh Qtl. of sugar to B-Heavy molasses. The recovery is lower as compared to last year, mainly due to weather conditions and unexpected disease of top borer in cane. Measures are being taken to address this problem in the next year crop.
We have exported the entire export quota allocated to us at a reasonably high price as our sugar is meeting all the international standards. The export realization was significantly better than domestic market price during the year 2022-23.
As the Distillery capacity has been increased last year, DSWâs Ethanol production capacity has also been increased and the Unit has produced 36359 KL of alcohol during FY 2022-23.
The Central Government has laid down a target of 20% blending of Ethanol with petrol by 2025, which will give further fillip to the sector.
Around 50% of levy molasses, will be used in the Unitâs country liquor plant and remaining molasses will be converted to ENA and sold to country liquor bottlers.
This season, we have diverted 100% B-Heavy Molasses as against last year 63%. It will increase the Ethanol production and better profitability of Distillery.
Rayon
Shriram Rayons achieved highest ever sales turnover and profits during the year with increase in sales realisation and various cost reduction measures. The export volumes suffered in the second and third quarter of FY 2022-23. Reduction in production by European customers due to energy constraint during ongoing Russia Ukraine War resulted in a low offtake during the above said period and posed recessionary trend in the market. Unitâs volumes were also in downward trend in FY 2020-21 and 2021-22 due to recessionary economic conditions followed by Covid-19 pandemic.
Adverse global demand supply situation affected the prices of raw materials, chemicals etc.in upward trajectory. But the Unit was able to off-set rise in cost of inputs with improved sales realisation.
The Unit implemented a project for capacity expansion of Rayon in a phased manner. Although the Project was delayed due to poor market conditions, lockdowns and restrictions on movement due to the spread of Covid-19, it is now nearly completed.
The Unit also manufactures Nylon Chafer fabric which is sold mainly to domestic tyre companies and Carbon Disulphide for captive consumption and sale in domestic market. The Unit achieved higher sales in these products during the year. The operating margins were also improved with increase in sales realisation despite increase in input prices for Carbon Disulphide. Unit is exploring options to add new customers for business.
Maximising agro fuel usage and moving towards zero fossil fuel consumption helped the Unit in controlling the energy cost up to a certain extent. More energy conservation measures are being adopted considering future challenges of increase of agro fuel cost.
The Unit continued receiving appreciations and awards from various forums for its productivity, highest export in the segment, top performance in Technical Textiles, energy conservation, PAT Cycle-II, best employer & safety etc.
Shriram Rayons continues to maintain quality and standards of its management systems and was recognised for the same, viz. Quality (ISO-9001:2015), Environment (ISO-14001:2015) and Occupational Health and Safety Management Systems (ISO-45001-2018). The Unit participated in assessment of CSR and sustainability by independent international bodies namely ECOVADIS and CDP (Carbon Disclosure Project).
The effluent and emission control facilities with real time monitoring are maintained and continuously upgraded to comply with the norms.
Chemicals
The buoyancy in the Chemicals Businesses continued because of logistic constraints in China due to Covid restrictions and other reasons.
The Companyâs focus has been on optimizing sales realization by aggressive marketing/ dispatch of products with high margin.
In spite of higher inputs prices due to hardening of energy prices all over the world, the limit could restrict its impact by better realization on our products. Parallelly, we have been focused on cost reduction through process improvements resulting in lower energy consumption, improved process efficiencies and operational cost control. Investment made in previous year have started yielding results in the form of better plant operation efficiencies.
Engineering Projects
DSIL is slowly establishing its name in the Defence Equipment Manufacturing industry. Our products are being tried and appreciated by the defence and police forces.
The Armoured Vehicle project which had slowed down due to the exit of Ford India is back on track. DSIL has now gone into collaboration with Ford Motor Company, USA. The basic documentation formalities have been completed. The MoU and collaboration Agreement are in final stages with Ford USA. We have also received an informal confirmation that Ford, USA has got a go ahead for our collaboration after the internal due diligence. Ford will be supporting the Company from Thailand. The Company has also collaborated with RMA, Thailand (Fordâs Global Export Distributor). Two stripped down Ford Ranger vehicles have been bought and received in India for prototyping. The designing of the vehicles with help from GAIA Automotives, Israel is in its final stages. Concurrently, we have also started the process of registering our new vehicle with ARAI, Pune for Type Certification.
The equity investment in Zyrone Dynamics, Turkiye is progressing well. The First, Second and Third tranches were transferred to Zyrone Dynamics in September 2021, January 2022 and October 2022. As per the Share Subscription and Shareholders Agreement, the Company will get 30% of the share capital in Zyrone Dynamics for a total value of US $ 1.05 million in five tranches. Zyrone Dynamics has completed all the formalities for the first three tranches. It has now commenced the development of the Minimum Viable Product (MVP) of Variable Volume Concept UAV Platform, the main requirement to pay the fourth tranche. The development is in advanced stage and the MVP is likely to be ready soon for our inspection and assessment. The total holding of class A shares by the Company presently is 9,797 constituting 14.04% of ZDâs paid up capital.
DSIL and Skylock, Israel have signed a MOU for partnership to make Counter Drone Systems in India. DSIL will have the exclusive rights for manufacturing and marketing their systems in India. All existing inquiries for the Counter Drone Systems will also be routed through the Company. A Counter Drone System has also been bought to showcase the counter drone capability to the Defence and Police Forces around the Country. A definitive agreement is in process.
DCM Shriram Industries Limited has now viable products in all three verticals to showcase to our customers. We are aggressively pursuing sales in India and abroad and hope to make breakthrough in the leads we are following in this financial year.
Material changes and commitments
No material changes or commitments have occurred between the end of the financial year to which the financial statements relate and the date of this Report, affecting the financial position of the Company.
Subsidiary/Associate Companies
The Company has three non-material wholly owned subsidiaries, Daurala Foods & Beverages Pvt. Ltd., which is not carrying on any operations presently, DCM Shriram Fine Chemicals Limited, incorporated in September 2021 and DCM Shriram International Limited, incorporated in September 2022, both of which are yet to commence business. DCM Hyundai Limited is an associate company. The required information regarding the performance and financial position of the subsidiaries and associate company are annexed in Form AOC - I as annexure to the Annual Financial Statements for the year ended 31.03.2023. There has been no change in relationship of subsidiaries/ associate company during the year.
Annual Return
A copy of Annual Return for the year 2021-22, is available on the Companyâs web link https://dcmsr.com/ wp-content/uploads/2022/09/Annual-Return.pdf. The Annual Return for the year 2022-23 will be uploaded after filing with the Registrar of Companies in due course.
BOARD MEETINGS AND DIRECTORS
Meetings of the Board
During the year 2022-23 five board meetings were held. The dates of the meetings, attendance, etc., are given in the Corporate Governance Report annexed hereto.
Declaration u/s 149(6) of the Act
All the Independent Directors (IDs) have given declarations u/s 149(6) of the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, confirming that they meet the criteria of independence as laid down under the said Section/ Regulation.
The Directors of the Company have also confirmed that they were not disqualified to be appointed as directors as per Section 164(2) of the Companies Act, 2013 and that they have not been debarred by SEBI or any other statutory authority to hold an office of director in a company.
Familiarization Programme for Independent Directors
As part of the familiarization programme for directors, a visit of the Board of Directors was arranged on 29.03.2023 to Shriram Rayons, Kota. The directors visited various plants and other establishments at Shriram Rayons Complex, Kota, accompanied by senior technical officers, who explained the operations to the directors. The directors also visited the Dr. Bansi Dhar School and other processes at the Complex. The directors interacted with the workersâ representatives and senior officers. On the occasion the directors also witnessed a live demonstration of ZEBU, the Light Bullet Proof Vehicle and a Drone, both developed by the Engineering Projects Section of the Company. The directors appreciated the maintenance, hygienic conditions and safety measures adopted by the Unit at the plants and in the complex as a whole.
A Familiarization Programme for IDs, laid down by the Board has been posted on the Companyâs weblink - https://dcmsr.com/wp-content/uploads/2023/05/Familiarization-Programme-for-Independent-Directors.pdf
Policy on Board Diversity
The Board of Directors in its meeting held on 30.05.2016 had approved a Policy on Board Diversity, recommended by the Nomination & Remuneration Committee (NRC) as required under the SEBI (LODR) Regulations, 2015. A copy of the same has been posted on the Companyâs weblink - https://dcmsr.com/ wp-content/uploads/2021/04/Policy-BoardDiversity.pdf
Directors Appointment and Remuneration
Appointment of directors on the Board of the Company, except nominee director, is based on the recommendations of the Nomination & Remuneration Committee. NRC identifies and recommends to the Board, persons for appointment on the Board, after considering the necessary and desirable competencies. NRC also considers positive attributes like integrity, maturity, judgement, leadership position, time and willingness, financial acumen, management experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, etc.
Independent Directors should fulfill the obligations of independence as per the Act and Regulation 25 of the SEBI (LODR) Regulations, 2015 in addition to the general criteria stated above. All the Independent Directors of the Company are enrolled in the Databank of IDs maintained by Indian Institute of Corporate Affairs, an entity under the Ministry of Corporate Affairs. Their registrations are renewed when due. It is ensured that a person to be appointed as a director has not suffered any disqualification under the Act or any other law to hold such an office.
The directors of the Company are paid remuneration as per the Remuneration Policy of the Company, the gist of which is given under the heading ''Remuneration Policyâ as part of this Report. The details of remuneration paid to the directors during the year 2022-23 are given in the Corporate Governance Report forming part of this Report.
Changes in Directors or KMP
There has been no change in the composition of the Board of Directors or KMPs during the year.
Shri Madhav B. Shriram, Managing Director, retires by rotation pursuant to Section 152(6) of the Companies Act, 2013 at the ensuing Annual General Meeting and being eligible offers himself for reappointment. An item has accordingly been included in the Notice for the ensuing Annual General Meeting.
The present term of Shri Sanjay C. Kirloskar, Independent Director, concludes on 31.08.2023. As per section 149(10) of the Companies Act, 2013, an independent director can hold office for two terms of five consecutive years on the board of a company. Accordingly, the Board of Directors on recommendation of the Nomination & Remuneration Committee has proposed reappointment of Shri Sanjay C. Kirloskar as an Independent director for another term of five years from 01.09.2023 to the shareholders for approval. An item has accordingly been included in the Notice for the ensuing Annual General Meeting.
The present term of Shri Alok B. Shriram, Sr. Managing Director & CEO, and Shri Madhav B. Shriram, Managing Director, concludes on 30.09.2023. The Board, considering their performance and on recommendation of the Nomination & Remuneration Committee reappointed them for another term of 5 years w.e.f. 01.10.2023 on present terms, subject to approval of the shareholders at the ensuing Annual General Meeting. Items have accordingly been included in the Notice for the ensuing Annual General Meeting.
Annual Evaluation of Board and Directors
As required under the Act and the SEBI (LODR) Regulations, 2015, evaluation of the performance of the Independent Directors, other non-executive directors, Board as a whole, Executive Directors, the Chairman and the Committees during the year 2022-23 was carried out by the Board of Directors, based on the criteria laid down by the NRC in the year 2017, in the meeting held on 29.03.2023. A copy of the ''criteria for evaluationâ is annexed as Annexure 2 hereto.
Based on the criteria, the Board reviewed the performance of the Board as a whole, particularly structure, quality of deliberations in the meetings, functions, performance of the management and feedback etc. The Board also reviewed the performance of the Committees, Chairman and Directors and observed:
- that despite the downward trend in economic conditions due to post Covid impact and the turbulence in certain parts of the world, the Company has performed well.
- that the Board continued to adhere to highest standards in all above areas, and the performance was constructive and met the test of objectivity in achieving the goals of the Company.
- that the Committees carried out their functions according to the requirements mandated under the Companies Act/ SEBI Regulations, pursuant to which they were constituted, effectively. The Board particularly appreciated the Audit Committee which met regularly and acted as a watch dog in matters concerning finance, RPTs and internal financial controls.
- that all the directors including IDs have given very valuable inputs/contribution in achieving the goals of the Company. It was noted that the Executive Directors continued to perform with utmost responsibility in achieving the operating targets and the IDs and other directors contributed by providing valuable inputs and guidance.
- that the Independent Directors individually and collectively functioned constructively in the best interest of and beneficial to the Company and the stakeholders.
- that the IDs adhered to the Code of Independence as per Schedule IV of the Act and to the restriction regarding pecuniary relationship with the Company during the period under evaluation.
The IDs in a separate meeting held on the same day prior to the Board Meeting, reviewed and evaluated the performance of non-Independent Directors.
The IDs also reviewed the quality, quantity and timeliness of flow of information between the Company management and the Board, which are necessary for the Board to effectively and reasonably perform its duties.
The performance evaluation by the Board and the Independent Directors did not find any matter requiring follow up action.
Directorsâ Responsibility Statement
As required under Section 134(3)(c) of the Act, your Directors state that:
a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Internal Financial Controls
A comprehensive and effective internal financial control system is followed by the Company at all its establishments. This is further strengthened by an internal audit process under the overall supervision of the Audit Committee of the Board. Services for internal audit are outsourced. Qualified and experienced professionals are engaged to ensure effective and independent evaluation of, inter alia, the internal financial controls.
The Audit Committee lays down the schedule for internal audit. Internal audit reports are placed before the Committee with management comments. Suggestions are implemented and reported to the Audit Committee.
Apart from the above, an effective budgeting and monitoring system is also in place. Budgets are reviewed by Audit Committee and approved by the Board. The operating results are compared and monitored with the approved budgets periodically. An Executive Committee comprising of senior management team meets every month, reviews all aspects of operations and chalks out remedial measures and strategies, regularly. Monthly operations review reports comparing budgets with actual performances are placed before the Executive Committee for internal assessment and also before the Board on a quarterly basis.
An effective communication/ reporting system operates between the Units, Divisions and Corporate Office to keep various establishments abreast of regulatory changes and ensure compliances.
To further strengthen the Internal Financial Controls and business transformation through digitization, the Company has implemented an advanced SAP S/4 HANA in all business segments.
Loans, Guarantees and Investments
The particulars of loans given by the Company are given in Note no. 15 of the Standalone Financial Statements for the year ended 31.03.2023.
The Company has not made any investment or provided any guarantee covered u/s 186 of the Companies Act, 2013, during the year except surplus funds placed in liquid funds of Mutual funds on short term basis and the funds provided to DCM Shriram Fine Chemicals Limited, a wholly owned subsidiary, incorporated to explore and set up a fine chemicals plant at Dahej, Gujarat.
Related Party Transactions
There has been no materially significant related party transaction between the Company and the Directors, Key Management Personnel, the subsidiary, or the relatives except for those disclosed in the financial statements - Note No.45 of Notes to Accounts, which are at armâs length basis and not material. Accordingly, Form AOC -2 does not form part of this Report.
The Board had framed a Policy on Related Party Transactions which is revised in line with the legal requirements. A copy of the same is placed on the Companyâs weblink: https://dcmsr.com/wp-content/ uploads/2022/02/Policv-on-Related-Partv-Transactions.pdf
CSR Activities
Pursuant to Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended from time to time, an Annual Report on CSR activities in the prescribed proforma is annexed - Annexure 3. The Company was required to spent Rs.187.22 lakh, being 2% of the average net profits of the preceding 3 years during the year under review which have been fully utilized. The CFO has confirmed to the Board that funds mandated were spent as per approval of the CSR Committee and Board.
Risk Management
As the Company has become one of the top 1000 companies, based on market capitalization (993) as on 31.03.2022, the Company inter alia was required to constitute a Risk Management Committee, comprising of Directors and Senior Personnel. Accordingly, the Board constituted a Risk Management Committee in the meeting held on 30.05.2022 and also laid down a Risk Management Policy as required under Regulation 17 of SEBI (LODR) Regulations, 2015 on 08.08.2022. The Committee is required to oversee the implementation of risk management measures and report to the Board through Audit Committee. The Committee met twice during the year 2022-23.
The Board of Directors in its meeting held on 30.01.2006 undertook a comprehensive review of the risk assessment and minimization procedures/ policies followed by the Company at its various operations. While taking note of the same, the Board laid down that a half yearly status report of the risk assessment and steps taken to minimize the risks be placed before the Board. Such a report in respect of all the operations of the Company is now being placed before the Board through the Risk Management and the Audit Committees.
In view of the diversified business, there are no significant elements of risk, which in the opinion of the Board may threaten the existence of the Company.
The Board of Directors while reviewing the existing risk assessment procedures, laid down a Risk Management Policy.
Public Deposits
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Details relating to deposits, covered under Chapter V of the Act: |
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i) |
Accepted during the year: - Rs. 5.00 Lakh. |
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ii) |
Remained unclaimed as at the end of the year: - Nil |
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(There is no deposit claimed but not paid) |
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iii) |
Whether there has been any default in repayment of deposits or payment of interest thereon during |
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the year and if so, number of such cases and the total amount involved- |
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a) At the beginning of the year |
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b) Maximum during the year |
Nil |
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c) At the end of the year |
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iv) |
The details of deposits which are not in compliance with the requirements of Chapter V of the |
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Act: - Nil |
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Significant Material Orders Passed by Regulators or Courts or Tribunals
No significant orders have been passed by any Regulators, Courts or Tribunals during the year impacting the going concern status and Companyâs operations in future.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The required information as per Rule 8 (3) A, B & C of Companies (Accounts) Rules, 2014 is annexed -Annexure 4.
REMUNERATION POLICY
The Board of Directors in its meeting held on 14.08.2014 had laid down a Remuneration Policy as recommended by the Nomination & Remuneration Committee (NRC) relating to remuneration of the Directors, Key Managerial Personnel (KMP), Sr. Management Personnel (SMP) and other employees of the Company. The Remuneration Policy is in accordance with Section 178 of the Act and the Rules made there under. The Policy was revised by the Board in its meeting held on 29.10.2019 on recommendations of the NRC. The Remuneration Policy is posted on the Companyâs weblink. https://dcmsr.com/wp-content/ uploads/2021/04/remuneration-policy.pdf
The salient features of the Policy are given below:
i. Guiding principle
The guiding principle of the Policy is that the remuneration and other terms of employment should effectively help in attracting and retaining committed and competent personnel. The remuneration packages are designed keeping in view industry practices and cost of living.
ii. Directors
Non-executive directors are paid remuneration in the form of sitting fees for attending Board/ Committee meetings as fixed by the Board from time to time subject to statutory provisions. Presently sitting fee is Rs.60,000 per Board meeting and Rs.30,000 per Committee meeting. In addition, Non-executive Directors are to be paid commission on profits of up to 1% of the net profit of the Company, computed in the manner laid down u/s 198 of the Companies Act, 2013, in such amount and proportion as may be decided by the Board of Directors.
Remuneration of Executive Directors (Whole-time Directors) including Managing Director(s) is fixed by the Board of Directors on the recommendation of the NRC, subject to the approval of the shareholders. The NRC, while recommending the remuneration, considers pay and employment conditions in the industry, merit and seniority of the person and paying capacity of the Company. The remuneration, which comprises of salary, perquisites, performance-based reward/profit-based commission and retirement benefits as per Company Rules, is subject to the limits laid down under the Companies Act, 2013.
iii. Key Managerial Personnel and Sr. Management Personnel
Appointment, remuneration and cessation of service of Key Managerial Personnel are subject to the approval of the NRC and Board of Directors. Appointment and cessation of service of Sr. Management Personnel are approved by the Senior Managing Director on the recommendation of the concerned Executive Director, keeping in view the Remuneration Policy.
iv. Other employees
The remuneration of other employees is fixed from time to time by the Management as per the guiding principle laid down in the Remuneration Policy and considering industry standards and cost of living. In addition to salary, they are also provided perquisites and retirement benefits as per schemes of the Company and statutory requirements, where applicable.
Managerial Remuneration
The information required as per Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 pertaining to remuneration of Directors, KMP and comparisons are annexed - Annexure 5. It is affirmed that the remuneration is as per the Remuneration Policy of the Company.
Statement of particulars of the top ten employees in terms of remuneration including employees who were in receipt of remuneration which was not less than Rs.102 lakh or more per annum in aggregate during the year 2022-23 is annexed - Annexure 6.
Audit Committee
The Audit Committee presently comprises of six members including four IDs, one Non-Executive Director and one Executive Director. Shri P.R. Khanna is the Chairman and Shri S.B. Mathur, Shri S.C. Kumar, Mrs. V. Kavitha Dutt, all of them IDs, Shri Manoj Kumar, Non-Executive Director and Shri Madhav B. Shriram, Managing Director are Members. There was no instance of the Board not accepting the recommendation of the Audit Committee.
Vigil Mechanism
Pursuant to Section 177 of the Act and Regulation 22 of SEBI (LODR) Regulations, 2015, the Board of Directors, on the recommendation of the Audit Committee, adopted a Vigil Mechanism (Whistle Blower Policy). The Policy has been revised by the Board in its meeting held on 27.06.2020. The revised Policy has been circulated among the employees and also has been put on the weblink of the Company: https://dcmsr.com/ wp-content/uploads/2021/04/whistleblower-policy.pdf
The Policy provides a channel to the employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the code of conduct or policies. The mechanism provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases.
Share Capital
During the year, the Company has not issued any share capital with differential voting rights, sweat equity or ESOP nor provided any money to the employees or trusts for purchase of its own shares.
The Company has not made any public offer of shares during the year.
Statutory Auditors
As per Section 139 of the Companies Act, 2013, a firm of auditors can be appointed as Statutory Auditors for two terms of five year each. Accordingly, the shareholders in their meeting held on 08.08.2022 had reappointed M/s B S R & Co., LLP, Chartered Accountants Gurugram (Firm Registration No.101248W/W100022), whose first term of 5 years expired at the conclusion of the last AGM, for another term of 5 years from the conclusion of the last AGM to hold office till the conclusion of the AGM in the year 2027.
Cost Auditors
M/s Ramanath Iyer & Co., Cost Accountants, (Regn No.13848), 808, Pearls Business Park, Netaji Subhash Place, Pitampura, Delhi - 110034, who were appointed as Cost Auditors of the Company for the year 202122, submitted the Cost Audit report, due for filing on or before 07.09.2022, to the Central Government on 29.08.2022. They have been reappointed as Cost Auditors for the year 2023-24. A resolution for ratification of their remuneration for the year 2023-24, as required under the Companies Act, 2013, forms part of the Notice convening the ensuing AGM.
The Company maintains cost records as specified by the Central Govt. under sub- section (1) of Section 148 of the Companies Act, 2013.
Corporate Governance
Reports on Corporate Governance and Management Discussion & Analysis are annexed - Annexure 7. Anti-Sexual Harassment Policy
Pursuant to the âSexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013â, the Company constituted Internal Complaints Committees at all its workplaces. There has not been any instance of complaint reported in this regard to any of the Committees during the year. The Committees were reconstituted effective from 01.07.2020 for 3 years.
The Company periodically review the policy and submit a status report annually to the Competent Authority under Section 22 of the said Act.
Applicability of IBC Code
Neither any application was made nor any proceedings were pending under the IBC Code during the year. One Time Settlements
The Company has not entered into any one time settlement of debt during the year under review. DISCLOSURE UNDER SECRETARIAL STANDARDS
Applicable Secretarial Standards i.e. SS-1 and SS-2 relating to âMeeting of the Board of Directorsâ and âGeneral Meetingsâ, respectively, have been duly followed by the Company.
Acknowledgment
The Directors acknowledge the continued co-operation and support received from the banks and various government agencies, and all our business associates.
The Directors also place on record their appreciation of the contribution made by employees at all levels. Their conduct and support are of utmost in achieving the Companyâs objectives targets.
For and on behalf of the Board
(Madhav B. Shriram) (Alok B. Shriram)
Place: New Delhi, DIN: 00203521 DIN: 00203808
Date: 25th May, 2023 Managing Director Sr. Managing Director
Mar 31, 2018
1A. Significant accounting policies
a) Operating Cycle
Based on the nature of products/ activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
b) Property, plant and equipment
(i) Recognition and measurement
All items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation/ amortization and accumulated impairment losses, if any.
Cost of acquisition or construction of property, plant and equipment comprises its purchase price including import duties and non-refundable purchase taxes after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Capital work-in-progress is stated at cost, net of impairment loss, if any.
The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition and location for their intended use, and the estimated cost of dismantling and removing the items and restoring the site on which they are located.
When parts of an item of property, plant and equipment having significant cost have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognized.
The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no further benefit is expected from its use and disposal. Assets retired from active use and held for disposal are generally stated at the lower of their net book value and net realizable value. Any gain or losses arising on disposal of property, plant and equipment is recognized in the Statement of Profit and Loss.
Once classified as held-for-sale, property, plant and equipment are no longer depreciated.
Gains or losses arising from de-recognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
(ii) Transition to Ind AS
The Company has elected to avail the option under Ind AS 101 by not applying the provisions of Ind AS 16 retrospectively and continue to use the Previous GAAP carrying amount as the deemed cost under Ind AS on the date of transition to Ind AS. Therefore, the Previous GAAP carrying amounts of items of property, plant and equipment as at April 1, 2016 (the Companyâs date of transition to Ind AS) have been considered as the carrying amounts under Ind AS on April 1, 2016. Refer Note 48.
(iii) Subsequent Expenditure
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.
(iv) Depreciation
Depreciation is provided on a pro-rata basis using the straight-line method as per the useful lives prescribed in Schedule II to the Companies Act, 2013.. Assets costing up to Rs. 0.05 lakhs are fully depreciated in the year of purchase. No depreciation is provided on assets sold, discarded, etc. during the year.
Depreciation methods, useful lives and residual values are reviewed in each financial year, and changes, if any, are accounted for prospectively.
c) Intangible assets
(i) Recognition and initial measurement
Intangible assets comprise computer software. Intangible assets that are acquired by the Company are measured 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.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in the Statement of Profit and Loss when the asset is derecognised.
(ii) Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognized as at April 1, 2016, measured as per the previous GAAP and use that carrying value as the deemed cost of such intangible assets (refer note 48).
(iii) Subsequent Expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.
(iv) Amortisation
Intangible assets, being computer software are amortised in the Statement of Profit and Loss over the estimated useful life of 5 years using the straight line method.
The amortisation method and the useful lives of intangible assets are reviewed annually and adjusted as necessary.
d) Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is ascertained on a âweighted averageâ basis. Cost comprises of raw material cost, appropriate share of labour, and overheads incurred in bringing them to their present location and condition. 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.
e) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company 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, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
However, sales tax/ value added tax (VAT)/ Goods and Services Tax (GST) is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognized.
Sale of goods
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on dispatch of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, inclusive of excise duty and exclusive of Goods and Services tax (GST), Sales Tax, Value Added Taxes (VAT) and is net of returns, allowances, trade discounts and volume rebates.
Revenue is recognized;
- when the significant risks and rewards of ownership have been transferred to the buyer,
- recovery of the consideration is probable,
- the associated costs and possible return of goods can be estimated reliably,
- there is no continuing effective control over, or managerial involvement with, the goods, and
- the amount of revenue can be measured reliably.
The timing of transfers of risks and rewards varies depending on the individual terms of sale. Rendering of services
Revenue from services rendered is recognized in the Statement of Profit and Loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed.
Interest income
For all debt instruments measured either at amortized cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. 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 the Statement of Profit and Loss.
Dividends
Revenue is recognized when the Companyâs right to receive the payment is established.
Sale of Renewable Energy Certificates (RECs) is recognised as income on delivery of the RECs to customerâs account as evidenced by confirmation of delivery instructions.
f) Income tax
Income tax expense comprises current and deferred tax. It is recognised in Statement of Profit and Loss except to the extent that it relates to a business combination, or items recognised directly in equity or in Other Comprehensive Income (OCI).
- Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received after considering uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
- Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that effects neither accounting nor taxable profit or loss at the time of the transaction;
- temporary differences related to freehold land and investments in subsidiaries, to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets (DTA) include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously
g) Employee benefits
i) Short-term benefits
All employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. 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, if the Company has a present legal or constructive obligation to pay the amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
ii) Defined contribution plans
The defined contribution plans i.e. provident fund, superannuation fund and employeesâ pension scheme are post-employment benefit plans under which a Company pays fixed contributions into a separate entity and will have no legal and constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in the Statement of Profit and Loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.
iii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. 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 the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
Gratuity
The Company provides for gratuity, a defined benefit plan (the Gratuity Plan) covering all eligible employees. In accordance with the payment of Gratuity Act, 1972, the Gratuity plan provides a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment.
These are funded by the Company and are managed by LIC.
The calculation of defined benefit obligation is performed by a qualified actuary separately for each plan using the projected unit credit method, which recognises each year of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the present value of estimated future cash flows. The discount rate used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in the Statement of Profit and Loss.
iv) Other long-term employee benefits
Benefits under the Companyâs privilege leaves and medical leave are other long term employee benefits. The Companyâs net obligation in respect of privilege leave and medical leave are the amount of future benefit that employees have earned in return for their service in the current and prior periods. The benefit is discounted to determine its present value. The obligation is measured on the basis of an actuarial valuation using the projected unit credit method.
Re-measurements are recognised in Statement of Profit and Loss in the period in which they arise.
h) Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the Statement of Profit and Loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income other than export benefits which are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
Government grants relating to the purchase of property, plant and equipment are included in noncurrent liabilities as deferred income and are credited to the Statement of Profit and Loss on a straight-line basis over the expected lives of the related assets and presented within other income.
i) Foreign currency transactions and translation
The management has determined the currency of the primary economic environment in which the Company operates i.e., functional currency, to be Indian Rupees (INR). The financial statements are presented in INR which is Companyâs functional and presentational currency.
Monetary and non-monetary transactions in foreign currencies are initially recorded in the functional currency of the Company at the exchange rates at the dates of the transactions or at an average rate if the average rate approximates the actual rate at the date of the transaction.
Monetary foreign currency assets and liabilities remaining unsettled on reporting date are translated at the rates of exchange prevailing on reporting date. Gains/ (losses) arising on account of realisation/ settlement of foreign exchange transactions and on translation of monetary foreign currency assets and liabilities are recognised in the Statement of Profit and Loss.
Non-monetary items measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
The derivative financial instruments such as forward exchange contracts to hedge its risk associated with foreign currency fluctuations are stated at fair value. Any gains or losses arising from changes in fair value are taken directly to Statement of Profit or Loss.
j) Impairment of non-financial assets
The carrying amounts of the Companyâs 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 âImpairment of Assetsâ. If any such indication exists, then the assetâs recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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 the Statement of Profit and Loss. Impairment losses recognized in respect of CGUs are reduced from the carrying amounts of the assets of the CGU.
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 assetâs 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.
k) Provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period., If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
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.
l) Borrowing cost
Borrowing costs that are directly attributable to the acquisition, construction or erection of qualifying assets are capitalised as part of cost of such asset until such time that 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.
When the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the borrowing costs incurred are capitalized. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalization of the borrowing costs is computed based on the weighted average cost of general borrowing that are outstanding during the period and used for the acquisition of the qualifying asset.
Capitalisation 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 interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
All other borrowing costs are recognised as an expense in the year in which they are incurred. m) Leases
At the inception of each lease, the lease arrangement is classified as either a finance lease or an operating lease, based on the substance of the lease arrangement.
Finance leases
Assets leased by the Company in its capacity as lessee where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. A finance lease is recognized as an asset and a liability at the commencement of the lease, at the lower of the fair value of the asset and 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. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability
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 leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of Profit and Loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
n) Earnings per share (EPS)
Basic earnings / (loss) per share are calculated by dividing the net profit or loss for the year attributable to the shareholders of the Company by the weighted average number of equity shares outstanding at the end of the reporting period. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus / rights issue, if any, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earning per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
o) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM).
In accordance with Ind AS 108 - âOperating Segmentsâ, the operating segments used to present segment information are identified on the basis of internal reports used by the Companyâs Management to allocate resources to the segments and assess their performance.
The Executive Committee, comprising of Chairman and Managing Director, Whole Time Directors, Business Heads, Chief Financial Officer and Company Secretary is collectively the Companyâs âChief Operating Decision Makerâ or âCODMâ within the meaning of Ind AS 108. All operating segmentsâ operating results are reviewed regularly by the CODM to make decisions about resources to be allocated to the segments and assess their performance. Refer Note 39 for segment information.
p) Financial instruments
A number of the accounting policies and disclosures require measurement of fair values, for both financial and non-financial assets and liabilities.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Company has an established control framework with respect to the measurement of fair values. It regularly reviews significant inputs and valuation adjustments.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values used in preparing these financial statements is included in the respective notes.
Impairment of financial assets
The Company recognizes loss allowances for expected credit losses on:
- Financial assets measured at amortized cost; and
- Financial assets measured at FVOCI-debt instruments.
At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt instruments at FVOCI are credit-impaired. A financial asset is âcredit-impairedâ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
q) Cash and cash equivalents
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
r) Research and development
Expenditure on research and development activities is recognized in the Statement of Profit and Loss as incurred.
Development expenditure is capitalized as part of cost of the resulting intangible asset 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. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated amortisation and any accumulated impairment losses, if any.
s) Recent accounting pronouncements
A. Ind AS 115- Revenue from Contract with Customers: On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Ind AS 115, Revenue from Contract with Customers. Key aspects are as follow:
i. Sales of goods
For the sale of products, revenue is currently recognised when the risks and rewards of ownership are transferred which generally coincides with dispatch of goods. Revenue is recognised at this point provided that the revenue and costs can be measured reliably, the recovery of the consideration is probable and there is no continuing management involvement with the goods.
Under Ind AS 115, revenue will be recognised when a customer obtains control of the goods.
For certain contracts that permit the customer to return an item, revenue is currently recognised when a reasonable estimate of the returns can be made, provided that all other criteria for revenue recognition are met. If a reasonable estimate cannot be made, then revenue recognition is deferred until the return period lapses or a reasonable estimate of returns can be made.
Under Ind AS 115, revenue will be recognised for these contracts to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognised will not occur. As a consequence, for those contracts for which the Company is unable to make a reasonable estimate of return, revenue is expected to be recognised sooner than when the return period lapses or a reasonable estimate can be made. A refund liability and an asset for recovery will be recognised for these contracts and presented separately in the balance sheet.
ii. Rendering of services
The Company is also in the business of undertaking Job work as well as performing related services. If the services under a single arrangement are rendered in different reporting periods, then the consideration is allocated on a relative fair value basis between the different services. Revenue is currently recognised using the stage-of-completion method.
Under Ind AS 115, the total consideration in the service contracts will be allocated to all services based on their stand-alone selling prices. The stand-alone selling prices will be determined based on the list prices at which the Company sells the services in separate transactions.
iii. Transition
The Company plans to apply Ind AS 115 using the cumulative effect method, with the effect of initially applying this standard recognised at the date of initial application (i.e. April 1, 2018) in retained earnings. As a result, the Company will not present relevant individual line items appearing under comparative period presentation.
B. Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:
On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.
The amendment has come into force from April 1, 2018.
Mar 31, 2017
a) Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention as modified to include the revaluation of certain fixed assets up to March 31, 2016 (Refer note 45). The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires management to make prudent and reasonable estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the results of operations during the year. Differences between the actual results and estimates are recognized in the year in which the results are known or materialized.
c) Fixed assets
i) Owned assets
All fixed assets are stated at cost of acquisition or construction including taxes and other incidental expenses related to acquisition, installation cost, etc. except for certain fixed assets which are revalued and are, therefore, stated at their revalued book values. Financing costs (up to the date the assets are ready for their intended use) relating to borrowed funds or deferred credits attributable to acquisition or construction of fixed assets are included in the gross book value of fixed assets to which they relate (Refer note 45).
ii) Impairment of fixed assets
Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the fixed assets. If any indication exists, the related asset''s recoverable amount is estimated and an impairment loss is recognized, if the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of net selling price and value in use which is determined by discounting the estimated future cash flows to their present value based on an appropriate discount factor.
d) Depreciation and amortization
i) Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets is provided on the straight-line method as per the useful life prescribed in the Schedule II to the Companies Act, 2013.
Amortization of intangible fixed assets, being computer software is done on straight line method over 5 years.
ii) Depreciation is calculated on a pro-rata basis in respect of additions having a cost in excess of Rs. 5000. Assets costing upto Rs. 5000 are fully depreciated in the year of purchase. No depreciation is provided on assets sold, discarded, etc. during the year.
iii) In respect of revalued assets, an amount equivalent to the additional charge arising due to revaluation is transferred from the Revaluation reserve to General Reserve (Refer note 45).
iv) No write-off is made in respect of leasehold land in case of long term lease.
e) Investments
Long term investments are stated at cost as reduced by amounts written off / provision made for diminution, other than temporary, in the value of such investments. Current investments are stated at cost or fair value, whichever is lower.
f) Inventories
Inventories are valued at the lower of cost and net realizable value. Cost of inventories is ascertained on a âweighted average'' basis. In the case of finished goods and process stocks, appropriate share of labour, overheads and excise duty is included.
g) Research and development
Revenue expenditure on research and development is charged as an expense in the year in which it is incurred and the capital expenditure is included in fixed assets.
h) Government Grants, subsidies and export benefits
Government grants and subsidies are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the same will be received. Government grants and subsidies are recognized as income and / or as reduction of cost over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis.
Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
i) Employee benefits
Provision for employee benefits charged on accrual basis is determined based on Accounting Standard (AS) 15 (Revised) "Employee Benefits" as specified under section 133 of the Companies Act, 2013.
i) Contributions to the provident fund, gratuity fund and superannuation fund are charged to the statement of profit and loss.
ii) Gratuity liability determined at balance sheet date on an actuarial basis is provided to the extent not covered by the funds available in the gratuity fund. Excess funding, if any, is recognized as an asset.
iii) Provision for privilege and medical leave salary is determined on actuarial basis.
iv) Provision for casual leave is determined on arithmetical basis.
v) Actuarial gains / losses are recognized in the Statement of Profit & Loss. j) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction.
Monetary items denominated in foreign currency are reported using the closing exchange rates on the date of the balance sheet.
The exchange differences arising on settlement of monetary items or on reporting these items at the rates different from the rates at which these were initially recorded / reported in previous financial statements, are recognized as income / expense in the year in which they arise.
In the case of forward exchange contracts, the premium or discount, arising at the inception of such contracts is amortized as income or expense over the life of the contract and the exchange differences on such contracts, i.e., differences between the exchange rates at the reporting/ settlement date and the exchange rates on the date of inception of contract/ the last reporting date, is recognized as income / expense for the year.
k) Revenue recognition
Sale of goods is recognized, net of returns and trade discounts on the transfer of significant risks and rewards of ownership to the buyer which generally coincides with the dispatch of goods to customers. Gross sales are inclusive of excise duty and net of value added tax / sales tax.
Sale of Renewable Energy Certificates (RECs) is recognized as income on delivery of the RECs to customer''s account as evidenced by confirmation of delivery instructions.
Other income includes interest income accounted on time - proportion basis and dividend income accounted for as and when the right to receive the payment is established.
l) Income-tax
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) paid is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. In respect of unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognized based on virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
m) Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Mar 31, 2016
a) Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention, as modified to include the revaluation of certain fixed assets. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires management to make prudent and reasonable estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the results of operations during the year. Differences between the actual results and estimates are recognized in the year in which the results are known or materialized.
c) Fixed assets
i) Owned assets
All fixed assets are stated at cost of acquisition or construction including taxes and other incidental expenses related to acquisition, installation cost, except for certain assets which are revalued and are, therefore, stated at their revalued book values. Financing costs (up to the date the assets are ready for their intended use) relating to borrowed funds or deferred credits attributable to acquisition or construction of fixed assets are included in the gross book value of fixed assets to which they relate.
ii) Impairment of fixed assets
Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the fixed assets. If any indication exists, an asset''s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.
d) Depreciation and amortization
i) Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in the Schedule II to the Companies Act, 2013.
Amortization of intangible fixed assets, being computer software is done on straight line method over 5 years.
ii) Depreciation is calculated on a pro-rata basis only in respect of additions to plant and machinery having a cost in excess of Rs. 5000. Assets costing up to Rs. 5000 are fully depreciated in the year of purchase. No depreciation is provided on assets sold, discarded, etc. during the year.
iii) In respect of revalued assets, an amount equivalent to the additional charge arising due to revaluation is transferred from the Revaluation reserve to General Reserve.
iv) No write-off is made in respect of leasehold land in case of long term lease.
e) Investments
Long term investments are stated at cost as reduced by amounts written off / provision made for diminution, other than temporary, in the value of such investments. Current investments are stated at cost or fair value, whichever is lower.
f) Inventories
Stores and spares are valued at cost or under. Stock-in-trade is valued at the lower of cost and net realizable value. Cost of inventories is ascertained on a âweighted average'' basis. In the case of finished goods and process stocks, appropriate share of labour, overheads and excise duty is included.
g) Research and development
Revenue expenditure on research and development is charged as an expense in the year in which it is incurred and the capital expenditure is included in fixed assets.
h) Government Grants, subsidies and export benefits
Government grants and subsidies are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the same will be received. Government grants and subsidies are recognized as income and / or as reduction of cost over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis.
Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
i) Employee benefits
Provision for employee benefits charged on accrual basis is determined based on Accounting Standard (AS) 15 (Revised) "Employee Benefits" as specified under section 133 of the Companies Act, 2013, read with rule 7 of the Companies (Accounts) Rules, 2014.
i) Contributions to the provident fund, gratuity fund and superannuation fund are charged to revenue.
ii) Gratuity liability determined at balance sheet date on an actuarial basis is provided to the extent not covered by the funds available in the gratuity fund. Excess funding, if any, is recognized as an asset.
iii) Provision for privilege and medical leave salary is determined on actuarial basis.
iv) Provision for casual leave is determined on arithmetical basis.
v) Actuarial gains / losses are recognized immediately in the Statement of Profit & Loss.
j) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction.
Monetary items denominated in foreign currency are reported using the closing exchange rates on the date of the balance sheet.
The exchange differences arising on settlement of monetary items or on reporting these items at the rates different from the rates at which these were initially recorded / reported in previous financial statements, are recognized as income / expense in the year in which they arise.
In case of forward exchange contracts, the premium or discount, arising at the inception of such contracts is amortized as income or expense over the life of the contract and the exchange differences on such contracts, i.e., differences between the exchange rates at the reporting/ settlement date and the exchange rates on the date of inception of contract/ the last reporting date, is recognized as income / expense for the year.
k) Revenue recognition
Sale of goods is recognized, net of returns and trade discounts on the transfer of significant risks and rewards of ownership to the buyer which generally coincides with the dispatch of goods to customers. Gross sales are inclusive of excise duty and net of value added tax / sales tax.
Sale of Renewable Energy Certificates (RECs) is recognized as income on delivery of the RECs to customer''s account as evidenced by confirmation of delivery instructions.
Other income includes interest income accounted on time - proportion basis and dividend income accounted for as and when the right to receive the payment is established.
l) Income-tax
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) paid is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. In respect of unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognized based on virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
m) Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current
Mar 31, 2015
A) Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
1956 Act / 2013 Act, as applicable. The financial statements have been
prepared on accrual basis under the historical cost convention, as
modified to include the revaluation of certain fixed assets. The
accounting policies adopted in the preparation of the financial
statements are consistent with those followed in the previous year.
b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make prudent and reasonable estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities on the date of financial
statements and the results of operations during the year. Differences
between the actual results and estimates are recognised in the year in
which the results are known or materialised.
c) Fixed assets
i) Owned assets
All fixed assets are stated at cost of acquisition or construction
including taxes and other incidental expenses related to acquisition,
installation cost, except for certain assets which are revalued and
are, therefore, stated at their revalued book values. Financing costs
(up to the date the assets are ready for their intended use) relating
to borrowed funds or deferred credits attributable to acquisition or
construction of fixed assets are included in the gross book value of
fixed assets to which they relate.
ii) Impairment of fixed assets
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
fixed assets. If any indication exists, an asset's recoverable amount
is estimated. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its recoverable amount. The recoverable
amount is the greater of net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value based on an appropriate discount factor.
d) Depreciation
i) Depreciable amount for assets is the cost of an asset, or other
amount substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets has been provided on the
straight-line method as per the useful life prescribed in the Schedule
II to the Companies Act, 2013.
ii) Depreciation is calculated on a pro-rata basis only in respect of
additions to plant and machinery having a cost in excess of Rs. 5000.
Assets costing upto Rs. 5000 are fully depreciated in the year of
purchase. No depreciation is provided on assets sold, discarded, etc.
during the year.
iii) In respect of revalued assets, an amount equivalent to the
additional charge arising due to revaluation is transferred from the
Revaluation reserve to General Reserve.
iv) No write-off is made in respect of leasehold land in case of long
term lease.
e) Investments
Long term investments are stated at cost as reduced by amounts written
off / provision made for diminution, other than temporary, in the value
of such investments. Current investments are stated at cost or fair
value, whichever is lower.
f) Inventories
Stores and spares are valued at cost or under. Stock-in-trade is valued
at the lower of cost and net realisable value. Cost of inventories is
ascertained on a 'weighted average' basis. In the case of finished
goods and process stocks, appropriate share of labour, overheads and
excise duty is included.
g) Research and development
Revenue expenditure on research and development is charged as an
expense in the year in which it is incurred and the capital expenditure
is included in fixed assets.
h) Government Grants, subsidies and export benefits
Government grants and subsidies are recognised when there is reasonable
assurance that the Company will comply with the conditions attached to
them and the same will be received. Government grants and subsidies are
recognised as income and / or as reduction of cost over the periods
necessary to match them with the costs for which they are intended to
compensate, on a systematic basis.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
i) Employee benefits
Provision for employee benefits charged on accrual basis is determined
based on Accounting Standard (AS) 15 (Revised) "Employee Benefits" as
specified under Section 133 of the Companies Act, 2013, read with Rule
7 of the Companies (Accounts) Rules, 2014.
i) Contributions to the provident fund, gratuity fund and
superannuation fund are charged to revenue.
ii) Gratuity liability determined at balance sheet date on an actuarial
basis is provided to the extent not covered by the funds available in
the gratuity fund. Excess funding, if any, is recognised as an asset.
iii) Provision for privilege and medical leave salary is determined on
actuarial basis.
iv) Provision for casual leave is determined on arithmetical basis.
v) Actuarial gains / losses are recognised immediately in the Statement
of Profit & Loss.
j) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transaction.
Monetary items denominated in foreign currency are reported using the
closing exchange rates on the date of the balance sheet.
The exchange differences arising on settlement of monetary items or on
reporting these items at the rates different from the rates at which
these were initially recorded / reported in previous financial
statements, are recognised as income / expense in the year in which
they arise.
In case of forward exchange contracts, the premium or discount, arising
at the inception of such contracts is amortised as income or expense
over the life of the contract and the exchange differences on such
contracts, i.e., differences between the exchange rates at the
reporting/ settlement date and the exchange rates on the date of
inception of contract/ the last reporting date, is recognised as income
/ expense for the year.
k) Revenue recognition
Sale of goods is recognised, net of returns and trade discounts, on the
transfer of significant risks and rewards of ownership to the buyer
which generally coincides with the dispatch of goods to customers.
Gross sales are inclusive of excise duty and net of value added tax /
sales tax.
Sale of Renewable Energy Certificates (RECs) is recognised as income on
delivery of the RECs to customer's account as evidenced by confirmation
of delivery instructions.
Other income includes interest income accounted on time - proportion
basis and dividend income accounted for as and when the right to
receive the payment is established.
l) Income-tax
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid is recognised as an asset in the
Balance Sheet when it is highly probable that future economic benefit
associated with it will flow to the Company.
Deferred tax is recognised, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. In respect of unabsorbed
depreciation and carry forward of losses and items relating to capital
losses, deferred tax assets are recognised based on virtual certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realised.
m) Operating Cycle
Based on the nature of products / activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
12 months for the purpose of classification of its assets and
liabilities as current and non-current.
Mar 31, 2014
A) Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance
with the Generally Accepted Accounting Principles in India (Indian
GAAP) to comply with the Accounting Standards notifed under Section 211
(3C) of the Companies Act, 1956 ("the 1956 Act") (which continue to be
applicable in respect of Section 133 of the Companies Act, 2013 ("the
2013 Act") in terms of General Circular 15/2013 dated 13 September,
2013 of the Ministry of Corporate Affairs) and the relevant provisions
of the 1956 Act/ 2013 Act, as applicable. The financial statements have
been prepared on accrual basis under the historical cost convention, as
modifed to include the revaluation of certain fixed assets. The
accounting policies adopted in the preparation of the financial
statements are consistent with those followed in the previous year.
b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make prudent and reasonable estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities on the date of financial
statements and the results of operations during the year. Differences
between the actual results and estimates are recognised in the year in
which the results are known or materialised.
c) Fixed assets
i) Owned assets
All fixed assets are stated at cost of acquisition or construction
including taxes and other incidental expenses related to acquisition,
installation cost, except for certain assets which are revalued and
are, therefore, stated at their revalued book values. Financing costs
(up to the date the assets are ready for their intended use) relating
to borrowed funds or deferred credits attributable to acquisition or
construction of fixed assets are included in the gross book value of
fixed assets to which they relate.
ii) Assets taken on finance lease
Fixed assets taken on finance lease are stated at the lower of cost of
finance lease assets or present value of the minimum finance lease
payments at the inception of finance lease.
iii) Impairment of fixed assets
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
fixed assets. If any indication exists, an asset''s recoverable amount is
estimated. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its recoverable amount. The recoverable
amount is the greater of net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value based on an appropriate discount factor.
d) Depreciation
i) Depreciation on all fixed assets is provided on the straight line
method at the rates specified in schedule XIV to the Companies Act, 1956
or at rates arrived at on the basis of the balance useful lives of the
assets based on technical evaluation/ revaluation of the related
assets, whichever is higher.
ii) Depreciation is calculated on a pro-rata basis only in respect of
additions to plant and machinery having a cost in excess of Rs. 5000.
Assets costing upto Rs. 5000 are fully depreciated in the year of
purchase. No depreciation is provided on assets sold, discarded, etc.
during the year.
iii) In respect of revalued assets, an amount equivalent to the
additional charge arising due to revaluation is transferred from the
revaluation reserve to the Statement of profit and Loss.
iv) In respect of assets taken on finance lease, depreciation is
provided in accordance with the policy followed for owned assets.
v) No write-off is made in respect of leasehold land in case of long
term lease.
e) Investments
Long term investments are stated at cost as reduced by amounts written
off / provision made for diminution, other than temporary, in the value
of such investments. Current investments are stated at cost or fair
value, whichever is lower.
f) Inventories
Stores and spares are valued at cost or under. Stock-in-trade is valued
at the lower of cost and net realisable value. Cost of inventories is
ascertained on a ''weighted average'' basis. In the case of fnished goods
and process stocks, appropriate share of labour, overheads and excise
duty is included.
g) Research and development
Revenue expenditure on research and development is charged as an
expense in the year in which it is incurred and the capital expenditure
is included in fixed assets.
h) Export benefits
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
i) Employees'' benefits
Provision for employee benefits charged on accrual basis is determined
based on Accounting Standard (AS) 15 (Revised) "Employee benefits" as
notifed under the Companies (Accounting Standards) Rules, 2006 as
under:
i) Contributions to the provident fund, gratuity fund and
superannuation fund are charged to revenue.
ii) Gratuity liability determined at balance sheet date on an actuarial
basis is provided to the extent not covered by the funds available in
the gratuity fund. Excess funding, if any, is recognised as an asset.
iii) Provision for privilege and medical leave salary is determined on
actuarial basis.
iv) Provision for casual leave is determined on arithmetical basis.
j) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transaction.
Monetary items denominated in foreign currency are reported using the
closing exchange rates on the date of the balance sheet.
The exchange differences arising on settlement of monetary items or on
reporting these items at the rates different from the rates at which
these were initially recorded / reported in previous financial
statements, are recognised as income / expense in the year in which
they arise.
In case of forward exchange contracts, the premium or discount, arising
at the inception of such contracts is amortised as income or expense
over the life of the contract and the exchange differences on such
contracts, i.e., differences between the exchange rates at the
reporting/ settlement date and the exchange rates on the date of
inception of contract/ the last reporting date, is recognised as income
/ expense for the year.
k) Revenue recognition
Sales are recognised at the point of dispatch to customers and include
excise duty.
Sale of Renewable Energy Certifcates (RECs) is recognised as income on
delivery of the RECs to customer''s account as evidenced by confirmation
of delivery instructions.
l) Income-tax
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Deferred tax is recognised, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. In respect of unabsorbed
depreciation and carry forward of losses, deferred tax assets are
recognised based on virtual certainty that suffcient future taxable
income will be available against which such deferred tax assets can be
realised.
d) Rs.163.71 lacs (2012-13 Â Rs.272.91 lacs) currently carrying
interest of 8.25% (net of interest subvention) repayable in 6 quarterly
installments is secured by frst mortgage and charge on Specific
immovable and movable assets of Shriram Rayons, a unit of the Company.
e) Rs.231.00 lacs (2012-13 Â Rs.321.00 lacs) currently carrying
interest of 14.25% repayable in 8 quarterly installments is secured by
a frst mortgage and charge on all the immovable and movable properties
(save and except book debts) of Daurala Organics, a unit of the
Company, subject to prior charges created / to be created in favour of
the Company''s bankers for securing the borrowings for working capital
requirements, the charges ranking pari-passu with the charges
created/to be created in favour of existing frst charge holders for
their respective term loans.
f) Rs.124.46 lacs (2012-13 Â Nil) currently carrying interest of 12.50%
repayable in 16 quarterly installments is secured by a frst mortgage
and charge on all the immovable and movable properties (save and except
book debts) of Daurala Organics, a unit of the Company, both present
and future, excluding the assets exclusively charged subject to prior
charges created / to be created in favour of the Company''s bankers for
securing the borrowings for working capital requirements, the charges
ranking pari-passu with the charges created/to be created in favour of
existing frst charge holders for their respective term loans.
g) Rs.1900.00 lacs (2012-13 Â Nil) carrying Nil interest (net of
interest subvention) repayable in 36 monthly installments is secured by
residual charge on fixed assets of sugar division of the Company.
h) Rs.24.72 lacs (2012-13 Â Rs.31.05 lacs) currently carrying interest
of 11.25% repayable in 50 monthly installments are secured by
hypothecation of Specific assets.
II. Others
Rs.1082.97 lacs (2012-13 Â Rs.1443.96 lacs) carrying interest of 4% and
repayable in 3 yearly installments is secured by exclusive second
charge on immovable and movable assets of sugar factory at Daurala
Sugar Works, a unit of the Company.
32. a) Pursuant to the Scheme of Arrangement as approved by the High
Court of Delhi vide its Order dated April 16, 1990 under
sections 391 / 394 of the Companies Act, 1956, assets and liabilities
relating to certain units, and certain reserves of the undivided DCM
Limited were transferred / allocated to the Company w.e.f. April 1,
1990, being the effective date. The excess of net assets acquired over
the share capital and reserves had been transferred to the securities
premium account.
b) There are various issues relating to sales tax, income-tax,
interest, etc. arisen / arising out of the reorganisation arrangement
which will be settled and accounted for in terms of the Scheme of
Arrangement of DCM Limited as and when the liabilities / benefits are
finally determined. During the year, based on a detailed assessment of
the maximum possible exposure on ultimate settlement of these issues,
the Company has made a provision for contingencies of Rs. 100 lacs in
these accounts.
Mar 31, 2013
A) Accounting convention
The financial statements are prepared under the historical cost
convention, as modified to include the revaluation of certain fixed
assets, and have been prepared in accordance with applicable Accounting
Standards and relevant presentational requirements of the Companies
Act, 1956.
b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities on the date of
financial statements and the results of Operations during the year.
Differences between the actual results and estimates are recognised in
the year in which the results are known or materialised.
c) Fixed assets
i) Owned assets
All fixed assets are stated at cost of acquisition or construction,
except for certain assets which are revalued and are, therefore, stated
at their revalued book values. Financing costs (up to the date the
assets are ready to be put to use for commercial production) relating
to borrowed funds or deferred credits attributable to acquisition or
construction of fixed assets are included in the gross book value of
fixed assets to which they relate.
ii) Assets taken on finance lease I
Fixed assets taken on finance lease are stated at the lower of cost of
finance lease assets or present value of the minimum finance lease
payments at the inception of finance lease.
iii) Impairment of fixed assets
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying i amount of the
fixed assets. If any indication exists, an asset''s recoverable amount
is estimated. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its recoverable amount. The recoverable
amount is the greater of net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value based on an appropriate discount factor.
d) Depreciation
i) Depreciation on all fixed assets is provided on the straight line
method at the rates specified in schedule XIV to the Companies Act,
1956 or at rates arrived at on the basis of the balance useful lives of
the assets based on technical evaluation/ revaluation of the related
assets, whichever is higher.
ii) Depreciation is calculated on a pro-rata basis only in respect of
additions to plant and machinery having a cost in excess of Rs. 5000.
Assets costing upto Rs. 5000 are fully depreciated in the year of
purchase. No depreciation is provided on assets sold, discarded, etc.
during the year.
iii) In respect of revalued assets, an amount equivalent to the
additional charge arising due to revaluation is transferred from the
revaluation reserve to the Statement of Profit and Loss.
iv) In respect of assets taken on finance lease, depreciation is
provided in accordance with the policy followed for owned assets.
v) No write-off is made in respect of leasehold land in case of long
term lease.
e) Investments
Long term investments are stated at cost as reduced by amounts written
off / provision made for diminution in value. Current investments are
stated at cost or fair value, whichever is lower.
f) Inventories
Stores and spares are valued at cost or under. Stock-in-trade is valued
at the lower of cost and net realisable value. Cost of inventories is
ascertained on a ''weighted average'' basis. In the case of finished
goods and process stocks, appropriate share of labour, overheads and
excise duty is included.
g) Research and development
Revenue expenditure on research and development is charged as an
expense in the year in which it is incurred. h) Export benefits
Export benefits are accounted for on accrual basis.
i) Employees'' benefits
Provision for employee benefits charged on accrual basis is determined
based on Accounting Standard (AS) 15 (Revised) "Employee Benefits" as
notified under the Companies (Accounting Standards) Rules, 2006 as
under:
i) Contributions to the provident fund, gratuity fund and
superannuation fund are charged to revenue.
ii) Gratuity liability determined on an actuarial basis is provided to
the extent not covered by the funds available in the gratuity fund.
iii) Provision for privilege and medical leave salary is determined on
actuarial basis.
iv) Provision for casual leave is determined on arithmetical basis.
j) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transaction.
Monetary items denominated in foreign currency are reported using the
closing exchange rates on the date of the balance sheet.
The exchange differences arising on settlement of monetary items or on
reporting these items at the rates different from the rates at which
these were initially recorded / reported in previous financial
statements, are recognised as income / expense in the year in which
they arise.
In case of forward exchange contracts, the premium or discount, arising
at the inception of such contracts is amortised as income or expense
over the life of the contract and the exchange differences on such
contracts, i.e., differences between the exchange rates at the
reporting/ settlement date and the exchange rates on the date of
inception of contract/the last reporting date, is recognised as income
/expense for the year.
k) Revenue recognition
Sales are recognised at the point of despatch to customers and include
excise duty.
I) Income-tax
Current income-tax liability is provided for in accordance with the
provisions of the Income-tax Act, 1961.
Deferred tax is recognised, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. In respect of unabsorbed
depreciation and carry forward of losses, deferred tax assets are
recognised based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realised.
Mar 31, 2012
A) Accounting convention
The financial statements are prepared under the historical cost
convention, as modified to include the revaluation of certain fixed
assets, and have been prepared in accordance with applicable Accounting
Standards and relevant presentational requirements of the Companies
Act, 1956.
b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities on the date of
financial statements and the results of operations during the year.
Differences between the actual results and estimates are recognised in
the year in which the results are known or materialised.
c) Fixed assets
i) Owned assets
All fixed assets are stated at cost of acquisition or construction,
except for certain assets which are revalued and are, therefore, stated
at their revalued book values. Financing costs (up to the date the
assets are ready to be put to use for commercial production) relating
to borrowed funds or deferred credits attributable to acquisition or
construction of fixed assets are included in the gross book value of
fixed assets to which they relate.
ii) Assets taken on finance lease
Fixed assets taken on finance lease are stated at the lower of cost of
finance lease assets or present value of the minimum finance lease
payments at the inception of finance lease.
iii) Impairment of fixed assets
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
fixed assets. If any indication exists, an asset's recoverable amount
is estimated. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its recoverable amount. The recoverable
amount is the greater of net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value based on an appropriate discount factor.
d) Depreciation
i) Depreciation on all fixed assets is provided on the straight line
method at the rates specified in schedule XIV to the Companies Act,
1956 or at rates arrived at on the basis of the balance useful lives of
the assets based on technical evaluation / revaluation of the related
assets, whichever is higher.
ii) Depreciation is calculated on a pro-rata basis only in respect of
additions to plant and machinery having a cost in excess of Rs. 5000.
Assets costing upto Rs. 5000 are fully depreciated in the year of
purchase. No depreciation is provided on assets sold, discarded, etc.
during the year.
iii) In respect of revalued assets, an amount equivalent to the
additional charge arising due to revaluation is transferred from the
revaluation reserve to the profit and loss account.
iv) In respect of assets taken on finance lease, depreciation is
provided in accordance with the policy followed for owned assets.
v) No write-off is made in respect of leasehold land in case of long
term lease.
e) Investments
Long term investments are stated at cost as reduced by amounts written
off / provision made for diminution in value. Current investments are
stated at cost or fair value, whichever is lower.
f) Inventories
Stores and spares are valued at cost or under. Stock-in-trade is valued
at the lower of cost and net realisable value. Cost of inventories is
ascertained on a 'weighted average' basis. In the case of finished
goods and process stocks, appropriate share of labour, overheads and
excise duty is included.
g) Research and development
Revenue expenditure on research and development is charged as an
expense in the year in which it is incurred.
h) Export benefits
Export benefits are accounted for on accrual basis.
i) Employees' benefits
Provision for employee benefits charged on accrual basis is determined
based on Accounting Standard (AS) 15 (Revised) "Employee Benefits"
as notified under the Companies (Accounting Standards) Rules, 2006 as
under :
i) Contributions to the provident fund, gratuity fund and
superannuation fund are charged to revenue.
ii) Gratuity liability determined on an actuarial basis is provided to
the extent not covered by the funds available in the gratuity fund.
iii) Provision for privilege and medical leave salary is determined on
actuarial basis.
iv) Provision for casual leave is determined on arithmetical basis. j)
Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transaction.
Monetary items denominated in foreign currency are reported using the
closing exchange rates on the date of the balance sheet.
The exchange differences arising on settlement of monetary items or on
reporting these items at the rates different from the rates at which
these were initially recorded / reported in previous financial
statements, are recognised as income / expense in the year in which
they arise.
In case of forward exchange contracts, the premium or discount, arising
at the inception of such contracts is amortised as income or expense
over the life of the contract and the exchange differences on such
contracts, i.e., differences between the exchange rates at the
reporting / settlement date and the exchange rates on the date of
inception of contract / the last reporting date, is recognised as
income / expense for the year.
k) Revenue recognition
Sales are recognised at the point of despatch to customers and include
excise duty.
l) Income-tax
Current income-tax liability is provided for in accordance with the
provisions of the Income-tax Act, 1961.
Deferred tax is recognised, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. In respect of unabsorbed
depreciation and carry forward of losses, deferred tax assets are
recognised based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realised.
(i) There has been no movement in the equity shares in the current and
previous year
(ii) The Company has only one class of equity shares having a par value
of Rs. 10 per share. Each holder of equity shares is entitled to one
vote per share.
(iii) Shareholders holding more than 5% shares in the Company
Mar 31, 2011
A) Accounting convention
The financial statements are prepared under the historical cost
convention, as modified to include the revaluation of certain fixed
assets, and have been prepared in accordance with applicable Accounting
Standards and relevant presentational requirements of the Companies
Act, 1956.
b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities on the date of
financial statements and the results of operations during the year.
Differences between the actual results and estimates are recognised in
the year in which the results are known or materialised.
c) Fixed assets
i) Owned assets
All fixed assets are stated at cost of acquisition or construction,
except for certain assets which are revalued and are, therefore, stated
at their revalued book values. Financing costs (up to the date the
assets are ready to be put to use for commercial production) relating
to borrowed funds or deferred credits attributable to acquisition or
construction of fixed assets are included in the gross book value of
fixed assets to which they relate.
ii) Assets taken on fnance lease
Fixed assets taken on fnance lease are stated at the lower of cost of
fnance lease assets or present value of the minimum fnance lease
payments at the inception of fnance lease.
iii) Impairment of fixed assets
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
fixed assets. If any indication exists, an assets recoverable amount is
estimated. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its recoverable amount. The recoverable
amount is the greater of net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value based on an appropriate discount factor.
d) Depreciation
i) Depreciation on all fixed assets is provided on the straight line
method at the rates specifed in schedule XIV to the Companies Act, 1956
or at rates arrived at on the basis of the balance useful lives of the
assets based on technical evaluation/ revaluation of the related
assets, whichever is higher.
ii) Depreciation is calculated on a pro-rata basis only in respect of
additions to plant and machinery having a cost in excess of Rs. 5000.
Assets costing upto Rs. 5000 are fully depreciated in the year of
purchase. No depreciation is provided on assets sold, discarded, etc.
during the year.
iii) In respect of revalued assets, an amount equivalent to the
additional charge arising due to revaluation is transferred from the
revaluation reserve to the Profit and loss account.
iv) In respect of assets taken on fnance lease, depreciation is
provided in accordance with the policy followed for owned assets.
v) No write-off is made in respect of leasehold land as the lease is a
long lease.
e) Investments
Long term investments are stated at cost as reduced by amounts written
off/ provision made for diminution in value. Current investments are
stated at cost or fair value, whichever is lower.
f) Inventories
Stores and spares are valued at cost or under. Stock-in-trade is valued
at the lower of cost and net realisable value. Cost of inventories is
ascertained on a Ãweighted average basis. In the case of fnished goods
and process stocks, appropriate share of labour, overheads and excise
duty is included.
g) Research and development
Revenue expenditure on research and development is charged as an
expense in the year in which it is incurred.
h) Export benefts
Export benefts are accounted for on accrual basis.
i) Employees benefts
Provision for employee benefts charged on accrual basis is determined
based on Accounting Standard (AS) 15 (Revised) "Employee Benefts" as
notifed under the Companies (Accounting Standards) Rules, 2006 as
under:
i) Contributions to the provident fund, gratuity fund and
superannuation fund are charged to revenue.
ii) Gratuity liability determined on an actuarial basis is provided to
the extent not covered by the funds available in the gratuity fund.
iii) Provision for privilege and medical leave salary is determined on
actuarial basis.
iv) Provision for casual leave is determined on arithmetical basis.
j) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transaction.
Monetary items denominated in foreign currency are reported using the
closing exchange rates on the date of the balance sheet.
The exchange differences arising on settlement of monetary items or on
reporting these items at the rates different from the rates at which
these were initially recorded / reported in previous financial
statements, are recognised as income / expense in the year in which
they arise.
In case of forward exchange contracts, the premium or discount, arising
at the inception of such contracts is amortised as income or expense
over the life of the contract and the exchange differences on such
contracts, i.e., differences between the exchange rates at the
reporting/ settlement date and the exchange rates on the date of
inception of contract/ the last reporting date, is recognised as income
/ expense for the year.
k) Revenue recognition
Sales are recognised at the point of despatch to customers and include
excise duty.
l) Income-tax
Current income-tax liability is provided for in accordance with the
provisions of the Income-tax Act, 1961.
Deferred tax is recognised, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. In respect of unabsorbed
depreciation and carry forward of losses, deferred tax assets are
recognised based on virtual certainty that suffcient future taxable
income will be available against which such deferred tax assets can be
realised.
Mar 31, 2010
A) Accounting convention
The financial statements are prepared under the historical cost
convention, as modified to include the revaluation of certain fixed
assets, and have been prepared in accordance with applicable Accounting
Standards and relevant presentational requirements of the Companies
Act, 1956.
b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities on the date of
financial statements and the results of operations during the year.
Difference between the actual results and estimates are recognised in
the year in which the results are known or materialised.
c) Fixed assets
i) Owned assets
All fixed assets are stated at cost of acquisition or construction,
except for certain assets which are revalued and are, therefore, stated
at their revalued book values. Financing costs (up to the date the
assets are ready to be put to use for commercial production) relating
to borrowed funds or deferred credits attributable to acquisition or
construction of fixed assets are included in the gross book value of
fixed assets to which they relate.
ii) Assets taken on finance lease
Fixed assets taken on finance lease are stated at the lower of cost of
finance lease assets or present value of the minimum finance lease
payments at the inception of finance lease.
iii) Impairment of fixed assets
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
fixed assets. If any indication exists, an assets recoverable amount
is estimated. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its recoverable amount. The recoverable
amount is the greater of net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value based on an appropriate discount factor.
d) Depreciation
i) Depreciation on all fixed assets is provided on the straight line
method at the rates specified in schedule XIV to the Companies Act,
1956 or at rates arrived at on the basis of the balance useful lives of
the assets based on technical evaluation/ revaluation of the related
assets, whichever is higher.
ii) Depreciation is calculated on a pro-rata basis only in respect of
additions to plant and machinery having a cost in excess of Rs. 5000.
Assets costing upto Rs. 5000 are fully depreciated in the year of
purchase. No depreciation is provided on assets sold, discarded, etc.
during the year.
iii) In respect of revalued assets, an amount equivalent to the
additional charge arising due to revaluation is transferred from the
revaluation reserve to the profit and loss account.
iv) In respect of assets taken on finance lease, depreciation is
provided in accordance with the policy followed for owned assets.
v) No write-off is made in respect of leasehold land as the lease is a
long lease.
e) Investments
Long term investments are stated at cost as reduced by amounts written
off / provision made for diminution in value. Current investments are
stated at cost or fair value, whichever is lower.
f) Inventories
Stores and spares are valued at cost or under. Stock-in-trade is valued
at the lower of cost and net realisable value. Cost of inventories is
ascertained on a weighted average basis. In the case of finished
goods and process stocks, appropriate share of labour, overheads and
excise duty is included.
g) Research and development
Revenue expenditure on research and development is charged as an
expense in the year in which it is incurred.
h) Export benefits
Export benefits are accounted for on accrual basis.
i) Employees benefits
Provision for employee benefits charged on accrual basis is determined
based on Accounting Standard (AS) 15 (Revised) "Employee Benefits" as
notified under the Companies (Accounting Standards) Rules, 2006 as
under:
i) Contributions to the provident fund, gratuity fund and
superannuation fund are charged to revenue. ii) Gratuity liability
determined on an actuarial basis is provided to the extent not covered
by the
funds available in the gratuity fund. iii) Provision for privilege and
medical leave salary is determined on actuarial basis. iv) Provision
for casual leave is determined on arithmetical basis.
j) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transaction.
Monetary items denominated in foreign currency are reported using the
closing exchange rates on the date of the balance sheet.
The exchange differences arising on settlement of monetary items or on
reporting these items at the rates different from the rates at which
these were initially recorded / reported in previous financial
statements, are recognised as income / expense in the year in which
they arise, except in respect of the foreign currency liabilities
incurred in connection with fixed assets where the exchange differences
arising during the construction period are adjusted in the cost of
concerned assets.
In case of forward exchange contracts, the premium or discount, arising
at the inception of such contracts is amortised as income or expense over
the life of the contract and the exchange differences on such contracts,
i.e., differences between the exchange rates at the reporting/ settlement
date and the exchange rates on the date of inception of contract/ the last
reporting date, is recognised as income / expense for the year except
where the foreign currency liabilities have been incurred in connection
with fixed assets where the exchange differences arising during the
construction period are adjusted in the cost of concerned assets.
k) Revenue recognition
Sales are recognised at the point of despatch to customers and include
excise duty.
l) Income-tax
Current income-tax liability is provided for in accordance with the
provisions of the Income-tax Act, 1961. Deferred tax is recognised,
subject to the consideration of prudence, on timing differences, being
the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods. In respect of unabsorbed depreciation and carry
forward of losses, deferred tax assets are recognised based on virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised.
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