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Accounting Policies of De Nora India Ltd. Company
Mar 31, 2025
2 Material accounting policies
Material accounting policies adopted by the company are as under:
2.1 Basis of Preparation of Financial Statements
(a) Statement of Compliance with Ind AS
The financial statements comply in all material aspects with Indian Accounting Standards (IndAS) notified under
section 133 of the Companies Act, 2013 (the Act) read with Companies (Indian Accounting Standards) Rules,
2015 and other relevant provisions of the Act.
Accounting policies have been consistently applied to all the years presented except where a newly issued
accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the
accounting policy in use.
The financial statements have been prepared on a historical cost basis, except for the following:
* Certain financial assets and liabilities is measured at fair value;
* defined benefit plans - plan assets measured at fair value;
(b) All assets and liabilities have been classified as current or non-current as per the Companyâs operating cycle
and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of services and
the time between the rendering of service and their realization in cash and cash equivalents, the Company has
ascertained its operating cycle as twelve months for the purpose of current and noncurrent classification of
assets and liabilities.
(c) Use of estimates
The preparation of financial statements in conformity with Ind AS requires the Management to make estimate
and assumptions that affect the reported amount of assets and liabilities as at the Balance Sheet date, reported
amount of revenue and expenses for the year and disclosures of contingent liabilities as at the Balance Sheet
date. The estimates and assumptions used in the accompanying financial statements are based upon the
Management''s evaluation of the relevant facts and circumstances as at the date of the financial statements.
Actual results could differ from these estimates. Estimates and underlying assumptions are reviewed on a
periodic basis. Revisions to accounting estimates, if any, are recognized in the year in which the estimates are
revised and in any future years affected. Refer Note 3 for detailed discussion on estimates and judgments.
(d) Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is also the Companyâs functional
currency. All amounts have been rounded-off to the nearest Lakhs, unless otherwise indicated.
2.2 Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that
is directly attributable to the acquisition of the items. Cost of property, plant and equipment comprises its purchase
price net of any discounts and rebates, any import duties and other taxes (other than those subsequently recovered
from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other
incidental expenses, decommissioning costs, if any, and interest on borrowings attributable to it up to the date it is
ready for its intended use. Cost of property, plant and equipment that are not yet ready for their intended use at the
balance sheet date are shown under capital work-in-progress.
Subsequent costs are included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to Statement of Profit and Loss during
the year in which they are incurred.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is
classified as capital advances under other non-current assets.
Depreciation methods, estimated useful lives
The Company depreciates Property, plant and equipments using the straight line method over their estimated useful
lives as prescribed under Schedule II to the Companies Act, 2013 as under:
* Leasehold Land are amortized over the lease period, which corresponds with the useful lives of the assets.
Depreciation on addition to property plant and equipment is provided on pro-rata basis from the date of acquisition.
Depreciation on sale/deduction from property plant and equipment is provided up to the date preceding the date of
sale, deduction as the case may be. Gains and losses on disposals are determined by comparing proceeds with
carrying amount. These are included in Statement of Profit and Loss under respective heads.
Depreciation methods, useful lives and residual values are reviewed periodically at each financial year end and
adjusted prospectively, as appropriate.
2.3 Intangible Assets
Intangible assets are stated at acquisition cost, net of accumulated amortization.
The Company amortized intangible assets over their estimated useful lives using the straight line method. The
estimated useful lives of intangible assets are as follows:
2.4 Foreign Currency Transactions
(a) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment
in which the entity operates (âthe functional currencyâ). The financial statements are presented in Indian rupee
(INR), which is the Companyâs functional and presentation currency.
(b) Transactions and balances
On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount
the exchange rate between the functional currency and the foreign currency at the date of the transaction. Gains/
Losses arising out of fluctuation in foreign exchange rate between the transaction date and settlement date are
recognised in the Statement of Profit and Loss.
All monetary assets and liabilities in foreign currencies are restated at the year end at the exchange rate
prevailing at the year end and the exchange differences are recognised in the Statement of Profit and Loss.
2.5 Fair value measurement
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes place either:
? In the principal market for the asset or liability, or
? In the absence of a principal market, in the most advantageous market for the asset or liability accessible to the
Company.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of
unobservable inputs. The Company''s management determines the policies and procedures for fair value measurement
such as investment made by company in mutual funds.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
? Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
? Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable
? Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable
2.6 Revenue Recognition
Sale of products
Revenue from the sale of products is recognised when the Company satisfies the performance obligation by
transferring promised products to the customer. The revenue is measured based on transaction price, which is the
fair value of consideration received or receivable, and is net of discounts, allowances, returns and amounts collected
on behalf of third party.
Rendering of services
The Company primarily earns revenue from recoating / repairs of electrolytic products. Revenue from recoating /
repairs of electrolytic products is recognized in accordance with the terms of the contract with customers when the
identified performance obligation is completed. The revenue is measured based on transaction price, which is the fair
value of consideration received or receivable and amounts collected on behalf of third party.
Other Income
Interest Income is recognised on a basis of effective interest method as set out in Ind AS 109, Financial Instruments,
and where no significant uncertainty as to measurability or collectability exists.
Dividend from investment is recognised as income when right to receive is established.
2.7 Taxes
Tax expense for the year, comprising current tax and deferred tax, are included in the determination of the net profit
or loss for the year.
(a) Current income tax
Current tax assets and liabilities are measured at the amount expected to be recovered or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted, at the year end date. Current tax assets and tax liabilities are offset where the entity has a legally enforceable
right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
(b) Deferred tax
Deferred income tax is provided in full, using the balance sheet approach, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in financial statements. Deferred
income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit
(tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the end of the year and are expected to apply when the related deferred income tax asset is realised
or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilize those temporary differences and losses.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority.
Current and deferred tax is recognized in Statement of Profit and Loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
2.8 Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
Raw materials are valued at lower of cost and net realizable value. Cost includes purchase price, (excluding those
subsequently recoverable by the enterprise from the concerned revenue authorities), freight inwards and other
expenditure incurred in bringing such inventories to their present location and condition. In determining the cost,
weighted average cost method is used.
Work in progress and manufactured finished goods are valued at the lower of cost and net realisable value. Cost
of work in progress and manufactured finished goods is determined on the weighted average basis and comprises
direct material, cost of conversion and other costs incurred in bringing these inventories to their present location and
condition.
Provision of obsolescence on inventories is considered on the basis of managementâs estimate based on demand
and market of the inventories.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of
completion and the estimated costs necessary to make the sale.
The comparison of cost and net realizable value is made on item by item basis.
2.9 Impairment of non-financial assets
The Company assesses at each year end whether there is any objective evidence that a non financial asset or a
group of non financial assets is impaired. If any such indication exists, the Company estimates the asset''s recoverable
amount and the amount of impairment loss.
An impairment loss is calculated as the difference between an assetâs carrying amount and recoverable amount.
Losses are recognized in Statement of Profit and Loss and reflected in an allowance account. When the Company
considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the
amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised, then the previously recognised impairment loss is reversed through Statement
of Profit and Loss.
The recoverable amount of an asset (as defined below) 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 are grouped together into the smallest group of assets that generates
cash in flows from continuing use that are largely independent of the cash inflows of other assets or groups of assets
(the âcash-generating unitâ).
Mar 31, 2024
1. General Information
De Nora India Limited (âthe Companyâ or "De Nora") was incorporated in June 1989 as Titanor Components Limited (''Titanor'') and commenced business in November 1989. The Company''s name was changed to De Nora India Limited on 27 June 2007. The Company has been incorporated under the provisions of The Companies Act and its equity shares are listed on National Stock Exchange of India Limited (NSE). The Company has its manufacturing facilities at Kundaim, Goa, which is also its principal place of business and is involved in the business of manufacturing and servicing of Electrolytic products.
2. Material accounting policies
Material accounting policies adopted by the company are as under:
2.1 Basis of Preparation of Financial Statements
(a) Statement of Compliance with Ind AS
The financial statements comply in all material aspects with Indian Accounting Standards (IndAS) notified under section 133 of the Companies Act, 2013 (the Act) [ Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
Accounting policies have been consistently applied to all the years presented except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy in use.
The financial statements have been prepared on a historical cost basis, except for the following:
* Certain financial assets and liabilities is measured at fair value;
* defined benefit plans - plan assets measured at fair value;
(b) All assets and liabilities have been classified as current or non-current as per the Companyâs operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of services and the time between the rendering of service and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current and noncurrent classification of assets and liabilities.
(c) Use of estimates
The preparation of financial statements in conformity with Ind AS requires the Management to make estimate and assumptions that affect the reported amount of assets and liabilities as at the Balance Sheet date, reported amount of revenue and expenses for the year and disclosures of contingent liabilities as at the Balance Sheet date. The estimates and assumptions used in the accompanying financial statements are based upon the Management''s evaluation of the relevant facts and circumstances as at the date of the financial statements. Actual results could differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates, if any, are recognized in the year in which the estimates are revised and in any future years affected. Refer Note 3 for detailed discussion on estimates and judgments.
(d) Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is also the Companyâs functional currency. All amounts have been rounded-off to the nearest Lakhs, unless otherwise indicated.
2.2 Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost of property, plant and equipment comprises its purchase price net of any discounts and rebates, any import duties and other taxes (other than those subsequently recovered from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses, decommissioning costs, if any, and interest on borrowings attributable to it up to the date it is ready for its intended use. Cost of property, plant and equipment that are not yet ready for their intended use at the balance sheet date are shown under capital work-in-progress.
Subsequent costs are included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to Statement of Profit and Loss during the year in which they are incurred.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets.
Depreciation methods, estimated useful lives
The Company depreciates Property, plant and equipments using the straight line method over their estimated useful lives as prescribed under Schedule II to the Companies Act, 2013 as under:
|
Property, plant and equipment |
|
|
Leasehold improvement* |
Lease period |
|
Office Building |
60 years |
|
Factory Building |
30 years |
|
Plant & Machinery |
15 years |
|
Furniture and Fixtures |
10 years |
|
Vehicles |
8 years |
|
Office Equipment |
5 years |
|
Computers |
3 years |
* Leasehold Land are amortized over the lease period, which corresponds with the useful lives of the assets.
Depreciation on addition to property plant and equipment is provided on pro-rata basis from the date of acquisition. Depreciation on sale/deduction from property plant and equipment is provided up to the date preceding the date of sale, deduction as the case may be. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in Statement of Profit and Loss under respective heads.
Depreciation methods, useful lives and residual values are reviewed periodically at each financial year end and adjusted prospectively, as appropriate.
Intangible assets are stated at acquisition cost, net of accumulated amortization.
The Company amortized intangible assets over their estimated useful lives using the straight line method. The estimated useful lives of intangible assets are as follows:
|
Intangible assets |
||
|
Computer Software |
3-5 years |
2.4 Foreign Currency Transactions
(a) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (âthe functional currencyâ). The financial statements are presented in Indian rupee (INR), which is the Companyâs functional and presentation currency.
(b) Transactions and balances
On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction. Gains/ Losses arising out of fluctuation in foreign exchange rate between the transaction date and settlement date are recognised in the Statement of Profit and Loss.
All monetary assets and liabilities in foreign currencies are restated at the year end at the exchange rate prevailing at the year end and the exchange differences are recognised in the Statement of Profit and Loss.
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability accessible to the Company.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. The Company''s management determines the policies and procedures for fair value measurement such as investment made by company in mutual funds.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
⢠Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
2.6 Revenue Recognition Sale of products
Revenue from the sale of products is recognised when the Company satisfies the performance obligation by transferring promised products to the customer. The revenue is measured based on transaction price, which is the fair value of consideration received or receivable, and is net of discounts, allowances, returns, Goods and Services Tax (GST) and amounts collected on behalf of third party.
Rendering of services
The Company primarily earns revenue from recoating / repairs of electrolytic products. Revenue from recoating / repairs of electrolytic products is recognized in accordance with the terms of the contract with customers when the identified performance obligation is completed. The revenue is measured based on transaction price, which is the fair value of consideration received or receivable, and is net of Goods and Services Tax (GST) and amounts collected on behalf of third party.
Interest Income is recognised on a basis of effective interest method as set out in Ind AS 109, Financial Instruments, and where no significant uncertainty as to measurability or collectability exists.
Dividend from investment is recognised as revenue when right to receive is established.
Tax expense for the year, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the year.
(a) Current income tax
Current tax assets and liabilities are measured at the amount expected to be recovered or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the year end date. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
(b) Deferred tax
Deferred income tax is provided in full, using the balance sheet approach, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in financial statements. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the year and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
Current and deferred tax is recognized in Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
Raw materials are valued at lower of cost and net realizable value. Cost includes purchase price, (excluding those subsequently recoverable by the enterprise from the concerned revenue authorities), freight inwards and other expenditure incurred in bringing such inventories to their present location and condition. In determining the cost, weighted average cost method is used.
Work in progress and manufactured finished goods are valued at the lower of cost and net realisable value. Cost of work in progress and manufactured finished goods is determined on the weighted average basis and comprises direct material, cost of conversion and other costs incurred in bringing these inventories to their present location and condition.
Provision of obsolescence on inventories is considered on the basis of managementâs estimate based on demand and market of the inventories.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale.
The comparison of cost and net realizable value is made on item by item basis.
2.9 Impairment of non-financial assets
The Company assesses at each year end whether there is any objective evidence that a non financial asset or a group of non financial assets is impaired. If any such indication exists, the Company estimates the asset''s recoverable amount and the amount of impairment loss.
An impairment loss is calculated as the difference between an assetâs carrying amount and recoverable amount. Losses are recognized in Statement of Profit and Loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through Statement of Profit and Loss.
The recoverable amount of an asset (as defined below) 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 are grouped together into the smallest group of assets that generates cash in flows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ).
2.10 Provisions and contingent liabilities
Provisions are recognized when there is a present obligation 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 there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date.
The Company offers assurance-type warranties for one of the critical parts of certain electro chlorinators and for some of its coating / recoating services and supplies for an initial period of two years followed by support contracts for a period of four years in the case of electro chlorinators and for a period of six years in the case of coating, eight years in case of recoating services during which period amounts are recoverable from the customers based on pre-defined terms. Estimated costs from warranty terms standard to the deliverable are recognised when revenue is recorded for the related deliverable. The Company estimates its warranty costs standard to the deliverable based on historical warranty claim experience and applies this estimate to the revenue stream for deliverables under warranty.
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 recognized as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
2.11 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and cash on hand, which are subject to an insignificant risk of changes in value.
For the purposes of the cash flow statement, cash and cash equivalents include cash on hand and cash in banks.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(a) Financial assets
(i) Initial recognition and measurement
At initial recognition, financial asset is measured at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
(ii) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
a) at amortized cost; or
b) at fair value through other comprehensive income; or
c) at fair value through profit or loss.
The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash flows.
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method (EIR).
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. Fair value income from these financial assets has included in other income.
Equity instruments: All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. 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 recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.
(iii) Impairment of financial assets
For trade receivables only, the Company applies the simplified approach required by IndAS 109, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
For recognition of impairment loss on financial assets (trade receivable) and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 15-quarters ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in subsequent years, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 15 quarters ECL.
Life time ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 15 quarters ECL is a portion of the lifetime ECL which results from default events that are possible within 15 quarters after the year end.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider all contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.
In general, it is presumed that credit risk has significantly increased since initial recognition if the payment is more than 90 days past due.
ECL impairment loss allowance (or reversal) recognized during the year is recognized as income/expense in the statement of profit and loss. In balance sheet ECL for financial assets measured at amortized cost is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
(iv) Derecognition of financial assets
A financial asset is derecognized only when
a) the rights to receive cash flows from the financial asset is transferred or
b) retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the financial asset is transferred then in that case financial asset is derecognized only if substantially all risks and rewards of ownership of the financial asset is transferred. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.
(b) Financial liabilities
(i) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss and at amortized cost, as appropriate.
All financial liabilities are recognized initially at fair value net of directly attributable transaction costs.
(ii) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
(iii) Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss as finance costs.
(c) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
(a) Short-term obligations
Liabilities for salaries and wages, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the year in which the employees render the related service are recognized in respect of employeesâ services up to the end of the year and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
(b) Other long-term employee benefit obligations
(i) Defined contribution plan
Provident Fund: Contribution towards provident fund is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis which are charged to the Statement of Profit and Loss.
Employee''s State Insurance Scheme: Contribution towards employees'' state insurance scheme is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis which are charged to the Statement of Profit and Loss.
(ii) Defined benefit plans
Gratuity: The Company provides for gratuity, a defined benefit plan (the "Gratuity Plan") covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the other comprehensive income in the year in which they arise.
(iii) Other long term employee benefit obligations
All employee benefits (other than post-employment benefits and termination benefits) which do not fall due wholly within twelve months after the end of the period in which the employees render the related services are determined based on actuarial valuation or discounted present value method carried out at each balance sheet date. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary as at every year end using projected unit credit method on the additional amount expected to be paid / availed as a result of the unused entitlement that has accumulated at the balance sheet date. Expense on non-accumulating compensated absences is recognised in the period in which the absences occur. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining the Company''s earnings per share is the net profit or loss for the year after deducting preference dividends and any attributable tax thereto for the year. The weighted average number of equity shares outstanding during the year and for all the years presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares.
3. Significant accounting judgments, estimates and assumptions
In the preparation of the financial statements, the Company makes judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.
Information about assumptions, judgements and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending March 31,2024 are as below :
The key assumptions concerning the future and other key sources of estimation uncertainty at the year end date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
(a) Useful lives of property, plant and equipment and intangible assets
As described in the Material accounting policies, the Company reviews the estimated useful lives of property, plant and equipment and intangible assets at the end of each reporting period. Useful lives of intangible assets is determined on the basis of estimated benefits to be derived from use of such intangible assets. These reassessments may result in change in the depreciation /amortisation expense in future periods.
(b) Actuarial Valuation
The determination of Companyâs liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depend upon assumptions determined after taking into account discount rate, salary growth rate, expected rate of return, mortality and attrition rate. Information about such valuation is provided in notes to the financial statements.
(c) Expected credit loss on trade receivable
The impairment provisions for trade receivables are based on assumptions about risk of default and expected loss rates. The Company uses judgements in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
(d) Warranty expenses
The Company offers assurance-type warranties for one of the critical parts of certain electro chlorinators and for some of its coating / recoating services and supplies for an initial period of two years followed by support contracts for a period of four years in the case of electro chlorinators and for a period of six years in the case of coating, eight years in case of recoating services during which period amounts are recoverable from the customers based on pre-defined terms. Estimated costs from warranty terms standard to the deliverable are recognised when revenue is recorded for the related deliverable. The Company estimates its warranty costs standard to the deliverable based on historical warranty claim experience and applies this estimate to the revenue stream for deliverables under warranty.
(e) Revenue Recognition
The Company derives significant revenue from recoating / repairs of electrolytic products. Such revenue is recognised in accordance with the terms of the contracts when identified performance obligation is completed. The terms of the contracts are varied which affects the identification of performance obligation, allocation of transaction price to the performance obligation and timing of revenue recognition. The company exercises the significant judgment In assessing the performance obligation and timing of revenue recognition.
4. New and amended standards adopted by the Company
The Ministry of Corporate Affairs vide notification dated 31 March 2023 notified the Companies (Indian Accounting Standards) Amendment Rules, 2023, which amended certain accounting standards (see below), and are effective 1 April 2023:
⢠Disclosure of accounting policies - amendments to Ind AS 1
⢠Definition of accounting estimates - amendments to Ind AS 8
⢠Deferred tax related to assets and liabilities arising from a single transaction - amendments to Ind AS 12 The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications.
These amendments did not have any material impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
Mar 31, 2023
2 Significant accounting policies
Significant accounting policies adopted by the company are as under:
2.1 Basis of Preparation of Financial Statements
(a) Statement of Compliance with Ind AS
These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the "Act") read with the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
Accounting policies have been consistently applied to all the years presented except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
The financial statements were authorized for issue by the Company''s Board of Directors on May 4, 2023
(b) Basis of measurement
The standalone financial statements have been prepared on the historical cost basis except for the following items:
(c) All assets and liabilities have been classified as current or non-current as per the Company''s operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of services and the time between the rendering of service and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current and noncurrent classification of assets and liabilities.
(d) Use of estimates
The preparation of financial statements in conformity with Ind AS requires the Management to make estimate and assumptions that affect the reported amount of assets and liabilities as at the Balance Sheet date, reported amount of revenue and expenses for the year and disclosures of contingent liabilities as at the Balance Sheet date. The estimates and assumptions used in the accompanying financial statements are based upon the Management''s evaluation of the relevant facts and circumstances as at the date of the financial statements. Actual results could differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates, if any, are recognized in the year in which the estimates are revised and in any future years affected. Refer Note 3 for detailed discussion on estimates and judgments.
(e) Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is also the Company''s functional currency. All amounts have been rounded-off to the nearest Lakhs, unless otherwise indicated.
2.2 Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost of property, plant and equipment comprises its purchase price net of any discounts and rebates, any import duties and other taxes (other than those subsequently recovered from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses, decommissioning costs, if any, and interest on borrowings attributable to it up to the date it is ready for its intended use. Cost of property, plant and equipment that are not yet ready for their intended use at the balance sheet date are shown under capital work-in-progress.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to Statement of Profit and Loss during the year in which they are incurred.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets.
Depreciation methods, estimated useful lives
The Company depreciates Property, plant and equipments using the straight line method over their estimated useful lives as under : * Leasehold improvements are amortized over the lease period, which corresponds with the useful lives of the assets.
Based on the technical experts assessment of useful life, certain items of property plant and equipment are being depreciated over useful lives different from the prescribed useful lives under Schedule II to the Companies Act, 2013. Management believes that such estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
Depreciation on addition to property plant and equipment is provided on pro-rata basis from the date of acquisition. Depreciation on sale/deduction from property plant and equipment is provided up to the date preceding the date of sale, deduction as the case may be. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in Statement of Profit and Loss under ''Other Income''.
Depreciation methods, useful lives and residual values are reviewed periodically at each financial year end and adjusted prospectively, as appropriate.
2.3 Other Intangible Assets
Intangible assets are stated at acquisition cost, net of accumulated amortization.
The Company amortized intangible assets over their estimated useful lives using the straight line method. The estimated useful lives of intangible assets are as follows:
Intangible assets with finite lives are assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year end.
2.4 Foreign Currency Transactions
(a) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The financial statements are presented in Indian rupee (INR), which is the Company''s functional and presentation currency.
(b) Transactions and balances
On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction. Gains/ Losses arising out of fluctuation in foreign exchange rate between the transaction date and settlement date are recognised in the Statement of Profit and Loss.
All monetary assets and liabilities in foreign currencies are restated at the year end at the exchange rate prevailing at the year end and the exchange differences are recognised in the Statement of Profit and Loss.
2.5 Fair value measurement
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability accessible to the
Company.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. The Company''s management determines the policies and procedures for fair value measurement such as derivative instrument.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
⢠Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
2.6 Revenue Recognition Sale of products
Revenue from the sale of products is recognised when the Company satisfies the performance obligation by transferring promised products to the customer. The revenue is measured based on transaction price, which is the fair value of consideration received or receivable, and is net of discounts, allowances, returns, Goods and Services Tax (GST) and amounts collected on behalf of third party.
Rendering of services
The Company primarily earns revenue from recoating / repairs of electrolytic products. Revenue from recoating / repairs of electrolytic products is recognized in accordance with the terms of the contract with customers when the identified performance obligation is completed. The revenue is measured based on transaction price, which is the fair value of consideration received or receivable, and is net of Goods and Services Tax (GST) and amounts collected on behalf of third party.
In respect of above, the amounts received in advance are reflected in the Balance sheet under "Other Current Liabilities" as "Advance from Customer".
Other Income
Interest Income is recognised on a basis of effective interest method as set out in Ind AS 109, Financial Instruments, and where no significant uncertainty as to measurability or collectability exists.
Dividend from investment is recognised as revenue when right to receive is established.
2.7 Taxes
Tax expense for the year, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the year.
(a) Current income tax
Current tax assets and liabilities are measured at the amount expected to be recovered or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the year end date. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
(b) Deferred tax
Deferred income tax is provided in full, using the balance sheet approach, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in financial statements. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the year and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
Current and deferred tax is recognized in Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
2.8 Leases
As a lessee
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. 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. The Company recognises a right-of-use asset and a lease liability at the lease commencement date except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the lease payments associated with these leases are recognised as an expense on a straightline basis over the lease term. Lease term is a non-cancellable period together with periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.
The right-of-use asset is initially measured at cost at the commencement date. At the commencement date, the lease liability is measured 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 or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. The Company uses its incremental borrowing rate as the discount rate.
After the commencement date, the right-of-use asset is measured at cost less any accumulated depreciation and any accumulated impairment losses, and the lease liability is measured by
(i) increasing the carrying amount to reflect interest on the lease liability;
(iii) remeasuring the carrying amount to reflect any reassessment or lease modifications, or to reflect revised insubstance fixed lease payments.
Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability. Interest expense on the lease liability is a component of finance costs.
Right-of-use assets are depreciated on a straight-line basis over the lease term.
2.9 Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
Raw materials, packaging materials and stores and spare parts are valued at lower of cost and net realizable value. Cost includes purchase price, (excluding those subsequently recoverable by the enterprise from the concerned revenue authorities), freight inwards and other expenditure incurred in bringing such inventories to their present location and condition. In determining the cost, weighted average cost method is used.
Work in progress and manufactured finished goods are valued at the lower of cost and net realisable value. Cost of work in progress and manufactured finished goods is determined on the weighted average basis and comprises direct material, cost of conversion and other costs incurred in bringing these inventories to their present location and condition.
Provision of obsolescence on inventories is considered on the basis of management''s estimate based on demand and market of the inventories.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale.
The comparison of cost and net realizable value is made on item by item basis.
2.10 Impairment of non-financial assets
The Company assesses at each year end whether there is any objective evidence that a non financial asset or a group of non financial assets is impaired. If any such indication exists, the Company estimates the asset''s recoverable amount and the amount of impairment loss.
An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognized in Statement of Profit and Loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through Statement of Profit and Loss.
The recoverable amount of an asset or cash-generating unit (as defined below) 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 are grouped together into the smallest group of assets that generates cash in flows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ).
Mar 31, 2018
1 Significant accounting policies
1.1 Basis of preparation
(i) Statement of compliance
These financial statements have been prepared in accordance with Indian Accounting Standards (''Ind AS'') as per Companies (Indian Accounting Standards) Rules, 2015 (as amended) notified under Section 133 of the Companies Act, 2013 (the ''Act'' ) read with Companies (Indian Accounting Standards Rules, 2015); and the other relevant provisions of the Act and Rules thereunder.
The financial statements up to year ended 31 March 2017 were prepared in accordance with the accounting standards as per Companies (Accounting Standard) Rules, 2006 (as amended) (referred to as "Indian GAAP" or "Previous GAAP"), notified under Section 133 of the Act and other relevant provisions of the Act.
These financial statements for the year ended 31 March 2018 are the first financial statements of the Company under Ind AS, hence Ind AS 101 First time adoption of Indian Accounting Standards has been applied. Refer note 34 for an explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
The financial statements were authorised for issue by the Company''s Board of Directors on 8 May 2018.
(ii) Functional Currency
These financial statements are presented in Indian Rupees, which is the functional currency of the Company. All financial information presented in Indian Rupees has been rounded to the nearest lakhs, except otherwise indicated.
(iii) Basis of measurement
These Financial statements are prepared under the historical cost basis except for following items:
(iv) Use of Estimates and Judgements
In preparing these financial statements, Management has made judgements, estimates and assumptions that affect the application of accounting policies and 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 recognized progressively.
Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The areas involving critical estimates or judgments are:
- Note 3 - Property, plant and equipment
- Note 22 - Income taxes
- Note 28 - Measurement of defined benefit obligations
2.2 Current versus non-current classification
The Company presents assets and liabilities in its Balance Sheet based on current versus non-current classification. An asset is classified as current when it is:
a) Expected to be realized or intended to be sold or consumed in normal operating cycle,
b) Held primarily for the purpose of trading,
c) Expected to be realized within twelve months after the reporting period, or
d) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when:
a) it is expected to be settled in normal operating cycle,
b) it is held primarily for the purpose of trading,
c) it is due to be settled within twelve months after the reporting period
d) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
2.3 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Company operates in one reportable business segment i.e. "Electrolytic Products".
2.4 Foreign Currency Transactions / Translations
Transactions in foreign currencies are initially recorded by the Company in their functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting period. Exchange differences arising on the settlement of monetary items or on translating monetary items are recognized in the Statement of Profit and Loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Foreign exchange difference on foreign currency borrowings, settlement gain/loss and fair value gain/loss on derivative contract relating to borrowings are accounted and disclosed under finance cost
2.5 Revenue
(i) Sales of Goods
Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. This inter alia involves discounting of the consideration due to the present value if the payment extends beyond normal credit terms. 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.
(ii) Rendering of services
Income from recoating/repairs of electrolytic products is recognized in accordance with the terms of the contract with customers when the related performance obligation is completed. The Company recognizes revenue from such contracts in proportion to the stage of completion of the transaction at the reporting date except in cases where the Company retains risk and rewards of ownership, which is in cases where installation is a significant part of the contract. In such cases revenue is recognized on installation. The stage of completion is assessed based on survey of the work performed.
Interest income is recognized with reference to the effective interest rate method.
Dividend from investments is recognized as revenue when right to receive is established
2.6 Income Tax
Income tax expense comprises current tax and deferred tax. It is recognized in Statement of Profit and Loss except to the extent that it relates items recognized directly in equity or in OCI.
Current tax
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 reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if, the Company:
i) has a legally enforceable right to set off the recognized amounts; and
ii) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred tax
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 also recognized in respect of carried forward tax losses and tax credits.
Deferred tax assets are recognized 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. The existence of unused tax losses is strong evidence that future taxable profits may not be available. Therefore in case of a history of recent losses, the Company recognizes a deferred tax asset only to the extent it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.
Unrecognized deferred tax assets are reassessed at each reporting date and recognized 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 be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
Deferred tax is determined using tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the laws that have been enacted or substantively enacted by the end of the reporting period and are expected to be apply when the related deferred income tax assets is realized or the deferred income tax liability is settled.
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:
i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and
ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
Minimum Alternate Tax (âMATâ) credit entitlement is generally recognized as a deferred tax asset if it is probable (more likely than not) that MAT credit can be used in future years to reduce the regular tax liability.
2.7 Leases
Leases of property, plant and equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the leaseâs inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to 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.
2.8 Impairment of assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest company of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized in the Statement of Profit and Loss.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made 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
2.9 Inventories
Inventories consist of raw materials, work-in-progress, finished goods and stock in trade etc. are valued at cost or net realizable value, whichever is lower.
âCostâ comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventory to their present location and condition. Cost of raw material, packing material, stores and spares is determined on weighted average basis. Cost of work-in-progress and finished goods includes labor and manufacturing overheads, where applicable.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated costs necessary to make the sale.
The net realizable value of work-in-progress is determined with reference to the selling prices of related finished products.
Raw material, components and other supplies held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realizable value.
The comparison of cost and net realizable value is made on an item-by-item basis.
2.10 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
A. Financial Assets
Classification
On initial recognition, the Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Initial recognition and measurement
All financial assets (not measured subsequently at fair value through profit or loss) are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Financial assets at amortized cost
A âfinancial assetâ is measured at the amortized cost if both the following conditions are met:
I) the asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
ii) contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognized in the Statement of Profit and Loss. This category generally applies to trade and other receivables.
Financial Asset at FVTPL
Financial assets included within the fair value through profit and loss (FVTPL) category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
Financial Asset at FVTOCI
A âfinancial assetâ is classified at FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Financial Assets included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the equity to profit and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVTOCI) or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments are recognized in profit or loss as other income when the Companyâs right to receive payments is established.
Changes in the fair value of financial assets at fair value of financial assets at fair value through profit or loss are recognized in other gain/ (losses) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
DE recognition
A financial asset (or, where applicable, a part of a financial asset ) is primarily derecognized (i.e. removed from the Company''s financial statements) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpassthroughâ arrangement; and either:
i) the Company has transferred substantially all the risks and rewards of the asset, or
ii) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
i) financial assets that are debt instruments, and are measured at amortized cost e.g., loans, debt securities, deposits, and bank balance.
ii) trade receivables.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables which do not contain a significant financing component.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
B. Financial Liabilities
Classification
The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities measured at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be subsequently measured at fair value with changes in fair value being recognized in the Statement of Profit and Loss.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, at amortized cost (loans and borrowings, and payables), or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to Statement of Profit and Loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the Statement of Profit and Loss.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in Statement of Profit and Loss when the liabilities are derecognised.
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 as finance costs in the Statement of Profit and Loss.
This category generally applies to interest-bearing loans and borrowings.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
2.11 Property, plant and equipment
i Recognition and Measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. The cost of an item of property, plant and equipment comprises:
- its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.
- any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by Management.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labor, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
ii Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at 1 April 2017 measured as per the previous GAAP and used that carrying value as the deemed cost of the property, plant and equipment. The carrying values of property, plant and equipment as aforesaid are after making adjustments relating to decommissioning liabilities.
iii Subsequent Expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefit associated with the expenditure will flow to the Company.
iv Depreciation
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual values over their estimated useful lives based on technical assessment on a pro-rata basis using the straight line method and is generally recognised in statement of profit and loss. Assets acquired under finance leases are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the company will obtain ownership at the end of the lease term. Freehold land is not depreciated.
The estimated useful lives followed by the Company for depreciating such tangible assets are as under:
Leasehold lands are amortized on straight line basis, over the remaining lease term.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The asset''s residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Fully depreciated assets still in use are retained infinancial statements.
2.12 Intangible assets
Recognition and measurement
Intangible assets are carried at cost less accumulated amortization and impairment losses, if any. The cost of an intangible asset comprises of its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use.
The Company has elected to continue with the carrying value of all its intangible assets as recognized in the standalone financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as the deemed cost as at the transition date pursuant to the exemption under Ind AS 101.
Subsequent Expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
Amortization methods and periods
The Company amortizes intangible assets with a finite useful life using the straight-line method over the following periods:
2.13 Provisions
A provision is recognized when the Company has a present obligation (legal or constructive) as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. If effect of the time value of money is material, provisions are discounted using an appropriate discount rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
i. Warranties
A provision for warranties is recognized when the underlying products or services are sold. The provision is based on technical evaluation, historical warranty data and a weighing of all possible outcomes by their associated probabilities.
2.14 Employee Benefits
Short-term obligations
Short-term employee benefits 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 this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Post-employment obligations
The Company operates the following post-employment schemes:
(a) defined benefit plans such as gratuity; and
(b) defined contribution plans such as provident fund.
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.
The calculation of a defined benefit obligation is performed by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized 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 contributions to the plan (''the asset ceiling''). In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements.
Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses and the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income (OCI). The Company determines Net interest expense (income) on the net defined liability (assets) is computed by applying the discount rate, used to measure the net defined liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in Statement of Profit and Loss.
When the 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 Statement of Profit and Loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.
Defined contribution plan
A defined contribution plan is a post employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards Government administered provident fund scheme. Obligations for contributions to defined contribution plans are recognized as an employee benefit expense in profit or loss in the periods during which the related services are rendered by employees.
Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
Termination benefits
Termination benefits are expensed at the earlier when the Company can no longer withdraw the offer of those benefits and when the Company recognizes the cost of restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.
Other long-term employee benefit obligations
The Companyâs current policies permit certain categories of its employees to accumulate and carry forward a portion of their unutilized compensated absences and utilize them in future periods or receive cash in lieu thereof in accordance with the terms of such policies.
The Company measures the expected cost of accumulating compensated absences as the additional amount that the Company incurs as a result of the unused entitlement that has accumulated at the balance sheet date. Such measurement is based on actuarial valuation as at the balance sheet date carried out by a qualified actuary. Remeasurement gains and losses are recognized in the profit or loss in the period in which they arise.
2.15 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for the events for bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).
Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on conversion of all dilutive potential equity shares.
2.16 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.
2.17 Borrowing Cost
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in which they are incurred.
3 Recent accounting pronouncements
Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new amendments to Ind ASs which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2018:
Ind AS 115 - Revenue from Contracts with Customers
Ind AS 21 - The effect of changes in Foreign Exchange rates
Ind AS 115 - Revenue from Contracts with Customers
Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 Revenue, Ind AS 11 Construction Contracts when it becomes effective.
The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:
Step 1:Identify the contract(s) with a customer
Step 2: Identify the performance obligation in contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when âcontrolâ of the goods or services underlying the particular performance obligation is transferred to the customer.
The Company is evaluating the requirements of the new standard and the effect on its financial statements.
Ind AS 21 - The effect of changes in Foreign Exchange rates
The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt.
The Company is evaluating the impact of this amendment on its financial statements.
Mar 31, 2016
for the fifteen months ended 31 March, 2016 (Currency: Indian Rupees)
1 Background
De Nora India Limited (âthe Companyâ or ''De Nora'') was incorporated in June 1989 as Titanor Components Limited (''Titanor'') and commenced business in November 1989. The Company''s name was changed from Titanor to De Nora on 27 June 2007. The Company has its manufacturing facilities at Kundaim, Goa and is involved in the business of manufacturing and servicing of Electrolytic products.
2 Significant accounting policies
2.1 Basis of preparation of financial statements
The financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting in accordance with the accounting principles generally accepted in India (âIndian GAAPâ) and comply with the Accounting standards prescribed under Section 133 of the Companies Act, 2013 (âthe Actâ) read with Rule 7 of the Companies (Accounts) Rules 2014 and other relevant provisions of the Act, to the extent applicable.
The Board of Directors vide their resolution dated 19 February 2015 has approved the change in financial year of the Company from January - December to April - March effective 1 April 2015. In view of this, the current financial period is for a period of fifteen months. i.e.1 January 2015 to 31 March 2016 ("period") and, accordingly, the figures for the current period are not comparable with the figure for the year ended 31 December 2014 ("previous year") presented in the statement of profit and loss, cash flow statement and notes to the financial statement.
2.2 Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in current and future periods.
2.3 Current and Non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the following criteria:
(a) it is expected to be realized in, or is intended for sale or consumption in, the Companyâs normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realized within 12 months after the balance sheet date; or
(d) it is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the balance sheet date.
All other assets are classified as non-current
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
(a) it is expected to be settled in, the Companyâs normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the balance sheet date; or
(d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents.
Based on the nature of products and services and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current / non-current classification of assets and liabilities.
2.4 Tangible assets and depreciation
Tangible fixed assets are stated at cost less accumulated depreciation / amortization and impairment losses, if any. Cost comprises of purchase price and any attributable cost such as duties, freight, borrowing costs, erection and commissioning expenses incurred in bringing the asset to its working condition for its intended use.
Depreciation on tangible fixed assets is provided on the straight-line method (SLM) over the useful lives of the assets as estimated by the Management. Depreciation is charged on a pro-rata basis for assets purchased / sold during the year.
Capital work-in-progress includes the cost of fixed assets that are not ready to use at the balance sheet date.
The Schedule II of the Act has been adopted by the Company and the useful lives for the fixed assets estimated by management are as prescribed by the schedule. The useful life are as follows
Nature of assets Useful Life
Factory building (RCC) 30 years
Other than Factory buildings (RCC) 60 years
Electrical fittings 7 years
Office equipments 5 years
Furniture and fixtures 10 years
Computers 3 years
Plant and machinery 15 years
Vehicles 8 years
Losses arising from the retirement or gains or losses arising from disposal of fixed assets which are carried at cost are recognized in the statement of profit and loss.
Fixed assets individually costing up to Rs 5,000 are depreciated fully in the year of purchase.
Premium on leasehold land is amortized over the unexpired period of the lease.
Tangible Assets is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal.
2.5 Intangible assets and amortization
Intangible assets includes system and application software. These intangible assets are recognized only where future economic benefits attributable to such assets are expected to flow to the Company and the cost of such assets can be reasonably measured. Software is initially recognized at cost and carried to subsequent years at cost less accumulated amortization and accumulated impairment losses, if any.
The computer software is amortized over an expected benefit period of 3 years on a straight line method (SLM).
Intangible assets are derecognized when no future economic benefits are expected from their use and subsequent disposal.
2.6 Borrowing costs
Borrowing costs include interest and ancillary costs incurred in connection with the borrowings. Borrowing costs in connection with the borrowing of funds, to the extent attributable to the acquisition or construction of a qualifying asset, are capitalized as part of the cost of such asset till such time the asset is ready for its intended use. All other borrowing costs are recognized in the statement of profit and loss in the period in which they are incurred.
2.7 Impairment of assets
The Company assesses at each balance sheet date whether there is any indication that an asset or a group of assets (cash generating unit) may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset or a group of assets. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of profit and loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the impairment loss is reversed to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
2.8 Leases
Lease payments under operating lease are recognized as an expense in the Statement of profit and loss on a straight line basis over the lease term.
2.9 Investments
Long term investments are stated at cost, less any other than temporary diminution in value. determined separately for each individual investments.
Current investments are carried at lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.
2.10 Inventories
Inventories include raw materials and consumable stores and spares, work in progress, manufactured and traded finished goods inventory. Inventory is valued at the lower of cost and net realizable value.
Cost comprises the purchase price, costs of conversion and other related costs incurred in bringing the inventories to their present location and condition. Costs of raw materials and consumable stores and spares are determined on the basis of the weighted average method. Cost of finished goods and work in progress include appropriate proportion of costs of conversion which include variable and fixed overheads. Fixed production overheads are allocated on the basis of normal capacity of production facilities. Excise duty on unsold manufactured goods is included in the value of the work in progress and finished goods inventory.
Obsolete, defective and unserviceable inventories are duly provided for. The comparison of cost and net realizable value is made on an item to item basis.
2.11 Revenue recognition
Revenue from sale of products is recognized on transfer of all significant risks and rewards of ownership of the products on to the customers, which is generally on dispatch of goods.
Service income comprising mainly recoating/ repair of electrolytic products is recognized as per the terms of the contract with the customer when the related services are performed and the products are dispatched to the customer. Income from annual maintenance service contracts is recognized pro-rata over the period of the contract.
Revenue from fixed price construction contracts is recognized by reference to the estimated overall profitability of the contract under the percentage of completion method. Percentage of completion method is determined as a proportion of the costs incurred to date to the total estimated costs. Provision for expected loss is recognized immediately when it is probable that the total estimated contract costs will exceed total contract revenue. Revenue recognized in excess of billings is recorded as unbilled revenue.
Dividend income is recognized when the right to receive the dividend is established.
Interest income is recognized on the time proportion basis.
2.12 Foreign currency transactions
Foreign currency transactions are recorded at the spot rates on the date of the respective transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the statement of profit and loss of the year.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date; the resultant exchange differences are recognized in the statement of profit and loss.
2.13 Employee benefits
(a) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period.
(b) Post-employment benefits
The Companyâs approved superannuation scheme is a defined contribution plan. The Company also makes specified monthly contributions towards employee provident fund which is also a defined contribution plan. The Company''s contribution paid/ payable under these schemes is recognized as an expense in the Statement of profit and loss during the year in which the employee renders the related service.
The Companyâs gratuity benefit scheme is a defined benefit plan and funded by the Company. The Companyâs net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is determined based on actuarial valuation at the balance sheet date by an independent actuary using the Projected Unit Credit Method. Actuarial gains and losses are recognized immediately in the Statement of profit and loss.
(c) Other Long-term employment benefits
Compensated absences, do not fall due wholly within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation which is determined at each balance sheet date based on an actuarial valuation by an independent actuary using the Projected Unit Credit Method. The said liability is funded by the Company. Actuarial gains and losses are recognized immediately in the Statement of profit and loss.
2.14 Taxation
Income tax expense comprises current income tax and deferred tax charge or credit.
Current Tax
Provision for income tax is recognized in accordance with the provisions of Indian Income Tax Act, 1961 and is made based on the tax liability after taking credit for tax allowances and exemptions.
Deferred taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available to realize the assets. However, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty that sufficient future taxable income will be available to realize these assets. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at each balance sheet date.
2.15 Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
2.16 Earnings per share (EPS)
The basic earnings per share (âEPSâ) is computed by dividing the net profit for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the reporting year. Diluted EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.
Dec 31, 2014
1.1 Basis of preparation of financial statements
These financial statements have been prepared and presented on the
accrual basis of accounting and comply with the Accounting Standards
prescribed in the Companies (Accounting Standards) Rules, 2006 issued
by the Central Government, read with the General Circular 15/2013 dated
13th September, 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013, and the relevant provisions of
the Companies Act, 1956 (''the Act'') and other accounting principles
generally accepted in India, to the extent applicable.
Under section 211 (3C) of the Companies Act, 1956, which as per
clarification issued by the Ministry of Corporate Affairs, continue to
apply under section 133 of the Companies Act, 2013 (which has
superseeded section 211 (3C) of the Companies Act, 1956 with effect
from 12 September 2013.
2.2 Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
judgments, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities, income
and expenses and the disclosure of contingent liabilities on the date
of the financial statements. Actual results could differ from those
estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Any revision to accounting estimates is recognised
prospectively in current and future periods.
2.3 Current and Non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the
following criteria:
(a) it is expected to be realised in, or is intended for sale or
consumption in, the company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the balance
sheet date; or
(d) it is cash or a cash equivalent unless it is restricted from being
exchanged or used to settle a liability for atleast 12 months after the
balance sheet date.
All other assets are classified as non-current
Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
(a) it is expected to be settled in, the company''s normal operating
cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the balance sheet
date; or
(d) the company does not have an unconditional right to defer
settlement of the liability for atleast 12 months after the balance
sheet date.
All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents.
Based on the nature of products and services and the time between the
acquisition of assets for processing and their realisation in cash and
cash equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current - non-current classification of
assets and liabilities.
2.4 Tangible assets and depreciation
Tangible assets are stated at acquisition cost less accumulated
depreciation and impairment loss, if any. The acquisition cost of fixed
assets includes taxes, duties, freight and other incidental expenses
related to bringing the asset to its working condition for its intended
use.
The Company depreciates its fixed assets on straight line method (SLM)
at the rates prescribed in Schedule II to the Companies Act 2013. Fixed
assets individually costing up to Rs 5,000 are depreciated fully in the
year of purchase.
Premium on leasehold land is amortised over the unexpired period of the
lease.
2.5 Intangible assets and amortisation
Intangible assets includes system and application software. These
intangible assets are recognised only where future economic benefits
attributable to such assets are expected to flow to the Company and the
cost of such assets can be reasonably measured. Software is initially
recognised at cost and carried to subsequent years at cost less
accumulated amortisation and accumulated impairment losses, if any.
The computer software is amortised over an expected benefit period of 3
years on a straight line method (SLM) at the rates prescribed in
Schedule II to the Companies Act 2013.
Intangible assets are derecognised when no future economic benefits are
expected from their use and subsequent disposal.
2.6 Borrowing Costs
General and specific borrowing costs directly attributable to the
acquisition/ construction of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their
intended use, are added to the cost of those assets, until such time as
the assets are substantially ready for their intended use. All other
borrowing costs are recognised in Statement of Profit and Loss in the
period in which they are incurred.
2.7 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset or a group of assets (cash generating unit)
may be impaired. If any such indication exists, the Company estimates
the recoverable amount of the asset or a group of assets. If such
recoverable amount of the asset or the recoverable amount of the cash
generating unit to which the asset belongs is less than its carrying
amount, the carrying amount is reduced to its recoverable amount. The
reduction is treated as an impairment loss and is recognized in the
Statement of profit and loss. If at the balance sheet date there is an
indication that a previously assessed impairment loss no longer exists,
the recoverable amount is reassessed and the asset is reflected at the
recoverable amount subject to a maximum of depreciable historical cost.
2.8 Leases
Lease payments under operating lease are recognised as an expense in
the Statement of profit and loss on a straight line basis over the
lease term.
2.9 Investments
Long term investments are stated at cost, less any other than temporary
diminution in value.
Current investments are carried at lower of cost and fair value,
computed separately in respect of each category of investment.
2.10 Inventories
Inventories include raw materials and consumable stores and spares,
work in progress, manufactured and traded finished goods inventory.
Inventory is valued at the lower of cost and net realisable value.
Cost comprises the purchase price, costs of conversion and other
related costs incurred in bringing the inventories to their present
location and condition. Costs of raw materials and consumable stores
and spares are determined on the basis of the weighted average method.
Cost of finished goods and work in progress include appropriate
proportion of costs of conversion which include variable and fixed
overheads. Fixed production overheads are allocated on the basis of
normal capacity of production facilities. Excise duty on unsold
manufactured goods is included in the value of the finished goods
inventory.
Obsolete, defective and unserviceable inventories are duly provided
for. The comparison of cost and net realisable value is made on an item
to item basis.
2.11 Revenue recognition
Revenue from sale of products is recognised on transfer of all
significant risks and rewards of ownership of the products on to the
customers, which is generally on dispatch of goods.
Service income comprising mainly recoating/ repair of electrolytic
products is recognised as per the terms of the contract with the
customer when the related services are performed and the products are
dispatched to the customer. Income from annual maintenance service
contracts is recognised pro-rata over the period of the contract.
Commission income is recognised when proof of shipment is received from
the supplier.
Revenue from fixed price construction contracts is recognised by
reference to the estimated overall profitability of the contract under
the percentage of completion method. Percentage of completion method is
determined as a proportion of the costs incurred to date to the total
estimated costs. Provision for expected loss is recognised immediately
when it is probable that the total estimated contract costs will exceed
total contract revenue. Revenue recognised in excess of billings is
recorded as unbilled revenue.
Dividend income is recognised when the right to receive the dividend is
established.
Interest income is recognised on the time proportion basis.
2.12 Foreign currency transactions
Transactions denominated in foreign currency are recorded at the
exchange rate prevailing on the date of transactions. Exchange
differences arising on foreign exchange transactions settled during the
period are recognized in the Statement of profit and loss of the
period.
Monetary assets and liabilities in foreign currency, which are
outstanding as at the year-end are translated at the year-end at the
closing exchange rate and the resultant exchange differences are
recognized in the Statement of profit and loss.
2.13 Employee benefits
(a) Short term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short- term employee benefits. These
benefits include compensated absences such as paid annual leave and
sickness leave. The undiscounted amount of short-term employee benefits
expected to be paid in exchange for the services rendered by employees
is recognized during the period.
(b) Post-employment benefits
The Company''s approved superannuation scheme is a defined contribution
plan. The Company also makes specified monthly contributions towards
employee provident fund which is also a defined contribution plan. The
Company''s contribution paid/ payable under these schemes is recognised
as an expense in the Statement of profit and loss during the year in
which the employee renders the related service.
The Company''s gratuity benefit scheme is a defined benefit plan. The
Company''s net obligation in respect of the gratuity benefit scheme is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation at the balance sheet date by an
independent actuary using the Projected Unit Credit Method. Actuarial
gains and losses are recognised immediately in the Statement of profit
and loss.
(c) Other Long-term employment benefits
Compensated absences which are expected to occur beyond twelve months
after the end of the period in which the employee renders the related
services are recognized as a liability at the present value of the
defined benefit obligation which is determined at each balance sheet
date based on an actuarial valuation by an independent actuary using
the Projected Unit Credit Method. Actuarial gains and losses are
recognized immediately in the Statement of profit and loss.
2.14 Taxation
Income tax expense comprises current tax and deferred tax charge or
credit. Provision for current tax is determined as the amount of tax
payable in respect of taxable income for the period in accordance with
the provisions of the Income Tax Act, 1961.
Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and the tax
laws enacted or substantially enacted as on the balance sheet date.
Deferred tax assets other than on unabsorbed tax depreciation and
unabsorbed tax losses are recognized only to the extent that there is a
reasonable certainty of their realization. Deferred tax assets on
unabsorbed tax depreciation and unabsorbed tax losses are recognized
only to the extent that there is virtual certainty of their realization
supported by convincing evidence. Deferred tax assets are reviewed as
at each Balance Sheet date to reassess realization.
2.15 Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Dec 31, 2013
1.1 Basis of preparation of financial statements
These financial statements have been prepared and presented on the
accrual basis of accounting and comply with the Accounting Standards
prescribed in the Companies (Accounting Standards) Rules, 2006 issued
by the Central Government, read with the General Circular 15/2013 dated
13th September, 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013, and the relevant provisions of
the Companies Act, 1956 (''the Act'') and other accounting principles
generally accepted in India, to the extent applicable.
Under Section 211 (3C) of the Companies Act, 1956, which as per
clarification issued by the Ministry of Corporate Affairs, continue to
apply under section 133 of the Companies Act, 2013 (which has
superseded section 211 (3C) of the Companies Act, 1956 with effect
from 12 September, 2013.
1.2 Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
judgments, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities, income
and expenses and the disclosure of contingent liabilities on the date
of the financial statements. Actual results could differ from those
estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Any revision to accounting estimates is recognised
prospectively in current and future periods.
1.3 Current and Non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the following
criteria:
(a) it is expected to be realised in, or is intended for sale or
consumption in, the company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the balance
sheet date; or
(d) it is cash or a cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after the
balance sheet date.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
(a) it is expected to be settled in, the company''s normal operating
cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the balance sheet
date; or
(d) the company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the balance
sheet date.
All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents. Based on
the nature of products and services and the time between the
acquisition of assets for processing and their realisation in cash and
cash equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current- non-current classification of assets
and liabilities.
1.4 Tangible assets and depreciation
Tangible assets are stated at acquisition cost less accumulated
depreciation and impairment loss, if any. The acquisition cost of fxed
assets includes taxes, duties, freight and other incidental expenses
related to bringing the asset to its working condition for its intended
use.
The Company depreciates its fxed assets on Straight Line Method (SLM)
at the rates prescribed in Schedule XIV to the Act, except for existing
assets of plant and machinery procured until 31 December, 2005,
leasehold land and computers (including software classified as
Intangible assets). For additions and disposals, depreciation is
provided pro-rata for the period of use. Fixed assets individually
costing up to Rs. 5,000 are depreciated fully in the year of purchase.
In respect of the existing assets of plant and machinery procured until
31 December, 2005, depreciation is charged on SLM over management''s
estimate of the residual useful life of the respective asset which
varies from 1 to 10 years. However, in respect of these assets, the
depreciation rates prescribed in Schedule XIV to the Act, are
considered as the minimum rates.
Computers are depreciated over an expected benefit period of 3 years on
a straight line basis.
Premium on leasehold land is amortised over the unexpired period of the
lease.
1.5 Intangible assets and amortisation
Intangible assets includes system and application software. These
intangible assets are recognised only where future economic benefits
attributable to such assets are expected to flow to the Company and the
cost of such assets can be reasonably measured. Software is initially
recognised at cost and carried to subsequent years at cost less
accumulated amortisation and accumulated impairment losses, if any.
The computer software is amortised over an expected benefit period of 3
years on a straight line basis.
Intangible assets are derecognised when no future economic benefits are
expected from their use and subsequent disposal.
1.6 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset or a group of assets (cash generating unit)
may be impaired. If any such indication exists, the Company estimates
the recoverable amount of the asset or a group of assets. If such
recoverable amount of the asset or the recoverable amount of the cash
generating unit to which the asset belongs is less than its carrying
amount, the carrying amount is reduced to its recoverable amount. The
reduction is treated as an impairment loss and is recognized in the
Statement of profit and loss. If at the balance sheet date there is an
indication that a previously assessed impairment loss no longer exists,
the recoverable amount is reassessed and the asset is reflected at the
recoverable amount subject to a maximum of depreciable historical cost.
1.7 Leases
Lease payments under operating lease are recognised as an expense in
the Statement of profit and loss on a straight line basis over the lease
term.
1.8 Investments
Long term investments are stated at cost, less any other than temporary
diminution in value.
Current investments are carried at lower of cost and fair value,
computed separately in respect of each category of investment.
1.9 Inventories
Inventories include raw materials and consumable stores and spares,
work in progress, manufactured and traded finished goods inventory.
Inventory is valued at the lower of cost and net realisable value.
Cost comprises the purchase price, costs of conversion and other
related costs incurred in bringing the inventories to their present
location and condition. Costs of raw materials and consumable stores
and spares are determined on the basis of the weighted average method.
Cost of finished goods and work in progress include appropriate
proportion of costs of conversion which include variable and fixed
overheads. Fixed production overheads are allocated on the basis of
normal capacity of production facilities. Excise duty on unsold
manufactured goods is included in the value of the finished goods
inventory.
Obsolete, defective and unserviceable inventories are duly provided
for. The comparison of cost and net realisable value is made on an item
to item basis.
1.10 Revenue recognition
Revenue from sale of products is recognised on transfer of all
significant risks and rewards of ownership of the products on to the
customers, which is generally on dispatch of goods.
Service income comprising mainly recoating/repair of electrolytic
products is recognised as per the terms of the contract with the
customer when the related services are performed and the products are
dispatched to the customer. Income from annual maintenance service
contracts is recognised pro-rata over the period of the contract.
Commission income is recognised when proof of shipment is received from
the supplier.
Revenue from fxed price construction contracts is recognised by
reference to the estimated overall profitability of the contract under
the percentage of completion method. Percentage of completion method is
determined as a proportion of the costs incurred to date to the total
estimated costs. Provision for expected loss is recognised immediately
when it is probable that the total estimated contract costs will exceed
total contract revenue. Revenue recognised in excess of billings is
recorded as unbilled revenue.
Dividend income is recognised when the right to receive the dividend is
established.
Interest income is recognised on the time proportion basis.
1.11 Foreign currency transactions
Transactions denominated in foreign currency are recorded at the
exchange rate prevailing on the date of transactions. Exchange
differences arising on foreign exchange transactions settled during the
period are recognized in the Statement of profit and loss of the period.
Monetary assets and liabilities in foreign currency, which are
outstanding as at the year-end are translated at the year-end at the
closing exchange rate and the resultant exchange differences are
recognized in the Statement of profit and loss.
1.12 Employee benefits
(a) Short term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. These
benefits include compensated absences such as paid annual leave and
sickness leave. The undiscounted amount of short-term employee benefits
expected to be paid in exchange for the services rendered by employees
is recognized during the period.
(b) Post-employment benefits
The Company''s approved superannuation scheme is a defend contribution
plan. The Company also makes specified monthly contributions towards
employee provident fund which is also a defined contribution plan. The
Company''s contribution paid/payable under these schemes is recognised
as an expense in the Statement of profit and loss during the year in
which the employee renders the related service.
The Company''s gratuity benefit scheme is a defined benefit plan. The
Company''s net obligation in respect of the gratuity benefit scheme is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation at the balance sheet date by an
independent actuary using the Projected Unit Credit Method. Actuarial
gains and losses are recognised immediately in the Statement of profit
and loss.
(c) Other Long-term employment benefits
Compensated absences which are expected to occur beyond twelve months
after the end of the period in which the employee renders the related
services are recognized as a liability at the present value of the
defined benefit obligation which is determined at each balance sheet date
based on an actuarial valuation by an independent actuary using the
Projected Unit Credit Method. Actuarial gains and losses are recognized
immediately in the Statement of profit and loss.
1.13 Taxation
Income tax expense comprises current tax and deferred tax charge or
credit. Provision for current tax is determined as the amount of tax
payable in respect of taxable income for the period in accordance with
the provisions of the Income Tax Act, 1961.
Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and the tax
laws enacted or substantially enacted as on the balance sheet date.
Deferred tax assets other than on unabsorbed tax depreciation and
unabsorbed tax losses are recognized only to the extent that there is a
reasonable certainty of their realization. Deferred tax assets on
unabsorbed tax depreciation and unabsorbed tax losses are recognized
only to the extent that there is virtual certainty of their realization
supported by convincing evidence. Deferred tax assets are reviewed as
at each Balance Sheet date to reassess realization.
1.14 Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
b. Rights, preferences and restrictions attached to equity shares
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. The Company declares and pays dividends in Indian rupees.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
During the year ended 31 December, 2013, the amount of per share
dividend recognized as distribution to equity shareholders was Rs. 4
per share (previous year: Rs. 7 per share). The dividend appropriation
for the year ended December 2013 amounted to Rs. 21,234,536 (previous
year: Rs. 37,160,438) plus corporate dividend tax of Rs. 3,609,871
(previous year: Rs. 6,028,352).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
e. Aggregate number of bonus shares issued, shares issued for
consideration other than cash and shares bought back during the period
of fve years immediately preceding the reporting date
Pursuant to the Shareholders'' approval for buy back of equity shares
under Section 77A of the Companies Act, 1956, the Company has bought
back NIL equity shares (previous year: 135,451) through open market
transactions for an aggregate amount of Rs. NIL (previous year: Rs.
13,432,195). The said shares have been subsequently extinguished.
Capital redemption reserve has been created by transfer of Rs. NIL
(previous year: Rs. 1,354,510) from General Reserve being the nominal
value of shares bought back in terms of Section 77AA of the Companies
Act, 1956.
Dec 31, 2012
1.1 Basis of preparation of financial statements
These financial statements have been prepared and presented on the
accrual basis of accounting and comply with the Accounting Standards
prescribed in the Companies (Accounting Standards) Rules, 2006 issued
by the Central Government, the relevant provisions of the Companies
Act, 1956 (''the Act'') and other accounting principles generally
accepted in India, to the extent applicable.
This is the first year of application of the revised Schedule VI to the
Companies Act, 1956 for the preparation of the financial statements of
the Company. The revised Schedule VI introduces some significant
conceptual changes as well as new disclosures. These include
classification of all assets and liabilities into current and
non-current. The previous year figures have also undergone a major
reclassification to comply with the requirements of the revised
Schedule VI.
1.2 Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
judgments, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities, income
and expenses and the disclosure of contingent liabilities on the date
of the financial statements. Actual results could differ from those
estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Any revision to accounting estimates is recognised
prospectively in current and future periods.
1.3 Current and Non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the
following criteria:
(a) it is expected to be realised in, or is intended for sale or
consumption in, the company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the balance
sheet date; or
(d) it is cash or a cash equivalent unless it is restricted from being
exchanged or used to settle a liability for atleast 12 months after
the balance sheet date.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
(a) it is expected to be settled in, the company''s normal operating
cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the balance sheet
date; or
(d) the company does not have an unconditional right to defer
settlement of the liability for atleast 12 months after the balance
sheet date.
All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents.
Based on the nature of products and services and the time between the
acquisition of assets for processing and their realisation in cash and
cash equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current - non-current classification of
assets and liabilities.
1.4 Tangible assets and depreciation
Tangible assets are stated at acquisition cost less accumulated
depreciation and impairment loss, if any. The acquisition cost of fixed
assets includes taxes, duties, freight and other incidental expenses
related to bringing the asset to its working condition for its intended
use.
The Company depreciates its fixed assets on Straight Line Method (SLM)
at the rates prescribed in Schedule XIV to the Act, except for existing
assets of plant and machinery procured until 31 December, 2005,
leasehold land and computers (including software classified as
Intangible assets). For additions and disposals, depreciation is
provided pro-rata for the period of use. Fixed assets individually
costing up to Rs. 5,000 are depreciated fully in the year of purchase.
In respect of the existing assets of plant and machinery procured until
31 December, 2005, depreciation is charged on SLM over management''s
estimate of the residual useful life of the respective asset which
varies from 1 to 10 years. However in respect of these assets, the
depreciation rates prescribed in Schedule XIV to the Act, are
considered as the minimum rates.
Computers is depreciated over an expected benefit period of 3 years on
a straight line basis.
Premium on leasehold land is amortised over the unexpired period of the
lease.
Capital work-in-progress includes the cost of fixed assets that are not
ready to use at the balance sheet date.
1.5 Intangible assets and amortisation
Intangible assets includes system and application software. These
intangible assets are recognised only where future economic benefits
attributable to such assets are expected to flow to the Company and the
cost of such assets can be reasonably measured. Software is initially
recognised at cost and carried to subsequent years at cost less
accumulated amortisation and accumulated impairment losses, if any.
The computer software is amortised over an expected benefit period of 3
years on a straight line basis.
Intangible assets are derecognised when no future economic benefits are
expected from their use and subsequent disposal.
1.6 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset or a group of assets (cash generating unit)
may be impaired. If any such indication exists, the Company estimates
the recoverable amount of the asset or a group of assets. If such
recoverable amount of the asset or the recoverable amount of the cash
generating unit to which the asset belongs is less than its carrying
amount, the carrying amount is reduced to its recoverable amount. The
reduction is treated as an impairment loss and is recognized in the
Statement of profit and loss. If at the balance sheet date there is an
indication that a previously assessed impairment loss no longer exists,
the recoverable amount is reassessed and the asset is reflected at the
recoverable amount subject to a maximum of depreciable historical cost.
1.7 Leases
Lease payments under operating lease are recognised as an expense in
the Statement of profit and loss on a straight line basis over the
lease term.
1.8 Investments
Long term investments are stated at cost, less any other than temporary
diminution in value.
Current investments are carried at lower of cost and fair value,
computed separately in respect of each category of investment.
1.9 Inventories
Inventories include raw materials and consumable stores and spares,
work in progress, manufactured and traded finished goods inventory.
Inventory is valued at the lower of cost and net realisable value.
Cost comprises the purchase price, costs of conversion and other
related costs incurred in bringing the inventories to their present
location and condition. Costs of raw materials and consumable stores
and spares are determined on the basis of the weighted average method.
Cost of finished goods and work in progress include appropriate
proportion of costs of conversion which include variable and fixed
overheads. Fixed production overheads are allocated on the basis of
normal capacity of production facilities. Excise duty on unsold
manufactured goods is included in the value of the finished goods
inventory.
Obsolete, defective and unserviceable inventories are duly provided
for. The comparison of cost and net realisable value is made on an item
to item basis.
1.10 Revenue recognition
Revenue from sale of products is recognised on transfer of all
significant risks and rewards of ownership of the products on to the
customers, which is generally on dispatch of goods.
Service income comprising mainly recoating/ repair of electrolytic
products is recognised as per the terms of the contract with the
customer when the related services are performed and the products are
dispatched to the customer. Income from annual maintenance service
contracts is recognised pro-rata over the period of the contract.
Commission income is recognised when proof of shipment is received from
the supplier.
Revenue from fixed price construction contracts is recognised by
reference to the estimated overall profitability of the contract under
the percentage of completion method. Percentage of completion method is
determined as a proportion of the costs incurred to date to the total
estimated costs. Provision for expected loss is recognised immediately
when it is probable that the total estimated contract costs will exceed
total contract revenue. Revenue recognised in excess of billings is
recorded as unbilled revenue.
Dividend income is recognised when the right to receive the dividend is
established.
Interest income is recognised on the time proportion basis.
1.11 Foreign currency transactions
Transactions denominated in foreign currency are recorded at the
exchange rate prevailing on the date of transactions. Exchange
differences arising on foreign exchange transactions settled during the
period are recognized in the Statement of profit and loss of the
period.
Monetary assets and liabilities in foreign currency, which are
outstanding as at the year-end are translated at the year-end at the
closing exchange rate and the resultant exchange differences are
recognized in the Statement of profit and loss.
1.12 Employee benefits
(a) Short term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. These
benefits include compensated absences such as paid annual leave and
sickness leave. The undiscounted amount of short-term employee benefits
expected to be paid in exchange for the services rendered by employees
is recognized during the period.
(b) Post-employment benefits
The Company''s approved superannuation scheme is a defined contribution
plan. The Company also makes specified monthly contributions towards
employee provident fund which is also a defined contribution plan. The
Company''s contribution paid/payable under these schemes is recognised
as an expense in the Statement of Profit and Loss during the year in
which the employee renders the related service.
The Company''s gratuity benefit scheme is a defined benefit plan. The
Company''s net obligation in respect of the gratuity benefit scheme is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation at the balance sheet date by an
independent actuary using the Projected Unit Credit Method. Actuarial
gains and losses are recognised immediately in the Statement of profit
and loss.
(c) Other Long-term employment benefits
Compensated absences which are expected to occur beyond twelve months
after the end of the period in which the employee renders the related
services are recognized as a liability at the present value of the
defined benefit obligation which is determined at each balance sheet
date based on an actuarial valuation by an independent actuary using
the Projected Unit Credit Method. Actuarial gains and losses are
recognized immediately in the Statement of profit and loss.
1.13 Taxation
Income tax expense comprises current tax and deferred tax charge or
credit. Provision for current tax is determined as the amount of tax
payable in respect of taxable income for the period in accordance with
the provisions of the Income Tax Act, 1961.
Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and the tax
laws enacted or substantially enacted as on the balance sheet date.
Deferred tax assets other than on unabsorbed tax depreciation and
unabsorbed tax losses are recognized only to the extent that there is a
reasonable certainty of their realization. Deferred tax assets on
unabsorbed tax depreciation and unabsorbed tax losses are recognized
only to the extent that there is virtual certainty of their realization
supported by convincing evidence. Deferred tax assets are reviewed as
at each Balance Sheet date to reassess realization.
1.14 Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Dec 31, 2011
1.1 Basis of preparation of financial statements
The financial statements have been prepared and presented under the
historical cost convention, on the accrual basis of accounting and in
accordance with the provisions of the Companies Act, 1956 ('the
Act') and the accounting principles generally accepted in India
("Indian GAAP") and comply with the accounting standards prescribed
in the Companies (Accounting Standards) Rules, 2006 issued by the
Central Government, in consultation with the National Advisory
Committee on Accounting Standards, to the extent applicable.
1.2 Use of estimates
The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the
reported amount of assets and liabilities, revenue and expenses and the
disclosure of contingent liabilities on the date of the financial
statements. Actual results may differ from those estimates. Any
revisions to accounting estimates are recognised prospectively in
current and future periods.
1.3 Tangible assets and depreciation
Tangible assets are stated at acquisition cost less accumulated
depreciation and impairment loss, if any. The acquisition cost of fixed
assets includes taxes, duties, freight and other incidental expenses
related to bringing the asset to its working condition for its intended
use.
The Company depreciates its fixed assets on Straight Line Method (SLM)
at the rates prescribed in Schedule XIV to the Act, except for existing
assets of plant and machinery procured until 31 December 2005,
leasehold land and computers (including software classified as
Intangible assets). For additions and disposals, depreciation is
provided pro-rata for the period of use. Fixed assets individually
costing up to Rs 5,000 are depreciated fully in the year of purchase.
In respect of the existing assets of plant and machinery procured until
31 December 2005, depreciation is charged on SLM over management's
estimate of the residual useful life of the respective asset which
varies from 1 to 10 years. However in respect of these assets, the
depreciation rates prescribed in Schedule XIV to the Act, are
considered as the minimum rates.
Computers is depreciated over an expected benefit period of 3 years on
a straight line basis.
Premium on leasehold land is amortised over the unexpired period of the
lease.
Capital work-in-progress includes the cost of fixed assets that are not
ready to use at the balance sheet date and advances paid to acquire
capital assets before the balance sheet date.
1.4 Intangible assets and amortisation
Intangible assets includes system and application software. These
intangible assets are recognised only where future economic benefits
attributable to such assets are expected to flow to the Company and the
cost of such assets can be reasonably measured. Software is initially
recognised at cost and carried to subsequent years at cost less
accumulated amortisation and accumulated impairment losses, if any.
The computer software is amortised over an expected benefit period of
3 years on a straight line basis.
Intangible assets are derecognised when no future economic benefits are
expected from their use and subsequent disposal.
1.5 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset or a group of assets (cash generating unit)
may be impaired. If any such indication exists, the Company estimates
the recoverable amount of the asset or a group of assets. If such
recoverable amount of the asset or the recoverable amount of the cash
generating unit to which the asset belongs is less than its carrying
amount, the carrying amount is reduced to its recoverable amount. The
reduction is treated as an impairment loss and is recognized in the
profit and loss account. If at the balance sheet date there is an
indication that a previously assessed impairment loss no longer exists,
the recoverable amount is reassessed and the asset is reflected at the
recoverable amount subject to a maximum of depreciable historical cost.
1.6 Leases
Lease payments under operating lease are recognised as an expense in
the statement of profit and loss account on a straight line basis over
the lease term.
1.7 Investments
Long term investments are stated at cost, less any other than temporary
diminution in value.
Current investments are carried at lower of cost and fair value,
computed separately in respect of each category of investment.
1.8 Inventories
Inventories include raw materials and consumable stores and spares,
work in progress, manufactured and traded finished goods inventory.
Inventory is valued at the lower of cost and net realisable value.
Cost comprises the purchase price, costs of conversion and other
related costs incurred in bringing the inventories to their present
location and condition. Costs of raw materials and consumable stores
and spares are determined on the basis of the weighted average method.
Cost of finished goods and work in progress include appropriate
proportion of costs of conversion which include variable and fixed
overheads. Fixed production overheads are allocated on the basis of
normal capacity of production facilities. Excise duty on unsold
manufactured goods is included in the value of the finished goods
inventory.
Obsolete, defective and unserviceable inventories are duly provided
for. The comparison of cost and net realisable value is made on an item
to item basis.
1.9 Revenue recognition
Revenue from sale of products is recognised on transfer of all
significant risks and rewards of ownership of the products on to the
customers, which is generally oh dispatch of goods.
Service income comprising mainly recoating/ repair of electrolytic
products is recognised as per the terms of the contract with the
customer when the related services are performed and the products are
dispatched to the customer. Income from annual maintenance service
contracts is recognised pro-rata over the period of the contract.
Commission income is recognised when proof of shipment is received from
the supplier. .
Revenue from fixed price construction contracts is recognised by
reference to the estimated overall profitability of the contract under
the percentage of completion method. Percentage of completion method is
determined as a proportion of the costs incurred to date to the total
estimated costs. Provision for expected loss is recognised immediately
when it is probable that the total estimated contract costs will exceed
total contract revenue. Revenue recognised in excess of billings is
recorded as unbilled revenue.
Dividend income is recognised when the right to receive the dividend is
established.
Interest income is recognised on the time proportion basis.
1.10 Foreign currency transactions
Transactions denominated in foreign currency are recorded at the
exchange rate prevailing on the date of transactions. Exchange
differences arising on foreign exchange transactions settled during the
period are recognized in the Profit and Loss account of the period.
Monetary assets and liabilities in foreign currency, which are
outstanding as at the year-end are translated at the year-end at the
closing exchange rate and the resultant exchange differences are
recognized in the Profit and Loss Account.
1.11 Employee benefits
(a) Short term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short- term employee benefits. These
benefits include compensated absences such as paid annual leave and
sickness leave. The undiscounted amount of short-term employee benefits
expected to be paid in exchange for the services rendered by employees
is recognized during the period.
(b) Post-employment benefits
The Company's approved superannuation scheme is a defined
contribution plan. The Company also makes specified monthly
contributions towards employee provident fund which is also a defined
contribution plan. The Company's contribution paid/ payable under
these schemes is recognised as an expense in the Profit and Loss
account during the year in which the employee renders the related
service.
The Company's gratuity benefit scheme is a defined benefit plan. The
Company's net obligation in respect of the gratuity benefit scheme is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation at the balance sheet date by an
independent actuary using the Projected Unit Credit Method. Actuarial
gains and losses are recognised immediately in the Profit and Loss
account.
(c) Other Long-term employment benefits
Compensated absences which are expected to occur beyond twelve months
after the end of the period in which the employee renders the related
services are recognized as a liability at the present value of the
defined benefit obligation which is determined at each balance sheet
date based on an actuarial valuation by an independent actuary using
the Projected Unit Credit Method. Actuarial gains and losses are
recognized immediately in the Profit and Loss account.
1.12 Taxation
Income tax expense comprises current tax and deferred tax charge or
credit. Provision for current tax is determined as the amount of tax
payable in respect of taxable income for the period in accordance with
the provisions of the Income Tax Act, 1961. The final tax liability
will be determined on the basis of the results for the period 1 April
2011 to 31 March 2012, being the tax year of the Company.
The deferred tax charge or credit is recognised using enacted or
substantively enacted rates. In the case of unabsorbed depreciation or
carry forward losses, deferred tax assets are recognised only to the
extent there is virtual certainty of realisation of such assets. Other
deferred tax assets are recognised only to the extent there is
reasonable certainty of realisation in future. Such assets are reviewed
as at each Balance Sheet date to reassess realisation.
1.13 Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure'is made.
Note:
1) Of the above 2,849,500 (previous year 2,849,500) equity shares of
Rs. 10 each are held by Oronzio De Nora International B. V., the
holding company.
2) Pursuant to the Shareholders' approval for buyback of equity
shares under section 77A of the Companies Act, 1956, the Company has
bought back 111,049 equity shares through open market transactions for
an aggregate amount of Rs. 9,447,490, by utilising Share premium
account to the extent of Rs. 8,337,000. The said shares have been
subsequently extinguished. Capital Redemption Reserve has been created
by transfer of Rs. 1,110,490 from General reserve being the nominal
value of shares bought back in terms of section 77AA of the Companies
Act, 1956.
Dec 31, 2010
1.1 Basis of preparation of financial statements
The financial statements have been prepared and presented under the
historical cost convention, on the accrual basis of accounting and in
accordance with the provisions of the Companies Act, 1956 (the Act)
and the accounting principles generally accepted in India ("Indian
GAAP") and comply with the accounting standards prescribed in the
Companies (Accounting Standards) Rules, 2006 issued by the Central
Government, in consultation with the National Advisory Committee on
Accounting Standards, to the extent applicable.
1.2 Use of estimates
The preparation of financial statements in accordance with GAAP requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities, revenue and expenses and the
disclosure of contingent liabilities on the date of the financial
statements. Actual results may differ from those estimates. Any
revisions to accounting estimates are recognised prospectively in
current and future periods.
1.3 Tangible assets and depreciation
Tangible assets are stated at acquisition cost less accumulated
depreciation and impairment loss, if any. The acquisition cost of fixed
assets includes taxes, duties, freight and other incidental expenses
related to bringing the asset to its working condition for its intended
use.
The Company depreciates its fixed assets on Straight Line Method (SLM)
at the rates prescribed in Schedule XIV to the Act, except for existing
assets of plant and machinery procured until 31 December 2005,
leasehold land and computers (including sofitware classifed as
Intangible assets). For additions and disposals, depreciation is
provided pro-rata for the period of use. Fixed assets individually
costing up to Rs. 5,000 are depreciated fully in the year of purchase.
In respect of the existing assets of plant and machinery procured until
31 December 2005, depreciation is charged on SLM over managements
estimate of the residual useful life of the respective asset which
varies from 1 to 10 years. However in respect of these assets, the
depreciation rates prescribed in Schedule XIV to the Act, are
considered as the minimum rates.
Premium on leasehold land is amortised over the unexpired period of the
lease.
Hitherto, the Company provided for depreciation on computers (including
sofitware) on SLM over a period of 6 years based on the rates prescribed
under Schedule XIV to the Act. With effect from 1 January 2010, the
management has revised the remaining useful life of these assets and
provided depreciation on its remaining revised useful life of 3 years.
Accordingly, the Company has provided higher depreciation of Rs.
838,335 during the year and consequently net Profit for the year before
tax is lower by this amount.
Capital work-in-progress includes the cost of fixed assets that are not
ready to use at the balance sheet date and advances paid to acquire
capital assets before the balance sheet date.
1.4 Intangible assets and amortisation
Intangible assets includes system and application sofitware. These
intangible assets are recognised only where future economic benefits
attributable to such assets are expected to flow to the Company and the
cost of such assets can be reasonably measured. Sofitware is initially
recognised at cost and carried to subsequent years at cost less
accumulated amortisation and accumulated impairment losses, if any.
The computer sofitware is amortised over an expected benefit period of 3
years on a straight line basis. Refer note 2.3 above.
Intangible assets are derecognised when no future economic benefits are
expected from their use and subsequent disposal.
1.5 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset or a group of assets (cash generating unit)
may be impaired. If any such indication exists, the Company estimates
the recoverable amount of the asset or a group of assets. If such
recoverable amount of the asset or the recoverable amount of the cash
generating unit to which the asset belongs is less than its carrying
amount, the carrying amount is reduced to its recoverable amount. The
reduction is treated as an impairment loss and is recognized in the
Profit and loss account. If at the balance sheet date there is an
indication that a previously assessed impairment loss no longer exists,
the recoverable amount is reassessed and the asset is refected at the
recoverable amount subject to a maximum of depreciable historical cost.
1.6 Leases
Lease payments under operating lease are recognised as an expense in
the statement of Profit and loss account on a straight line basis over
the lease term.
1.7 Investments
Long term investments are stated at cost, less any other than temporary
diminution in value.
Current investments are carried at lower of cost and fair value,
computed separately in respect of each category of investment.
1.8 Inventories
Inventories include raw materials and components, work in progress,
manufactured and traded fnished goods inventory. Inventory is valued
at the lower of cost and net realisable value.
Cost comprises the purchase price, costs of conversion and other
related costs incurred in bringing the inventories to their present
location and condition. Costs of raw materials and consumable stores
and spares are determined on the basis of the weighted average method.
Cost of fnished goods and work in progress include appropriate
proportion of costs of conversion which include variable and fixed
overheads. Fixed production overheads are allocated on the basis of
normal capacity of production facilities. Excise duty on unsold
manufactured goods is included in the value of the fnished goods
inventory.
Obsolete, defective and unserviceable inventories are duly provided
for. The comparison of cost and net realisable value is made on an item
to item basis.
1.9 Revenue recognition
Revenue from sale of products is recognised on transfer of all
signifcant risks and rewards of ownership of the products on to the
customers, which is generally on dispatch of goods.
Service income comprising mainly recoating/repair of electrolytic
products is recognised as per the terms of the contract with the
customer when the related services are performed and the products are
dispatched to the customer. Income from annual maintenance service
contracts is recognised pro-rata overthe period of the contract.
Commission income is recognised when proof of shipment is received from
the supplier.
Dividend income is recognised when the right to receive the dividend is
established.
Interest income is recognised on the time proportion basis.
1.10 Foreign currency transactions
Transactions denominated in foreign currency are recorded at the
exchange rate prevailing on the date of transactions. Exchange
differences arising on foreign exchange transactions settled during the
period are recognized in the Profit and Loss account of the period.
Monetary assets and liabilities in foreign currency, which are
outstanding as at the year-end are translated at the year-end at the
closing exchange rate and the resultant exchange differences are
recognized in the Profit and Loss Account.
1.11 Employee benefits
(a) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classifed as short-term employee benefits. These benefits
include compensated absences such as paid annual leave and sickness
leave. The undiscounted amount of short-term employee benefits expected
to be paid in exchange for the services rendered by employees is
recognized during the period.
(b) Post-employment benefits
The Companys approved superannuation scheme is a defined contribution
plan. The Company also makes specifed monthly contributions towards
employee provident fund which is also a defined contribution plan. The
Companys contribution paid/ payable under these schemes is recognised
as an expense in the Profit and Loss account during the year in which
the employee renders the related service.
The Companys gratuity benefit scheme is a defined benefit plan. The
Companys net obligation in respect of the gratuity benefit scheme is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation at the balance sheet date by an
independent actuary using the Projected Unit Credit Method. Actuarial
gains and losses are recognised immediately in the Profit and Loss
account.
(c) Other Long-term employment benefits
Compensated absences which are expected to occur beyond twelve months
afiter the end of the period in which the employee renders the related
services are recognized as a liability at the present value of the
defined benefit obligation which is determined at each balance sheet date
based on an actuarial valuation by an independent actuary using the
Projected Unit Credit Method. Actuarial gains and losses are recognized
immediately in the Profit and Loss account.
1.12 Taxation
Income tax expense comprises current tax, deferred tax charge or credit
and fringe benefit tax. Provision for current tax is determined as the
amount of tax payable in respect of taxable income for the period in
accordance with the provisions of the Income Tax Act, 1961. The fnal
tax liability will be determined on the basis of the results for the
period 1 April 2010 to 31 March 2011, being the tax year of the
Company.
The deferred tax charge or credit is recognised using enacted or
substantively enacted rates. In the case of unabsorbed depreciation or
carry forward losses, deferred tax assets are recognised only to the
extent there is virtual certainty of realisation of such assets. Other
deferred tax assets are recognised only to the extent there is
reasonable certainty of realisation in future. Such assets are reviewed
as at each Balance Sheet date to reassess realisation.
Provision for Fringe benefits Tax was made on the basis of the
applicable rates on the taxable value of eligible expenses of the
Company as prescribed under the Income Tax Act, 1961 and has been
abolished w.e.f. 1 April 2009.
1.13 Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Dec 31, 2009
1.1 Basis of preparation of financial statements
The financial statements have been prepared and presented under the
historical cost convention, on the accrual basis of accounting and in
accordance with the provisions of the Companies Act, 1956 (the Act)
and the accounting principles generally accepted in India ("Indian
GAAP") and comply with the accounting standards prescribed in the
Companies (Accounting Standards) Rules, 2006 issued by the Central
Government, in consultation with the National Advisory Committee on
Accounting Standards, to the extent applicable.
1.2 Use of estimates
The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the
reported amount of assets and liabilities and the disclosure of
contingent liabilities on the date of the financial statements. Actual
results may differ from those estimates. Any revisions to accounting
estimates are recognised prospectively in current and future periods.
1.3 Tangible assets and depreciation
Tangible assets are stated at acquisition cost less accumulated
depreciation and impairment loss, if any. The acquisition cost of fixed
assets includes taxes, duties, freight and other incidental expenses
related to bringing the asset to its working condition for its intended
use.
The Company depreciates its fixed assets on Straight Line Method (SLM)
at the rates prescribed in Schedule XIV to the Act, except for existing
assets of plant and machinery procured until 31 December 2005 and
leasehold land. For additions and disposals, depreciation is provided
pro-rata for the period of use. Fixed assets individually costing up to
Rs. 5,000 are depreciated fully in the year of purchase.
In respect of the existing assets of plant and machinery procured until
31 December 2005, depreciation is charged on SLM over managements
estimate of the residual useful life of the respective asset which
varies from 1 to 10 years. However in respect of these assets, the
depreciation rates prescribed in Schedule XIV to the Act, are
considered as the minimum rates.
Premium on leasehold land is amortised over the unexpired period of the
lease.
Capital work-in-progress includes the cost of fixed assets that are not
ready to use at the balance sheet date and advances paid to acquire
capital assets before the balance sheet date.
1.4 Intangible assets and amortisation
Intangible assets includes system and application software. These
intangible assets are recognised only where future economic benefits
attributable to such assets are expected to flow to the Company and the
cost of such assets can be reasonably measured. Software is initially
recognised at cost and carried to subsequent years at cost less
accumulated amortisation and accumulated impairment losses, if any.
The computer software is amortised over an expected benefit period of 6
years on a straight line basis.
Intangible assets are derecognised when no future economic benefits are
expected from their use and subsequent disposal.
1.5 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset or a group of assets
(Cash generating unit) may be impaired. If any such indication exists,
the Company estimates the recoverable amount of the asset or a group of
assets. If such recoverable amount of the asset or the recoverable
amount of the cash generating unit to which the asset belongs is less
than its carrying amount, the carrying amount is reduced to its
recoverable amount. The reduction is treated as an impairment loss and
is recognized in the profit and loss account. If at the balance sheet
date there is an indication that a previously assessed impairment loss
no longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount subject to a maximum of depreciable
historical cost.
1.6 Leases
Lease payments under operating lease are recognised as an expense in
the statement of profit and loss account on a straight line basis over
the lease term.
1.7 Investments
Long term investments are stated at cost, less any other than temporary
diminution in value.
Current investments are carried at lower of cost and fair value,
computed separately in respect of each category of investment.
1.8 Inventories
Inventories include raw materials and components, work in progress,
manufactured and traded finished goods inventory. Inventory is valued
at the lower of cost and net realisable value.
Cost comprises the purchase price, costs of conversion and other
related costs incurred in bringing the inventories to their present
location and condition. Costs of raw materials and consumable stores
and spares are determined on the basis of the weighted average method.
Cost of finished goods and work in progress include appropriate
proportion of costs of conversion which include variable and fixed
overheads. Fixed production overheads are allocated on the basis of
normal capacity of production facilities. Excise duty on unsold
manufactured goods is included in the value of the finished goods
inventory.
Obsolete, defective and unserviceable inventories are duly provided
for. The comparison of cost and net realisable value is made on an item
to item basis.
1.9 Revenue recognition
Revenue from sale of products is recognised on transfer of all
significant risks and rewards of ownership of the products on to the
customers, which is generally on dispatch of goods.
Service income comprising mainly recoating/ repair of electrolytic
products is recognised as per the terms of the contract with the
customer when the related services are performed and the products are
dispatched to the customer. Income from annual maintenance service
contracts is recognised pro-rata over the period of the contract.
Commission income is recognised when proof of shipment is received from
the supplier.
Dividend income is recognised when the right to receive the dividend is
established.
Interest income is recognised on the time proportion basis.
1.10 Foreign currency transactions
Transactions denominated in foreign currency are recorded at the
exchange rate prevailing on the date of transactions. Exchange
differences arising on foreign exchange transactions settled during the
period are recognized in the Profit and Loss account of the period.
Monetary assets and liabilities in foreign currency, which are
outstanding as at the year-end are translated at the year- end at the
closing exchange rate and the resultant exchange differences are
recognized in the Profit and Loss Account.
1.11 Employee benefits
(a) Short term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. These
benefits include compensated absences such as paid annual leave and
sickness leave. The undiscounted amount of short-term employee benefits
expected to be paid in exchange for the services rendered by employees
is recognized during the period.
(b) Post-employment benefits
The Companys approved superannuation scheme is a defined contribution
plan. The Company also makes specified monthly contributions towards
employee provident fund which is also a defined contribution plan. The
Companys contribution paid/ payable under these schemes is recognised
as an expense in the Profit and Loss account during the year in which
the employee renders the related service.
The Companys gratuity benefit scheme is a defined benefit plan. The
Companys net obligation in respect of the gratuity benefit scheme is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation at the balance sheet date by an
independent actuary using the Projected Unit Credit Method. Actuarial
gains and losses are recognised immediately in the Profit and Loss
account.
(c) Other Long-term employment benefits
Compensated absences which are expected to occur within twelve months
after the end of the period in which the employee renders the related
services are recognized as a liability at the present value of the
defined benefit obligation which is determined at each balance sheet
date based on an actuarial valuation by an independent actuary using
the Projected Unit Credit Method. Actuarial gains and losses are
recognized immediately in the Profit and Loss account.
1.12 Taxation
Income tax expense comprises current tax, deferred tax charge or credit
and fringe benefit tax. Provision for current tax is determined as the
amount of tax payable in respect of taxable income for the period in
accordance with the provisions of the Income Tax Act, 1961. The final
tax liability will be determined on the basis of the results for the
period 1 April 2009 to 31 March 2010, being the tax year of the
Company.
The deferred tax charge or credit is recognised using enacted or
substantively enacted rates. In the case of unabsorbed depreciation or
carry forward losses, deferred tax assets are recognised only to the
extent there is virtual certainty of realisation of such assets. Other
deferred tax assets are recognised only to the extent there is
reasonable certainty of realisation in future. Such assets are reviewed
as at each Balance Sheet date to reassess realisation.
Provision for Fringe Benefits Tax is made on the basis of the
applicable rates on the taxable value of eligible expenses of the
Company as prescribed under the Income-tax Act, 1961
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Stocks To Buy Today, Dec 19: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Friday -
Stocks To Buy Today, Dec 18: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday -
Stocks To Buy Today, Dec 17: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
Stocks To Buy Today, Dec 16: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
India Stock Market Weekly Review: Nifty and Sensex Fall as Caution Spreads -
Stocks To Buy Today, Dec 15: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday
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Stocks To Buy Today, Dec 12: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Friday -
Market Outlook 2026: Kotak Securities Sees Nifty 50 at 30,000; THESE 4 Sectors Lead Rally, Gold To Stay Strong -
Stocks To Buy Today, Dec 10: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
D-Street Bleeds For 2nd Day! Sensex Slumps 678 Pts; Nifty Cracks 25,800; Why Stock Market Is Falling Today? -
Stocks To Buy Today, Dec 9: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
Stocks To Buy Today, Dec 8: Top 4 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday -
Stock Market Alert! Major Pre-Open Session Change From Dec 8: Full Timings, Rules & All You Need To Know -
Bank Nifty Surges: RBI’s 25 bps Rate Cut Triggers Strong Upside in Major Banking Stocks -
Closing Bell: Sensex Ends 158 pts Higher, Nifty Climbs Above 26,000; Hero MotoCorp, HAL Up 2% Each -
Stocks To Buy Today, Dec 4: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday
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