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Accounting Policies of Diamines & Chemicals Ltd. Company
Mar 31, 2025
2. Material Accounting policies
(i) Property, Plant and Equipment
Property, Plant & Equipment (PPE) comprises of Tangible assets and Capital Work in progress.
PPE are stated at cost, net of tax/duty credit availed, if any, after reducing accumulated depreciation
and accumulated impairment losses, if any; until the date of the Balance Sheet. The cost of PPE
comprises of its purchase price or its construction cost (net of applicable tax credit, if any), any cost
directly attributable to bring the asset to the location and condition necessary for it to be capable
of operating in the manner intended by the management. Direct costs are capitalized until the
asset is ready for use and includes borrowing cost capitalised in accordance with the Companyâs
accounting policy.
Capital work in progress includes the cost of PPE that are not yet ready for the intended use.
An item of PPE is de-recognised 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 the disposal or retirement
of an item of PPE is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in the Standalone Statement of Profit and Loss.
As per internal technical evaluation carried out by the management, the management of the
company believes that its Property, Plant & Equipment are of such nature that separate components
are not distinctly identifiable having different useful life. And therefore, Component level accounting
and reporting is not practically feasible for the company.
Depreciation of these PPE commences when the assets are ready for their intended use.
Depreciation is provided on the cost of Property, Plant and Equipment (other than Freehold land)
less their estimated residual value, using the straight-line method over the useful life of PPE as
stated in the Schedule II to the Companies Act, 2013 or based on internal technical evaluation.The
management believes that the useful lives as assessed best represent the period over which
management expects to use these assets.
The estimated useful lives, residual values and depreciation method are reviewed on an annual
basis and if necessary, changes in estimates are accounted for prospectively.
Depreciation on additions/deletions to PPE during the year is provided for on a pro-rata basis with
reference to the date of additions/deletions.
The low value assets costing Rs. 25,000/- or less are fully depreciated (net of residual value) in
the year of purchase.
Depreciation on subsequent expenditure on PPE arising on account of capital improvement or
other factors is provided for prospectively over the remaining useful life.
Leasehold improvements are amortized over the period of the lease.
Freehold land is not depreciated.
(ii) Intangible Assets
Intangible assets with finite useful life acquired separately, are recognized only if it is probable
that future economic benefits that are attributable to the assets will flow to the enterprise and the
cost of assets can be measured reliably. The intangible assets are recorded at cost and are
carried at cost less accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized over the estimated period of benefit, not exceeding ten years.
Intangible asset is derecognized on disposal, or when no future economic benefits are expected
from use or disposal. Gains or losses arising from derecognition of an intangible asset are
determined as the difference between the net disposal proceeds and the carrying amount of the
asset and recognized in the Standalone Statement of Profit and Loss when the asset is
derecognised.
(iii) Impairment of non-financial assets
The Company reviews at each reporting period whether there is any indication that an asset may
be impaired. If any such indication exists, the company estimates the recoverable amount of the
asset. 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
Standalone Statement of Profit & Loss. If at the reporting period, there is an indication that there is
change in the previously assessed impairment loss, the recoverable amount is reassessed and
the asset is reflected at the lower of its recoverable amount and the carrying amount that is
determined, net of depreciation, had no impairment loss been recognized for the asset in prior
years.
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.
An assessment is made at the end of each reporting period to see if there are any indications that
impairment losses recognized earlier may no longer exist or may have come down. The impairment
loss is reversed, if there has been a change in the estimates which has the effect of increasing the
assetâs recoverable amount since the previous impairment loss was recognised. If it is so, the
carrying amount of the asset is increased to the lower of its recoverable amount and the carrying
amount that has been determined, net of depreciation, had no impairment loss been recognized
for the asset in prior years. After a reversal, the depreciation charge is adjusted in future periods
to allocate the assetâs revised carrying amount, less any residual value, on a systematic basis
over its remaining useful life. Reversals of Impairment loss are recognized in the Standalone
Statement of Profit and Loss.
(iv) Investment in Subsidiary
The Company records the Investment in equity instrument of Subsidiary at cost less accumulated
impairment losses, if any. Where an indication of impairment exists, the carrying amount of the
investment is assessed and written down immediately to its recoverable amount. On disposal of
investment in subsidiary, the difference between net disposal proceeds and the carrying amounts
are recognised in the standalone statement of profit and loss.
Investment in Associate
The Company records the investments in associates at cost less impairment loss, if any.
On disposal of investment in associate, the difference between net disposal proceeds and the
carrying amounts (including corresponding value of dilution in deemed investment) are recognized
in the Statement of Profit and Loss.
(v) Share-based payments
The grant date fair value of options granted to employees is recognised as an employee expense,
with a corresponding increase in equity, on a straight -line basis, over the vesting period, based
on the Companyâs estimate of equity instruments that will eventually vest. At the end of each
reporting period, the Company revises its estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss
such that the cumulative expense reflects the revised estimate, with a corresponding adjustment
to the equity-settled employee benefits reserves.
(vi) Inventories
Inventories are valued at lower of cost and net realisable value after providing for impairment and
other losses, where considered necessary. The basis of determining the value of each class of
inventory is as follows:
(vii) Revenue and Income recognition:
(a) Revenue from Contracts with Customers
Revenues from sale of goods or services are recognised upon transfer of control of the
goods or services to the customer in an amount that reflects the consideration which the
company expects to receive in exchange for those goods or services.
Revenue is measured at the transaction price of the consideration received or receivable
duly adjusted for variable consideration and customerâs right to return the goods and the
same represents amounts receivable for goods and services provided in the normal course
of business. Revenue also excludes taxes collected from customers. Any retrospective revision
in prices is accounted for in the year of such revision.
Revenue is recognised at a point in time on accrual basis as per the terms of the contract,
when there is no uncertainty as to measurement or collectability of consideration. When
there is uncertainty as to measurement or ultimate collectability, revenue recognition is
postponed until such uncertainty is resolved.
When sales discount and rebate arrangements result in variable consideration, appropriate
estimates are made and estimated variable consideration is recognised as a deduction from
revenue at the point of sale (to the extent that it is highly probable that a significant reversal
in the amount of cumulative revenue recognised will not be required). The Company typically
uses the expected value method for estimating variable consideration, reflecting that such
contracts have similar characteristics and a range of possible outcomes.
The contract asset or a contract liability is recognised when either party to a contract has
performed, depending on the relationship between the entityâs performance and the
customerâs payment. When the company has a present unconditional rights to consideration,
it is recognised separately as a receivable.
(b) Interest Income
Interest on investments is booked on a time proportion basis taking into account the amounts
invested and the rate of interest.
(c ) Dividend Income
Dividend income is recognized when the right to receive the same is established.
(d) Export Incentives
Export incentives (Duty Drawback Scheme benefits) are accrued in the year when the right
to receive the same is established in respect of exports made and are accounted to the
extent there is no significant uncertainty about the measurability and ultimate realization/
utilization of such benefits/ duty credit.
(e) other Income
Other income is recognized on accrual basis except when realization of such income is
uncertain.
(viii) Foreign Exchange Transactions
Transactions in currencies other than the Companyâs functional currency (foreign currencies) are
recognized at the spot exchange rates prevailing at the dates of the transactions. At the end of
each reporting period, monetary items denominated in foreign currencies are translated using
closing exchange rate prevailing on the last day of the reporting period.
Non-monetary items which are carried in terms of historical cost denominated in a foreign currency
are reported using the exchange rate at the date of transaction.
Exchange differences on monetary items are recognized in the Standalone Statement of Profit
and Loss in the period in which they arise.
(ix) Leases
As a lessee
The Companyâs lease assets primarily consist of lease for land. The Company assesses whether
a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration. To assess whether a contract conveys the right to control the use of an identified
asset, the Company assesses whether:
- the contract involves the use of an identified asset;
- the Company has substantially all of the economic benefits from use of the asset through the
period of the lease and
- the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a lease liability for all lease
arrangements in which it is a lessee, except for leases with a term of twelve months or less (short¬
term leases) and low value leases and corresponding Right-of-use Asset. For these short-term
and low value leases, the Company recognises the lease payments as an operating expense on
a straight-line basis over the term of the lease.
The Right-of-use Assets are initially recognized at cost, which comprises the initial amount of the
lease liability adjusted for any lease payments made at or prior to the commencement date of the
lease plus any initial direct costs less any lease incentives. They are subsequently measured at
cost less accumulated depreciation and impairment losses and adjusted for any remeasurement
of the lease liability.
Right-of-use Assets are depreciated on a straight-line basis over the shorter of the lease term and
useful life of the underlying asset.
The lease liability is initially measured at amortized cost at the present value of the future lease
payments. The lease payments are discounted using the interest rate implicit in the lease or, if not
readily determinable, using the incremental borrowing rates in the country of domicile of these
leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of
use asset if the Company changes its assessment if whether it will exercise an extension or a
termination option.
(x) Employees Benefits
Post Employment Benefit
(i) Defined Contribution Plan
The companyâs contribution to defined contribution plan paid/payable for the year is charged
to the Standalone Statement of Profit and loss.
(ii) Defined Benefit Plan
The liabilities towards defined benefit schemes are determined using the Projected Unit
Credit method. Actuarial valuation under the Projected Unit Credit method are carried out at
the balance sheet date. Remeasurement gains/losses arising from experience adjustments
and changes in actuarial assumptions are recognised in the period in which they occur in
Other Comprehensive Income (OCI). These gains/losses which are recognised in OCI are
reflected in retained earnings and are not reclassified to Profit or Loss. Past service cost is
recognized immediately to the extent that the benefits are already vested and otherwise it is
amortized on straight-line basis over the remaining average period until the benefits become
vested.
The retirement benefit obligation recognised in the balance sheet represents the present
value of the defined benefit obligation as reduced by plan assets. The plan assets are
measured at fair value.
(iii) Short Term Employee Benefits
Short-term employee benefits expected to be paid in exchange for the services rendered by
employees are recognized undiscounted during the period employee renders services.
These benefits include salaries, wages, bonus, performance incentives, etc.
(iv) Other Long Term Employee Benefits
Compensated absences which are not expected to occur within twelve months after the end
of the period in which the employee renders the related services are recognized as an
actuarially determined liability at present value of the defined benefit obligation at the balance
sheet date, using Projected Unit Credit method.
(xi) Borrowing Costs
Borrowing costs are interest and ancillary costs incurred in connection with the arrangement of
borrowings.
General and specific borrowing costs attributable to acquisition and construction of qualifying
assets is added to the cost of the assets upto the date the asset is ready for its intended use. A
qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its
intended use Capitalisation of borrowing costs is suspended and charged to the Standalone
Statement of Profit and Loss during extended periods when active development activity on the
qualifying assets is interrupted. All other borrowing costs are recognised in the Standalone
Statement of Profit and Loss in the period in which they are incurred.
(xii) Statement of Cash Flows
Standalone Statement of Cash flows are reported using the indirect method, whereby profit before
tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past
or future operating cash receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows are segregated into operating, investing and
financing activities.
(xiii) Income Taxes
Income tax expense represents the sum of the current tax and deferred tax.
(i) Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from
âprofit before taxâ as reported in the Standalone Statement of Profit and Loss because of
items of income or expense that are taxable or deductible in other years and items that are
never taxable or deductible. The Companyâs current tax is calculated using tax rates and
laws that have been enacted or substantively enacted by the end of the reporting period.
(ii) Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets
and liabilities in the Standalone Financial Statements and the corresponding tax bases used
in the computation of taxable profit. Deferred tax liabilities are generally recognized for all
taxable temporary differences. Deferred tax assets are generally recognized for all deductible
temporary differences to the extent that it is probable that taxable profits will be available
against which those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period
and reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the deferred tax asset to be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in
the period in which the liability is settled or the asset realized, based on tax rates (and tax
laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that
would follow from the manner in which the Company expects, at the end of the reporting
period, to recover or settle the carrying amount of its assets and liabilities.
The Company offsets tax assets and liabilities, where it has a legally enforceable right to set
off the recognized amounts and where it intends either to settle on a net basis, or to realize
the asset and settle the liability simultaneously.
(iii) Current and Deferred Tax Expense for the Year
Current and deferred tax expense is recognized in the Standalone Statement of Profit and
Loss, except when they relate to items that are recognized in other comprehensive income
or directly in equity, in which case, the current and deferred tax are also recognized in other
comprehensive income or directly in equity respectively.
(xiv) Financial Instruments
Financial assets and Financial liabilities are recognised when the Company becomes a party to
the contractual provisions of the instruments.
Initial Recognition:
Financial assets and Financial liabilities are initially measured at fair value. Transaction costs that
are directly attributable to the acquisition or issue of financial assets and financial liabilities (other
than financial assets and financial liabilities at Fair Value through Profit or Loss) are added to or
deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised in the Standalone Statement of Profit
and Loss. However, trade receivables which is a financial asset that do not contain a significant
financing component are measured at transaction price.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value
through other comprehensive income (âFVTOCIâ) or fair value through profit or loss (âFVTPLâ) on
the basis of following:
¦ the entityâs business model for managing the financial assets; and
¦ the contractual cash flow characteristics of the financial assets.
Amortised Cost:
A financial asset shall be classified and measured at amortised cost, if both of the following
conditions are met:
¦ the financial asset is held within a business model whose objective is to hold financial assets
in order to collect contractual cash flows, and
¦ the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Fair Value through OCI:
A financial asset shall be classified and measured at FVTOCI, if both of the following conditions
are met:
¦ the financial asset is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling financial assets, and
¦ the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Fair Value through Profit or Loss:
A financial asset shall be classified and measured at FVTPL unless it is measured at amortised
cost or at FVTOCI.
All recognised financial assets are subsequently measured in their entirety at either amortised
cost or fair value, depending on the classification of the financial assets.
Fair Value Measurement
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 under current market conditions.
The Company categories assets and liabilities measured at fair value into one of three levels
depending on the ability to observe inputs employed in their measurement which are described
as follows:
(i) Level 1: Quoted Prices (unadjusted) in active markets for identical assets or liabilities
(ii) Level 2: inputs are observable, either directly or indirectly, other than quoted prices included
within level 1 for the asset or liability.
(iii) Level 3: inputs are unobservable for the asset or liability reflecting significant modifications
to observable related market data or Companyâs assumptions about pricing by market
participants.
For assets and liabilities that are recognised in the Standalone Financial Statements on a recurring
basis, the Company determines whether transfers have occurred between levels in the hierarchy
by re-assessing categorisation (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period. contract with customers and it is
being satisfied at a point in time.
Impairment of financial assets:
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for
measurement and recognition of impairment loss on the following financial assets and credit risk
exposure:
Financial Assets are measured at amortised cost e.g., deposits, trade receivables and bank
balance
Simplified Approach
The Company follows âsimplified approachâ for recognition of impairment loss allowance on Trade
Receivables.
The application of simplified approach does not require the Company to track changes in credit
risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting
date, right from its initial recognition.
General Approach
For recognition of impairment loss on other financial assets and risk exposure, the Company
determines that whether there has been a significant increase in the credit risk since initial
recognition. If credit risk has not increased significantly, 12-months ECL is used to provide for
impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a
subsequent period, credit quality of the instrument improves such that there is no longer a significant
increase in credit risk since initial recognition, then the entity reverts to recognising impairment
loss allowance based on 12-months ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the
expected life of a financial instrument. The 12-months ECL is a portion of the lifetime ECL which
results from default events that are possible within 12 months after the reporting date.
As a practical expedient, the Company uses a provision matrix to determine impairment loss
allowance on portfolio of its trade receivables. The provision matrix is based on its historically
observed default rates over the expected life of the trade receivables and is adjusted for forward¬
looking estimates. At every reporting date, the historical observed default rates are updated and
changes in the forward looking estimates are analysed. On that basis, the Company estimates
provision on trade receivables at the reporting date.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as
expense (or income) in the Standalone Statement of Profit and Loss.
Derecognition of financial assets:
The Company derecognises a financial asset when the contractual right to receive the cash flows
from the asset expire, or when it transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party. If the Company neither transfers nor retains
substantially all the risks and rewards of ownership and continues to control the transferred asset,
the Company recognises its retained interest in the asset and an associated liability for amounts
it may have to pay. If the Company retains substantially all the risks and rewards of ownership of
a transferred financial asset, the Company continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the assetâs carrying
amount and the sum of the consideration received and receivable and the cumulative gain or loss
that had been recognised in other comprehensive income and accumulated in equity is recognised
in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on
disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an
option to repurchase part of a transferred asset), the Company allocates the previous carrying
amount of the financial asset between the part it continues to recognise under continuing
involvement, and the part it no longer recognises on the basis of the relative fair values of those
parts on the date of the transfer. The difference between the carrying amount allocated to the part
that is no longer recognised and the sum of the consideration received for the part no longer
recognised and any cumulative gain or loss allocated to it that had been recognised in other
comprehensive income is recognised in profit or loss if such gain or loss would have otherwise
been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that
had been recognised in other comprehensive income is allocated between the part that continues
to be recognised and the part that is no longer recognised on the basis of the relative fair values
of those parts.
Classification and Subsequent Measurement:
Financial liabilities:
Financial liabilities are classified as either financial liabilities at FVTPL or âother financial liabilitiesâ.
Financial Liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are
designated upon initial recognition as FVTPL.
Gains or Losses on liabilities held for trading are recognised in the Standalone Statement of Profit
and Loss.
Other Financial Liabilities at amortised cost:
Other financial liabilities (including borrowings and trade and other payables) are subsequently
measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability
and of allocating interest expense over the relevant period. The effective interest rate is the rate
that exactly discounts estimated future cash payments (including all fees and points paid or
received that form an integral part of the effective interest rate, transaction costs and other premiums
or discounts) through the expected life of the financial liability, or (where appropriate) a shorter
period, to the net carrying amount on initial recognition.
Financial liabilities and equity instruments:
¦ Classification as debt or equity:
Debt and equity instruments issued by the Company are classified as either financial liabilities
or as equity in accordance with the substance of the contractual arrangements and the
definitions of a financial liability and an equity instrument.
¦ Equity instruments:
An equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities.
Equity instruments issued by a Company are recognised at the proceeds received.
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Derecognition of financial liabilities:
The Company derecognises a financial liability when its contractual obligations are discharged
or cancelled or expired. The Company also derecognises a financial liability when its terms are
modified and the cash flows under the modified terms are substantially different.
Offsetting:
Financial assets and financial liabilities are offset and the net amount is reported in the Standalone
Balance Sheet where there is a legally enforceable right to offset the recognised amounts and
there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
(xv) Derivative Financial Instruments
The Company holds derivative financial instruments such as foreign exchange forward contracts
to manage its exposure to foreign currency exchange rate risks.
Derivatives are initially recognised at fair value at the date the contracts are entered into.
Subsequent to initial recognition, these contracts are measured at fair value at the end of each
reporting period and changes are recognised in Standalone Statement of Profit and Loss.
(xvi) Segment Reporting
The Company identifies primary segments based on the dominant source, nature of risks and
returns and the internal organisation and management structure. The operating segments are
the segments for which separate financial information is available and for which operating profit
/ loss amounts are evaluated regularly by the Chief Operating Decision Making Body (CODM) in
deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies
of the Company.
(xvii) Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss) after tax with the weighted
average number of equity shares outstanding during the year. 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, with the aggregate of 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 the conversion of all dilutive potential equity shares.
(xviii) Dividend
Provision is made in the accounts for the amount of any final dividend declared on the date of its
approval by the shareholders. Interim dividends, if any, are recorded as a liability on the date of
its declaration by the companyâs board of directors.
(xix) Research and Development
Research costs are charged to the statement of profit and loss in the year in which they are
incurred.
Product development costs incurred on new products are recognised as intangible assets,
when feasibility has been established, the Company has committed technical, financial and
other resources to complete the development and it is probable that asset will generate probable
future economic benefits. The costs capitalised include the cost of materials, direct labour and
directly attributable overhead expenditure incurred up to the date the asset is available for use.
Interest cost incurred is capitalised up to the date the asset is ready for its intended use, based
on borrowings incurred specifically for financing the asset or the weighted average rate of all
other borrowings if no specific borrowings have been incurred for the asset. Product development
expenditure is measured at cost less accumulated amortisation and impairment, if any.
Mar 31, 2024
1. Corporate Information
The Standalone Financial Statements of âDiamines and Chemicals Limitedâ (âthe Companyâ) are for the year ended 31st March, 2024.
The Company is a domestic public limited company incorporated and domiciled in India and has its registered office at Plot No. 13, New IPCL Rd, PCC Area, Vadodara, Gujarat. The Company''s shares are listed and traded on the BSE Limited and National Stock Exchange of India Limited. The Company is engaged in business of manufacturing and marketing of organic chemicals compounds.
These Standalone Financial Statements have been prepared in accordance with Indian Accounting Standards (âInd ASâ) as notified under Section 133 of The Companies Act, 2013 ( the âActâ) read with Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act as amended from time to time, 2013.
Ministry of Corporate Affairs (âMCAâ) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. During the year ended 31st March 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
1.3 Basis of Preparation of Financial Statements
The Standalone Financial Statements have been prepared on the historical cost convention on accrual basis except for certain financial instruments that are measured at fair values / amortized cost / net present value at the end of each reporting period, as explained in the accounting policies below. These accounting policies have been applied consistently over all the periods presented in these standalone financials statements.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current or noncurrent classification of assets and liabilities. Accordingly, 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 Ind AS-1 âPresentation of Standalone Financial Statements'' and Schedule III to the Companies Act, 2013.
The Standalone Financial Statements have been presented in Indian Rupees (INR), which is also the Company''s presentation and functional currency. All values are rounded off to the nearest two decimal lakhs, unless otherwise indicated.
2. Material Accounting policies(i) Property, Plant and Equipment
The Company has elected to continue with the carrying value of its Property Plant & Equipment (PPE) recognised as of April 1, 2016 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per Para D7AA of Ind AS 101.
Property, Plant & Equipment (PPE) comprises of Tangible assets and Capital Work in progress. PPE are stated at cost, net of tax/duty credit availed, if any, after reducing accumulated depreciation and accumulated impairment losses, if any; until the date of the Balance Sheet. The cost of PPE comprises of its purchase price or its construction cost (net of applicable tax credit, if any), any cost
directly attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by the management. Direct costs are capitalized until the asset is ready for use and includes borrowing cost capitalised in accordance with the Company''s accounting policy.
Capital work in progress includes the cost of PPE that are not yet ready for the intended use.
An item of PPE is de-recognised 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 the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Standalone Statement of Profit and Loss.
As per internal technical evaluation carried out by the management, the management of the company believes that its Property, Plant & Equipment are of such nature that separate components are not distinctly identifiable having different useful life. And therefore, Component level accounting and reporting is not practically feasible for the company.
Depreciation of these PPE commences when the assets are ready for their intended use.
Depreciation is provided on the cost of Property, Plant and Equipment (other than Freehold land) less their estimated residual value, using the straight-line method over the useful life of PPE as stated in the Schedule II to the Companies Act, 2013 or based on internal technical evaluation. The management believes that the useful lives as assessed best represent the period over which management expects to use these assets.
Useful lives of following class of PPE are as prescribed under Part C of Schedule II to the Companies Act 2013 which are as under^
|
Asset Description |
Assets Useful life (in Years) |
|
|
Buildings |
30 - 60 |
|
|
R & D Equipments |
10 |
|
|
Office Equipments |
5 |
|
|
Computers |
3 |
|
|
Server |
6 |
|
|
Road |
5 |
|
|
Furniture and Fixtures |
10 |
|
|
Vehicle |
8 |
|
|
Useful lives of following class of PPE are based on internal technical evaluation carried out by the Company which are as under:- |
||
|
Asset Description |
Assets Useful life (in Years) |
|
|
Plant & Machinery |
20 |
|
|
Plant & Machinery (Tank) |
25 |
|
|
Wind Electric Generators |
22 |
|
The estimated useful lives, residual values and depreciation method are reviewed on an annual basis and if necessary, changes in estimates are accounted for prospectively.
Depreciation on additions/deletions to PPE during the year is provided for on a pro-rata basis with reference to the date of additions/deletions.
The low value assets costing '' 25,000/- or less are fully depreciated (net of residual value) in the year of purchase.
Depreciation on subsequent expenditure on PPE arising on account of capital improvement or other factors is provided for prospectively over the remaining useful life.
Freehold land is not depreciated.
(ii) Intangible Assets
The Company has elected to continue with the carrying value of its Intangible assets recognised as of April 1, 2016 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per Para D7AA of Ind AS 101.
Intangible assets with finite useful life acquired separately, are recognised only if it is probable that future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized over the estimated period of benefit, not exceeding ten years.
Intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised in the Standalone Statement of Profit and Loss when the asset is derecognised .
Intangible assets are amortised on Straight Line Method from the date they are available for use, over the useful lives of the assets as estimated by the Management as under:
|
Asset Description |
Assets Useful life (in Years) |
|
Software & Licenses |
3 |
(iii) Impairment of non-financial assets
The Company reviews at each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. 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 recognised in the Standalone Statement of Profit & Loss. If at the reporting period, there is an indication that there is change in the previously assessed impairment loss, the recoverable amount is reassessed and the asset is reflected at the lower of its recoverable amount and the carrying amount that is determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.
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.
An assessment is made at the end of each reporting period to see if there are any indications that impairment losses recognised earlier may no longer exist or may have come down. The impairment loss is reversed, if there has been a change in the estimates which has the effect of increasing the asset''s recoverable amount since the previous impairment loss was recognised. If it is so, the carrying amount of the asset is increased to the lower of its recoverable amount and the carrying amount that has been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. After a reversal, the depreciation charge is adjusted in future periods to allocate the asset''s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. Reversals of Impairment loss are recognised in the Standalone Statement of Profit and Loss.
The Company records the Investment in equity instrument of Subsidiary at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investment in subsidiary, the difference between net disposal proceeds and the carrying amounts are recognised in the standalone statement of profit and loss.
The Company records the investments in associates at cost less impairment loss, if any.
On disposal of investment in associate, the difference between net disposal proceeds and the carrying amounts (including corresponding value of dilution in deemed investment) are recognized in the Statement of Profit and Loss.
(v) Share-based payments
The grant date fair value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity, on a straight -line basis, over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserves.
(vi) Inventories
Inventories are valued at lower of cost and net realisable value after providing for impairment and other losses, where considered necessary. The basis of determining the value of each class of inventory is as follows:
|
Inventories |
Cost Formulae |
|
Raw Material, packing materials, fuels and stores and spares |
At first-in-first out basis (Net of eligible credit) |
|
Raw Material (Goods in transit) |
At invoice price |
|
Work-in-progress |
At Cost, comprising of raw material cost, labour cost and appropriate proportion of manufacturing expenses and overheads based on stage of completion. |
|
Finished Goods (Including in Transit) |
At Cost, comprising of raw material cost, labour cost and appropriate proportion of manufacturing expenses and overheads. |
|
Scrap |
At lower of Cost or Net Realisable Value |
(vii) Revenue and Income recognition:
(a) Revenue from Contracts with Customers
Revenues from sale of goods or services are recognised upon transfer of control of the goods or services to the customer in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services.
Revenue is measured at the transaction price of the consideration received or receivable duly adjusted for variable consideration and customer''s right to return the goods and the same represents amounts receivable for goods and services provided in the normal course of business. Revenue also excludes taxes collected from customers. Any retrospective revision in prices is accounted for in the year of such revision.
Revenue is recognised at a point in time on accrual basis as per the terms of the contract, when there is no uncertainty as to measurement or collectability of consideration. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved.
When sales discount and rebate arrangements result in variable consideration, appropriate estimates are made and estimated variable consideration is recognised as a deduction from revenue at the point of sale (to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not be required). The Company typically uses the expected value method for estimating variable consideration, reflecting that such contracts have similar characteristics and a range of possible outcomes.
The contract asset or a contract liability is recognised when either party to a contract has performed, depending on the relationship between the entity''s performance and the customer''s payment. When the company has a present unconditional rights to consideration, it is recognised separately as a receivable.
(b) Interest Income
Interest on investments is booked on a time proportion basis taking into account the amounts invested and the rate of interest.
(c ) Dividend Income
Dividend income is recognised when the right to receive the same is established.
(d) Export Incentives
Export incentives (Duty Drawback Scheme benefits) are accrued in the year when the right to receive the same is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization/ utilization of such benefits/ duty credit.
(e) other Income
Other income is recognised on accrual basis except when realization of such income is uncertain.
(viii) Foreign Exchange Transactions
Transactions in currencies other than the Company''s functional currency (foreign currencies) are recognised at the spot exchange rates prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated using closing exchange rate prevailing on the last day of the reporting period.
Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of transaction.
Exchange differences on monetary items are recognised in the Standalone Statement of Profit and Loss in the period in which they arise.
(ix) Leases
Ministry of Corporate Affairs (âMCAâ) through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, 2019, has notified Ind AS 116 Leases which replaces the existing lease standard, Ind AS 17 leases, and other interpretations. Ind AS 116 introduces a single, on-balance sheet lease accounting model for lessees.
As a lessee
The Company''s lease assets primarily consist of lease for land. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
- the contract involves the use of an identified asset;
- the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
- the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (shortterm leases) and low value leases and corresponding Right-of-use Asset. For these short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
The Right-of-use Assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liability.
Right-of-use Assets are depreciated on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
(x) Employees Benefits
Post Employment Benefit
(i) Defined Contribution Plan
The company''s contribution to defined contribution plan paid/payable for the year is charged to the Standalone Statement of Profit and loss.
(ii) Defined Benefit Plan
The liabilities towards defined benefit schemes are determined using the Projected Unit Credit method. Actuarial valuation under the Projected Unit Credit method are carried out at the balance sheet date. Remeasurement gains/losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur in Other Comprehensive Income (OCI). These gains/losses which are recognised in OCI are reflected in retained earnings and are not reclassified to Profit or Loss. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise it is amortized on straight-line basis over the remaining average period until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as reduced by plan assets. The plan assets are measured at fair value.
(iii) Short Term Employee Benefits
Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period employee renders services. These benefits include salaries, wages, bonus, performance incentives, etc.
(iv) Other Long Term Employee Benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as an actuarially determined liability at present value of the defined benefit obligation at the balance sheet date, using Projected Unit Credit method.
Borrowing costs are interest and ancillary costs incurred in connection with the arrangement of borrowings.
General and specific borrowing costs attributable to acquisition and construction of qualifying assets is added to the cost of the assets upto the date the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use Capitalisation of borrowing costs is suspended and charged to the Standalone Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. All other borrowing costs are recognised in the Standalone Statement of Profit and Loss in the period in which they are incurred.
(xii) Statement of Cash Flows
Standalone Statement of Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing activities.
(xiii) Income Taxes
Income tax expense represents the sum of the current tax and deferred tax.
(i) Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before tax'' as reported in the Standalone Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the end of the reporting period.
(ii) Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Standalone Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
(iii) Current and Deferred Tax Expense for the Year
Current and deferred tax expense is recognised in the Standalone Statement of Profit and Loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Financial assets and Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Initial Recognition:
Financial assets and Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at Fair Value through Profit or Loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised in the Standalone Statement of Profit and Loss. However, trade receivables which is a financial asset that do not contain a significant financing component are measured at transaction price.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (âFVTOCIâ) or fair value through profit or loss (âFVTPLâ) on the basis of following:
¦ the entity''s business model for managing the financial assets; and
¦ the contractual cash flow characteristics of the financial assets.
A financial asset shall be classified and measured at amortised cost, if both of the following conditions are met:
¦ the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and
¦ the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Fair Value through OCI:
A financial asset shall be classified and measured at FVTOCI, if both of the following conditions are met:
¦ the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and
¦ the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Fair Value through Profit or Loss:
A financial asset shall be classified and measured at FVTPL unless it is measured at amortised cost or at FVTOCI.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
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 under current market conditions.
The Company categories assets and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed in their measurement which are described as follows:
(i) Level 1: Quoted Prices (unadjusted) in active markets for identical assets or liabilities
(ii) Level 2: inputs are observable, either directly or indirectly, other than quoted prices included within level 1 for the asset or liability.
(iii) Level 3: inputs are unobservable for the asset or liability reflecting significant modifications to observable related market data or Company''s assumptions about pricing by market participants.
For assets and liabilities that are recognised in the Standalone Financial Statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Impairment of financial assets:
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
Financial Assets are measured at amortised cost e.g., deposits, trade receivables and bank balance
Simplified Approach
The Company follows âsimplified approach'' for recognition of impairment loss allowance on Trade Receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
General Approach
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-months ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-months ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forwardlooking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward looking estimates are analysed. On that basis, the Company estimates provision on trade receivables at the reporting date.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense (or income) in the Standalone Statement of Profit and Loss.
Derecognition of financial assets:
The Company derecognises a financial asset when the contractual right to receive the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Classification and Subsequent Measurement:
Financial liabilities are classified as either financial liabilities at FVTPL or âother financial liabilities''. Financial Liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL.
Gains or Losses on liabilities held for trading are recognised in the Standalone Statement of Profit and Loss.
Other Financial Liabilities at amortised cost:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Financial liabilities and equity instruments:
¦ Classification as debt or equity:
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
¦ Equity instruments:
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by a Company are recognised at the proceeds received.
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expired. The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different.
Offsetting:
Financial assets and financial liabilities are offset and the net amount is reported in the Standalone Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
(xv) Derivative Financial Instruments
The Company holds derivative financial instruments such as foreign exchange forward contracts to manage its exposure to foreign currency exchange rate risks.
Derivatives are initially recognised at fair value at the date the contracts are entered into. Subsequent to initial recognition, these contracts are measured at fair value at the end of each reporting period and changes are recognised in Standalone Statement of Profit and Loss.
(xvi) Segment Reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the Chief Operating Decision Making Body (CODM) in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.
(xvii) Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss) after tax with the weighted average number of equity shares outstanding during the year. 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, with the aggregate of 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 the conversion of all dilutive potential equity shares.
(xviii) Dividend
Provision is made in the accounts for the amount of any final dividend declared on the date of its approval by the shareholders. Interim dividends, if any, are recorded as a liability on the date of its declaration by the company''s board of directors.
(xix) Research and Development
Revenue expenditure on research and development is charged to Standalone Statement of Profit and Loss in the year in which it is incurred. Capital expenditure on research and development is considered as an addition to Property, Plant & Equipment/Intangible Assets.
(xx) Provisions, Contingent Liabilities and Contingent Assets Provisions
Provisions are recognised when, based on Company''s present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
Contingent Liabilities and Assets
Contingent liabilities are disclosed in the Standalone Financial Statements by way of notes to accounts, unless possibility of an outflow of resources embodying economic benefit is remote.
Contingent assets are disclosed in the Standalone Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
3. Critical Accounting Judgments, Estimates, Assumptions and Key Sources of Estimation Uncertainty
The preparation of the Company''s Standalone Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the Standalone Financial Statements. Estimates and assumptions are continuously evaluated and are based on management''s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Key estimates, assumptions and judgements
In particular, the Company has identified the following areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the Standalone Financial Statements. Changes in estimates are accounted for prospectively.
(i) Income taxes
Significant judgements are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions as also to determine the amount of deferred tax that can be recognised, based upon the likely timing and the level of future taxable profits.
(ii) Useful lives of Property, Plant and Equipment/Intangible Assets
Property, Plant and Equipment/ Intangible Assets are depreciated/amortised over their estimated useful lives, after taking into account estimated residual value. The useful lives and residual values are based on the Company''s historical experience with similar assets and taking into account anticipated technological changes or commercial obsolescence. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/amortisation to be recorded during any reporting period. The depreciation/ amortisaion for future periods is revised, if there are significant changes from previous estimates and accordingly, the unamortised/depreciable amount is charged over the remaining useful life of the assets.
(iii) Contingent Liabilities
In the normal course of business, Contingent Liabilities may arise from litigation and other claims against the Company. Potential liabilities that are possible but not probable of crystallising or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the Notes but are not recognised. Potential liabilities that are remote are neither recognised nor disclosed as contingent liability. The management decides whether the matters need to be classified as âremote'', âpossible'' or âprobable'' based on expert advice, past judgements, experiences etc.
(iv) Evaluation of Indicators for Impairment of Property, Plant and Equipment
The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline in asset''s value, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the idle assets etc.) which could result in significant change in recoverable amount of the Property, Plant and Equipment and such assessment is based on estimates, future plans as envisaged by Company.
(v) Actuarial Valuation:
The determination of Company''s liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognised in the income statement and in other comprehensive income. Such valuation depends upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.
(vi) Allowance for impairment of trade receivables
The expected credit loss is mainly based on the ageing of the receivable balances and historical experience. The receivables are assessed on an individual basis assessed for impairment collectively, depending on their significance. Moreover, trade receivables are written off on a case-to-case basis if deemed not to be collectable on the assessment of the underlying facts and circumstances.
(vii) Provisions
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
(viii) Revenue Recognition:
The Company''s contracts with customers include promises to transfer products to the customers. The Company assesses the products promised in a contract and identifies distinct performance obligations, if any, in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables. Judgement is also required to determine the transaction price for the contract. The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over time. The Company considers indicators such as to who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. The judgment is also exercised in determining the variable consideration, if any, involved in transaction price and also in estimating the impact of customer''s right to return the goods, based on prior experience. The company has exercised judgments and concluded that it has only one performance obligation from each of its contract with customers and it is being satisfied at a point in time.
Mar 31, 2023
1. Corporate Information
The Standalone Financial Statements of âDiamines and Chemicals Limitedâ (âthe Companyâ) are for the year ended 31st March, 2023.
The Companyis a domestic public limited company incorporated and domiciled in India and has its registered office at Plot No. 13, New IPCL Rd, PCC Area, Vadodara, Gujarat. The Company''s shares are listed and traded on the Bombay Stock Exchange Ltd. (BSE). The Company is engaged in business of manufacturing and marketing of organic chemicals compounds.
2. Significant Accounting Policies
i) Statement of Compliance
These Standalone Financial Statements have been prepared in accordance with Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended).
A. New Standards/ amendments and other changes effective April 1,2022 or thereafter
Ministry of Corporate Affairs notifies new standard or amendments to the existing standards. During the year, no new standard or modifications in existing standards have been notified which will be applicable from April 1, 2022, or thereafter.
B. New Standards/ amendments and other changes effective April 1,2023 Ind AS 1 - Presentation of Financial Statements
The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.
Ind AS 12 - Income Taxes
The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning, restoration and similar obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company is evaluating the impact, if any, in its financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.
ii) Basis of Preparation
The Standalone Financial Statements have been prepared on the historical cost convention on accrual basis except for certain financial instruments that are measured at fair values / amortized cost / net present value at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current or noncurrent classification of assets and liabilities. Accordingly, 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 Ind AS-1 âPresentation of Standalone Financial Statements'' and Schedule III to the Companies Act, 2013.
The Standalone Financial Statements have been presented in Indian Rupees (INR), which is also the Company''s presentation and functional currency. All values are rounded off to the nearest two decimal lakhs, unless otherwise indicated.
Fair Value Measurement
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 under current market conditions.
The Company categories assets and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed in their measurement which are described as follows:
(i) Level 1: Quoted Prices (unadjusted) in active markets for identical assets or liabilities
(ii) Level 2: inputs are observable, either directly or indirectly, other than quoted prices included within level 1 for the asset or liability.
(iii) Level 3: inputs are unobservable for the asset or liability reflecting significant modifications to observable related market data or Company''s assumptions about pricing by market participants.
For assets and liabilities that are recognised in the Standalone Financial Statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
iii) Property, Plant and Equipment
The Company has elected to continue with the carrying value of its Property Plant & Equipment (PPE) recognised as of April 1, 2016 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per Para D7AA of Ind AS 101.
Property, Plant & Equipment (PPE) comprises of Tangible assets and Capital Work in progress. PPE are stated at cost, net of tax/duty credit availed, if any, after reducing accumulated depreciation and accumulated impairment losses, if any; until the date of the Balance Sheet. The cost of PPE comprises of its purchase price or its construction cost (net of applicable tax credit, if any), any cost directly attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by the management. Direct costs are capitalized until the asset is ready for use and includes borrowing cost capitalised in accordance with the Company''s accounting policy.
Capital work in progress includes the cost of PPE that are not yet ready for the intended use.
An item of PPE is de-recognised 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 the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Standalone Statement of Profit and Loss.
As per internal technical evaluation carried out by the management, the management of the company believes that its Property, Plant & Equipment are of such nature that separate components are not distinctly identifiable having different useful life. And therefore, Component level accounting and reporting is not practically feasible for the company.
Depreciation of these PPE commences when the assets are ready for their intended use. Depreciation is provided on the cost of Property, Plant and Equipment (other than Freehold land) less their estimated residual value, using the straight-line method over the useful life of PPE as stated in the Schedule II to the Companies Act, 2013 or based on internal technical evaluation.The
management believes that the useful lives as assessed best represent the period over which management expects to use these assets.
Useful lives of following class of PPE are as prescribed under Part C of Schedule II to the Companies Act, 2013, which are as under:-
|
Asset Description |
Assets Useful life (in Years) |
|
|
Buildings |
30 - 60 |
|
|
R & D Equipments |
10 |
|
|
Office Equipments |
5 |
|
|
Computers |
3 |
|
|
Server |
10 |
|
|
Road |
5 |
|
|
Furniture and Fixtures |
10 |
|
|
Vehicle |
8 |
|
|
Useful lives of following class of PPE are based on internal technical evaluation carried out by the Company which are as under:- |
||
|
Asset Description |
Assets Useful life (in Years) |
|
|
Plant & Machinery |
20 |
|
|
Plant & Machinery (Tank) |
25 |
|
|
Wind Electric Generators |
22 |
|
The estimated useful lives, residual values and depreciation method are reviewed on an annual basis and if necessary, changes in estimates are accounted for prospectively.
Depreciation on additions/deletions to PPE during the year is provided for on a pro-rata basis with reference to the date of additions/deletions.
The low value assets costing '' 25,000/- or less are fully depreciated (net of residual value) in the year of purchase.
Depreciation on subsequent expenditure on PPE arising on account of capital improvement or other factors is provided for prospectively over the remaining useful life.
Freehold land is not depreciated.
iv) Intangible Assets
The Company has elected to continue with the carrying value of its Intangible assets recognised as of April 1, 2016 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per Para D7AA of Ind AS 101.
Intangible assets with finite useful life acquired separately, arerecognised only if it is probable that future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized over the estimated period of benefit, not exceeding ten years. Intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised in the Standalone Statement of Profit and Loss when the asset is derecognised.
Intangible assets are amortised on Straight Line Method from the date they are available for use, over the useful lives of the assets as estimated by the Management as under:
|
Asset Description |
Assets Useful life (in Years) |
|
Software & Licenses |
3 |
v) Impairment of non-financial assets
The Company reviews at each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. 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 recognised in the Standalone Statement of Profit & Loss. If at the reporting period, there is an indication that there is change in the previously assessed impairment loss, the recoverable amount is reassessed and the asset is reflected at the lower of its recoverable amount and the carrying amount that is determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.â
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.
An assessment is made at the end of each reporting period to see if there are any indications that impairment losses recognised earlier may no longer exist or may have come down. The impairment loss is reversed, if there has been a change in the estimates which has the effect of increasing the asset''s recoverable amount since the previous impairment loss was recognised. If it is so, the carrying amount of the asset is increased to the lower of its recoverable amount and the carrying amount that has been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. After a reversal, the depreciation charge is adjusted in future periods to allocate the asset''s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. Reversals of Impairment loss are recognised in the Standalone Statement of Profit and Loss.
vi) Investment in Subsidiary
The Company records the Investment in equity instrument of Subsidiary at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investment in subsidiary, the difference between net disposal proceeds and the carrying amounts are recognised in the standalone statement of profit and loss.
Investment in Associate
The Company records the investments in associates at cost less impairment loss, if any.
On disposal of investment in associate, the difference between net disposal proceeds and the carrying amounts (including corresponding value of dilution in deemed investment) are recognized in the Statement of Profit and Loss.
vii) Share-based payments
The grant date fair value of options granted to employees is recognised as an employee expense, with acorresponding increase in equity, on a straight-line basis, over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserves.
viii) Inventories
Inventories are valued at lower of cost and net realisable value after providing for impairment and other losses, where considered necessary. The basis of determining the value of each class of inventory is as follows:
|
Inventories |
Cost Formulae |
|
Raw Material, packing materials, fuels and stores and spares |
At first-in-first out basis(Net of eligible credit) |
|
Raw Material (Goods in transit) |
At invoice price |
|
Work-in-progress |
At Cost, comprising of raw material cost, labour cost and appropriate proportion of manufacturing expenses and overheads based on stage of completion. |
|
Finished Goods (Including in Transit) |
At Cost, comprising of raw material cost, labour cost and appropriate proportion of manufacturing expenses and overheads. |
|
Scrap |
At lower of Cost or Net Realisable Value |
ix) Revenue from Contracts with Customers
Revenues from sale of goods or services are recognised upon transfer of control of the goods or services to the customer in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services.
Revenue is measured at the transaction price of the consideration received or receivable duly adjusted for variable considerationand customer''s right to return the goods and the same represents amounts receivable for goods and services provided in the normal course of business. Revenue also excludes taxes collected from customers. Any retrospective revision in prices is accounted for in the year of such revision.
Revenue is recognised at a point in time on accrual basis as per the terms of the contract, when there is no uncertainty as to measurement or collectability of consideration. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved.
When sales discount and rebate arrangements result in variable consideration, appropriate estimates are made and estimated variable consideration is recognised as a deduction from revenue at the point of sale (to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not be required). The Company typically uses the expected value method for estimating variable consideration, reflecting that such contracts have similar characteristics and a range of possible outcomes.
The contract asset or a contract liability is recognised when either party to a contract has performed, depending on the relationship between the entity''s performance and the customer''s payment. When the company has a presentunconditional rights to consideration, it is recognised separately as a receivable.
Interest on investments is booked on a time proportion basis taking into account the amountsinvested and the rate of interest.
Dividend income is recognised when the right to receive the same is established.
Export incentives (Duty Drawback Scheme benefits) are accrued in the year when the right to receive the same is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization/ utilization of such benefits/ duty credit.
Other income is recognised on accrual basis except when realization of such income is uncertain.
x) Foreign Exchange Transactions
Transactions in currencies other than the Company''s functional currency (foreign currencies) are recognised at the spot exchange rates prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated using closing exchange rate prevailing on the last day of the reporting period.
Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of transaction.
Exchange differences on monetary items are recognised in the Standalone Statement of Profit and Loss in the period in which they arise.
xi) Leases
Ministry of Corporate Affairs (âMCAâ) through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, 2019, has notified Ind AS 116 Leases which replaces the existing lease standard, Ind AS 17 leases, and other interpretations. Ind AS 116 introduces a single, on-balance sheet lease accounting model for lessees.
As a lessee
The Company''s lease assets primarily consist of lease for land. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
- the contract involves the use of an identified asset;
- the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
- the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (shortterm leases) and low value leases and corresponding Right-of-use Asset. For these short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
The Right-of-use Assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liability.
Right-of-use Assets are depreciated on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
xii) Employees Benefits Post Employment Benefit
(i) Defined Contribution Plan
The company''s contribution to defined contribution plan paid/payable for the year is charged to the Standalone Statement of Profit and loss.
(ii) Defined Benefit Plan
The liabilities towards defined benefit schemes are determined using the Projected Unit Credit method. Actuarial valuation under the Projected Unit Credit method are carried out at the balance sheet date. Remeasurement gains/losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur in Other Comprehensive Income (OCI). These gains/losses which are recognised in OCI are reflected in retained earnings and are not reclassified to Profit or Loss. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise it is amortized on straight-line basis over the remaining average period until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as reduced by plan assets. The plan assets are measured at fair value.
(iii) Short Term Employee Benefits
Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period employee renders services. These benefits include salaries, wages, bonus, performance incentives, etc.
(iv) Other Long Term Employee Benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as an actuarially determined liability at present value of the defined benefit obligation at the balance sheet date, using Projected Unit Credit method.
xiii) Borrowing Costs
Borrowing costs are interest and ancillary costs incurred in connection with the arrangement of borrowings.
General and specific borrowing costs attributable to acquisition and construction of qualifying assets is added to the cost of the assets upto the date the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use Capitalisation of borrowing costs is suspended and charged to the Standalone Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. All other borrowing costs are recognised in the Standalone Statement of Profit and Loss in the period in which they are incurred.
xiv) Statement of Cash Flows
Standalone Statement of Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing activities.
xv) Income Taxes
Income tax expense represents the sum of the current tax and deferred tax.
(i) Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before tax'' as reported in the Standalone Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the end of the reporting period.
(ii) Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Standalone Financial Statements and the corresponding tax bases used
in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
(iii) Current and Deferred Tax Expense for the Year
Current and deferred tax expense is recognised in the Standalone Statement of Profit and Loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
xvi) Financial Instruments
Financial assets and Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Initial Recognition:
Financial assets and Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at Fair Value through Profit or Loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised in the StandaloneStatement of Profit and Loss. However, trade receivables which is a financial asset that do not contain a significant financing component are measured at transaction price.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (âFVTOCIâ) or fair value through profit or loss (âFVTPLâ) on the basis of following:
¦ the entity''s business model for managing the financial assets; and
¦ the contractual cash flow characteristics of the financial assets.
Amortised Cost:
A financial asset shall be classified and measured at amortised cost, if both of the following conditions are met:
¦ the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and
¦ the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Fair Value through OCI:
A financial asset shall be classified and measured at FVTOCI, if both of the following conditions are met:
¦ the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and
¦ the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Fair Value through Profit or Loss:
A financial asset shall be classified and measured at FVTPL unless it is measured at amortised cost or at FVTOCI.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
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:
a) Financial Assets are measured at amortised cost e.g., deposits, trade receivables and bank balance Simplified Approach
The Company follows âsimplified approach'' for recognition of impairment loss allowance on Trade Receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
General Approach
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-months ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-months ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forwardlooking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward looking estimates are analysed. On that basis, the Company estimates provision on trade receivables at the reporting date.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense (or income) in the Standalone Statement of Profit and Loss.
Derecognition of financial assets:
The Company derecognises a financial asset when the contractual right to receive the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Classification and Subsequent Measurement: Financial liabilities:
Financial liabilities are classified as either financial liabilities at FVTPL or âother financial liabilities''. Financial Liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL.
Gains or Losses on liabilities held for trading are recognised in the StandaloneStatement of Profit and Loss.
Other Financial Liabilities at amortised cost:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Financial liabilities and equity instruments:
¦ Classification as debt or equity:
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
¦ Equity instruments:
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by a Company are recognised at the proceeds received.
Derecognition of financial liabilities:
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expired. The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different.
Offsetting:
Financial assets and financial liabilities are offset and the net amount is reported in the StandaloneBalance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
xvii) Derivative Financial Instruments
The Company holds derivative financial instruments such as foreign exchange forward contracts to manage its exposure to foreign currency exchange rate risks.
Derivatives are initially recognised at fair value at the date the contracts are entered into. Subsequent to initial recognition, these contracts are measured at fair value at the end of each reporting period and changes are recognised in StandaloneStatement of Profit and Loss.
xviii) Segment Reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the Chief Operating Decision Making Body (CODM) in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.
xix) Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss) after tax with the weighted average number of equity shares outstanding during the year. 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, with the aggregate of 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 the conversion of all dilutive potential equity shares.
xx) Dividend
Provision is made in the accounts for the amount of any final dividend declared on the date of its approval by the shareholders. Interim dividends, if any, are recorded as a liability on the date of its declaration by the company''s board of directors.
xxi) Research and Development
Revenue expenditure on research and development is charged to Standalone Statement of Profit and Loss in the year in which it is incurred. Capital expenditure on research and development is considered as an addition to Property, Plant & Equipment/Intangible Assets.
xxii) Provisions, Contingent Liabilities and Contingent Assets Provisions
Provisions are recognised when,based on Company''s present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
Contingent Liabilities and Assets
Contingent liabilities are disclosed in the Standalone Financial Statements by way of notes to accounts, unless possibility of an outflow of resources embodying economic benefit is remote.
Contingent assets are disclosed in the Standalone Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
i. Critical Accounting Judgments, Estimates, Assumptions and Key Sources of Estimation Uncertainty
The preparation of the Company''s Standalone Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the Standalone Financial Statements. Estimates and assumptions are continuously evaluated and are based on management''s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Key estimates, assumptions and judgements
In particular, the Company has identified the following areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the Standalone Financial Statements. Changes in estimates are accounted for prospectively.
(i) Income taxes
Significant judgements are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions as also to determine the amount of deferred tax that can be recognised, based upon the likely timing and the level of future taxable profits.
(ii) Useful lives of Property, Plant and Equipment/Intangible Assets
Property, Plant and Equipment/ Intangible Assets are depreciated/amortised over their estimated useful lives, after taking into account estimated residual value. The useful lives and residual values are based on the Company''s historical experience with similar assets and taking into account anticipated technological changes or commercial obsolescence. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/amortisation to be recorded during any reporting period. The depreciation/ amortisaion for future periods is revised, if there are significant changes from previous estimates and accordingly, the unamortised/depreciable amount is charged over the remaining useful life of the assets.
(iii) Contingent Liabilities
In the normal course of business, Contingent Liabilities may arise from litigation and other claims against the Company. Potential liabilities that are possible but not probable of crystallising or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the Notes but are not recognised. Potential liabilities that are remote are neither recognised nor disclosed as contingent liability. The management decides whether the matters need to be classified as âremote'', âpossible'' or âprobable'' based on expert advice, past judgements, experiences etc.
(iv) Evaluation of Indicators for Impairment of Property, Plant and Equipment
The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline in asset''s value, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the idle assets etc.) which could result in significant change in recoverable amount of the Property, Plant and Equipment and such assessment is based on estimates, future plans as envisaged by Company.
(v) Actuarial Valuation:
The determination of Company''s liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognised in the income statement and in other comprehensive income. Such valuation depends upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.
(vi) Allowance for impairment of trade receivables
The expected credit loss is mainly based on the ageing of the receivable balances and historical experience. The receivables are assessed on an individual basis assessed for impairment collectively, depending on their significance. Moreover, trade receivables are written off on a case-to-case basis if deemed not to be collectable on the assessment of the underlying facts and circumstances.
(vii) Provisions
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
(viii) Revenue Recognition:
The Company''s contracts with customers include promises to transfer products to the customers. The Company assesses the products promised in a contract and identifies distinct performance obligations, if any, in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables. Judgement is also required to determine the transaction price for the contract. The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over time. The Company considers indicators such as to who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. The judgment is also exercised in determining the variable consideration, if any, involved in transaction price and also in estimating the impact of customer''s right to return the goods, based on prior experience. The company has exercised judgments and concluded that it has only one performance obligation from each of its contract with customers and it is being satisfied at a point in time.
Mar 31, 2018
1. Significant Accounting Policies
1.1 Basis of Preparation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified under Section 133 of the Companies Act 2013 (the âActâ) and other relevant provisions of the Act.
For all periodâs up to and including the financial year ended March 31, 2017, the Company prepared its financial statements in accordance with Accounting Standards specified under Section 133 of the Act read with applicable rules and the relevant provisions of the Act (âPrevious GAAPâ). The figures for the year ended March 31, 2017 have now been restated as per Ind AS to provide comparability.
The financial statements for the year ended March 31, 2018 are the Companyâs first Ind AS standalone financial statements. The Company has adopted all the Ind AS and the adoption was carried out in accordance with Ind AS 101, âFirst-Time Adoption of Indian Accounting Standards, the date of transition to Ind AS being April 1, 2016. Refer to Note 43 for details of adoption of Ind AS.
These financial Statements are prepared on an accrual basis under the historical cost convention or amortised cost, except for the following assets and liabilities, which have been measured at fair value :
i. Certain financial assets and liabilities (including derivative instruments) that are measured at fair value.
ii. Defined benefits plans-plan assets measured at fair value.
The financial statements are presented in Indian Rupees (INR), which is also the Companyâs functional currency and all amounts are rounded off to the nearest lakhs (INR '' â00,000â) up to two decimals, except when otherwise indicated.
2.2 Property, Plant and Equipment (PPE)
PPE is recognised 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. PPE (other than Freehold land and Capital Work-in-progress) are stated at cost less accumulated depreciation and impairment losses, if any. The initial cost of an asset comprises its purchase price, non-refundable purchase taxes and any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of any decommissioning obligation, if any. Cost includes for qualifying assets, borrowing costs capitalised in accordance with the companyâs accounting policy.
If significant parts of an item of PPE have different useful lives, then those are accounted as separate items (major components) of PPE.
Material items such as spare parts, stand-by equipment and service equipment are classified as and when they meet the definition of PPE, as specified in Ind AS 16 on âProperty, Plant and Equipmentâ.
Freehold land is carried at historical cost less impairment loss, if any
The carrying amount of an item of PPE is derecognised upon disposal or when no future economic benefit is expected to arise from its continued use. Any gain or loss arising on the derecognition of an item of PPE is determined as the difference between the net disposal proceeds and the carrying amount of the item and is recognised in Statement of Profit and Loss.
Capital Work-in-progress
Property, plant and equipment which are not ready for intended use on the date of balance sheet are disclosed as capital work-in-progress. It is carried at cost, less any recognised impairment loss. Such properties are classified and capitalised to the appropriate categories of Property, Plant and Equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
2.3 Depreciation/Amortisation
Depreciation on Property, Plant and Equipment (other than Freehold Land, Leasehold Land and Capital Work-in-progress) is provided on the Straight-Line Method in accordance with requirements prescribed under Schedule II to the Companies Act, 2013. The Company has assessed the estimated useful lives of its PPE and has adopted the useful lives and residual value as prescribed therein except for Leasehold Land which is amortised over the period of lease.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any change in estimate accounted for on a prospective basis.
Freehold land is not depreciated.
The Company depreciates significant components of the main asset (which have different useful lives as compared to the main asset) based on the individual useful life of those components. Useful life for such components of Property, Plant and Equipment is assessed based on the historical experience and internal technical inputs.
Depreciation on assets purchased/sold during the period is proportionately charged.
Leasehold Land is amortised on âStraight Line Methodâ over its remaining lease period of 72 years commencing from the year 2002-03
2.4 Impairment of non-financial 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 may have impaired. If any such indication exists, the recoverable amount, which is the higher of the value in use or fair value less cost to sell, of the asset or cash-generating unit, as the case may be, is estimated and impairment loss (if any) is recognised and the carrying amount is reduced to its recoverable amount.
In assessing the 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. 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.
An impairment loss is recognised immediately in the Statement of Profit and Loss. When an impairment subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but up to the amount that would have been determined, had no impairment loss been recognized for that asset or cash generating unit. A reversal of an impairment loss is recognised immediately in the Statement of Profit and Loss.
2.5 Inventories
Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition.
Raw materials, fuels, stores and spares are valued at lower of cost and net realisable value. Cost is determined on the basis of the first-in-first out basis. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Work-in-progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials, labour, other direct cost and a proportion of manufacturing overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
2.6 Financial Instruments
Financial assets and Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Initial Recognition:
Financial assets and Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at Fair Value through Profit or Loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised in the Statement of Profit and Loss.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (âFVOCIâ) or fair value through profit or loss (âFVTPLâ) on the basis of following:
- the entityâs business model for managing the financial assets; and
- the contractual cash flow characteristics of the financial assets.
Amortised Cost:
A financial asset shall be classified and measured at amortised cost, if both of the following conditions are met:
- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Fair Value through OCI:
A financial asset shall be classified and measured at FVOCI, if both of the following conditions are met:
- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Fair Value through Profit or Loss:
A financial asset shall be classified and measured at FVTPL unless it is measured at amortised cost or at FVTOCI.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification and Subsequent Measurement: Financial liabilities:
Financial liabilities are classified as either financial liabilities at FVTPL or âother financial liabilitiesâ.
Financial Liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL.
Gains or Losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
Other Financial Liabilities:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Impairment of financial assets:
The Company recognises loss allowance using expected credit loss model for financial assets which are not measured at Fair Value through Profit or Loss. Expected credit losses are weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss 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 Company expects to receive, discounted at original effective rate of interest.
For Trade Receivables, the Company measures loss allowance at an amount equal to expected credit losses. The Company computes expected credit loss allowance based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
Derecognition of financial assets:
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Financial liabilities and equity instruments:
- Classification as debt or equity:
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
- Equity instruments:
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by a Company are recognised at the proceeds received.
Derecognition of financial liabilities:
The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expired. The Company also derecognizes a financial liability when its terms are modified and the cash flows under the modified terms are substantially different.
Offsetting:
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
2.7 Derivative Financial Instruments
The Company holds derivative financial instruments such as foreign exchange forward contracts to manage its exposure to foreign currency exchange rate risks.
Derivatives are initially recognised at fair value at the date the contracts are entered into. Subsequent to initial recognition, these contracts are measured at fair value at the end of each reporting period and changes are recognised in Statement of Profit and Loss.
2.8 Statement of Cash Flows
Cash flows are reported using the indirect method, whereby net profit for the period is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents include cash on hand, cash at banks, other short-term deposits and highly liquid investments with original maturity of three months or less that are readily convertible into cash and which are subject to an insignificant risk of changes in value, as reduced by bank overdrafts.
2.9 Segment Reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.
Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.
Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under âunallocated revenue/expenses/ assets/liabilitiesâ respectively.
2.10 Non-current Assets held for Sale
Assets held for sale are measured at the lower of carrying amount or fair value less costs to sell. The determination of fair value less costs to sell includes use of management estimates and assumptions. The fair value of the asset held for sale has been estimated using valuation techniques (mainly income and market approach), which include unobservable inputs.
2.11 Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
2.12 Provisions, Contingent Liabilities and Contingent Assets
Provision is recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provision is not recognised for future operating losses.
Provisions are made at the managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If the effect of the time value of money is material, the amount of provision is discounted using an appropriate pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
A Contingent liability is disclosed in case of a present obligation arising from past events, when it is either not probable that an outflow of resources will be required to settle the obligation, or a reliable estimate of the amount cannot be made. A Contingent Liability is also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
Contingent Assets are not recognised but where an inflow of economic benefits is probable, contingent assets are disclosed in the financial statements.
2.13 Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits of a transaction will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Sale of Goods
Revenue from sale of goods is recognised upon transfer of significant risks and rewards of ownership of the goods to the customer, while neither continuing managerial involvement nor effective control over the goods sold is retained. Sales include excise duty but exclude Goods and Service Tax (GST). It is measured at fair value of consideration received or receivable, net of returns, rebates and discounts.
Sales Returns
The Company accounts for sales returns by recording an allowance for sales returns. This allowance is based on the Companyâs historical experience of expected sales returns towards expiry, breakages and damages. The Company considers its historical experience of sales return to account for such provision. Accordingly, short-term provisions have been increased with a corresponding adjustment to Retained Earnings/ Profit and Loss.
Interest income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of that financial asset.
Dividends
Dividend income from investments is recognised when the Companyâs right to receive dividend is established, which is generally when shareholders approve the dividend.
2.14 Foreign Currency Transactions
On initial recognition, transactions in foreign currencies are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items that are measured at historical cost denominated in a foreign currency are translated using the exchange rate as at the date of initial transaction. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.
2.15 Employee Benefits:
Short-term employee benefits:
Employee benefits such as salaries, wages, short term compensated absences, expected cost of bonus and ex-gratia falling due wholly within twelve months of rendering the service are classified as short-term employee benefits and are recognised as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.
Long-term employee benefits:
- Defined Contribution Plan:
The Companyâs contribution to Provident Fund and Employee State Insurance Scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.
- Defined Benefit Plan:
a. Gratuity
In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (âGratuity Planâ) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employeeâs last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date, carried out by an independent actuary.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the Statement of Changes in Equity and in the Balance Sheet.
b. Compensated Absences
The Company provides for the encashment of absence or absence with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absences subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.
2.16 Taxes on Income
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companyâs current tax is calculated using applicable tax rates that have been enacted or substantively enacted by the end of the reporting period and the provisions of the Income Tax Act, 1961 and other tax laws, as applicable.
Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities and when deferred income tax assets and liabilities relate to the income tax levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net or simultaneous basis.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
2.17 Earnings Per Share
The basic earnings per share are computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting period.
Diluted earnings per share 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.
Research and Development
Revenue expenditure on research and development is charged to Statement of Profit and Loss in the year in which it is incurred. Capital expenditure on research and development is considered as an addition to Property, Plant and Equipment/ Intangible Assets.
2.18 First-time adoption-mandatory exceptions, optional exemptions
Overall Principle
The Company has prepared the opening balance sheet as per Ind AS as of 1 st April, 2016 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to certain exceptions and certain optional exemptions availed by the Company detailed below:
Significant items are as discussed below:
i) Deemed cost for Property, Plant and Equipment and Intangible assets
The Company has elected to continue with the carrying value of all of its Property, Plant and Equipment and Intangible assets recognised as of the transition date measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
ii) Investments
The Company has elected to measure investments in Equity shares of subsidiary company at deemed cost, which is previous GAAP carrying amount at the entityâs date of transition to Ind ASs in its separate financial statements. Accordingly, under Ind AS, the Company has recognised investments as follows:
- Equity shares of subsidiary company - At deemed cost
- Equity shares of other companies- At fair value through Other Comprehensive Income (FVTOCI)
2.19 Critical Accounting Judgements and Key Sources of Estimation Uncertainty
The preparation of the financial statements requires the management to make judgements, estimates and assumptions in the application of accounting policies and that have the most significant effect on reported amounts of assets, liabilities, incomes and expenses, and accompanying disclosures, and the disclosure of contingent liabilities. 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. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Key estimates, assumptions and judgements
The key assumptions concerning the future and other major sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:
Income taxes
Significant judgements are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions as also to determine the amount of deferred tax that can be recognised, based upon the likely timing and the level of future taxable profits. Also, Refer Note 36.
Property, Plant and Equipment/Intangible Assets
Property, Plant and Equipment/ Other Intangible Assets are depreciated/amortised over their estimated useful lives, after taking into account estimated residual value. The useful lives and residual values are based on the Companyâs historical experience with similar assets and taking into account anticipated technological changes or commercial obsolescence. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/amortisation to be recorded during any reporting period. The depreciation/amortisation for future periods is revised, if there are significant changes from previous estimates and accordingly, the unamortised/depreciable amount is charged over the remaining useful life of the assets.
Employee Benefit Plans
The cost of the defined benefit gratuity plan and other-post employment benefits and the present value of gratuity obligations and compensated absences are determined based on actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, attrition and mortality rates. Due to the complexities involved in the valuation and its long-term nature, these liabilities are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Impairment of Financial Assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Companyâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.
Recoverability of Trade Receivables
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
Fair Value measurements of Financial Instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets (Net Assets Value in case of units of Mutual Funds), their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
Impairment of Assets
The Company has used certain judgements and estimates to work out future projections and discount rates to compute value in use of cash generating unit and to access impairment. In case of certain assets independent external valuation has been carried out to compute recoverable values of these assets.
Provisions
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future ouflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
2.20 Ind AS issued but not yet effective
Ministry of Corporate Affairs (âMCAâ) through the Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind ASs :
Ind AS 21 : The Effects of Changes in Foreign Exchange Rates
Appendix B to Ind AS 21, Foreign Currency T ransactions and Advance Consideration is inserted to clarify 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, to use on the initial recognition of the related asset, expense or income (or part of it) is the date on which the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration.
If there are multiple payments or receipts in advance, the date of the transaction is determined for each payment or receipt of advance consideration.
The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on its financial statements and the impact is not material.
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 on âRevenueâ and Ind AS 11 on âConstruction Contractsâ.
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.
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.
Further, Ind AS 115, requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
Ind AS 115 permits two possible methods of transition:
- Retrospective approach - Under this approach the standard is applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors.
- Retrospectively with cumulative effect of initially applying the standard recognised at the date of initial application (Cumulative catch - up approach) only to contracts that are not completed contracts on that date. Under this method, cumulative effect is recognised as an adjustment to the opening balance of retained earnings of the annual reporting period.
The effective date for adoption of Ind AS 115 is accounting period beginning on or after April 1, 2018.
The Company will adopt Ind AS on April 1, 2018 by using the cumulative catch-up transition method and accordingly, comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be insignificant.
Mar 31, 2017
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 BASIS OF PREPARATION:
These financial statements are prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention as also on accrual basis. These financial statements have been prepared to 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 (âthe Accounting Standardsâ) and the relevant provisions of the Act (to the extent notified). In the light of Rule4A of the Companies (Accounts) Rules 2014, the items contained in these financial statements are in accordance with the definitions and other requirements specified in the Accounting Standards.
1.2 USE OF ESTIMATES:
The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts / advances, deferred tax, etc. Actual results could differ from those estimates. Such difference is recognised in the period/s in which the results are known / materialised.
1.3 FIXED ASSETS AND DEPRECIATION / AMORTISATION:
i. An item of property, plant and equipment is recognised as an asset, referred to as Fixed Asset, if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Items such as spare parts, stand-by equipment and servicing equipment are recognised under property, plant and equipment, if those meet the definition thereof, else, such spare parts, etc. are classified as inventory.
Items of property, plant and equipment are measured at its cost. The cost comprises of - purchase price (net of CENVAT/value added tax), including import duties and non-refundable taxes, after deducting trade discounts and rebates and any cost incurred which is directly attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
The Company has adopted the cost model as its accounting policy for all its property, plant and equipment and accordingly, its Fixed Assets are carried at its cost less any accumulated depreciation and any impairment loss.
Items of property, plant and equipment which are not yet ready to be capable of operating in the manner intended by management are carried at cost and are disclosed as âCapital Work-in-progressâ.
ii. Depreciation on tangible fixed assets (other than Leasehold Land) is provided on âStraight Line Methodâ over the useful lives of assets as prescribed under Part C of Schedule II of the Companies Act, 2013.
Where the cost of a part of the asset which is significant to total cost of the asset and useful life of the part is different from the useful life of the remaining asset, the Company has determined the useful life of the significant part separately (âComponent Accountingâ) and accordingly, provided depreciation on such parts.
Leasehold Land is amortised on âStraight Line Methodâ over its remaining lease period of 72 years commencing from the year 2002-03.
iii. Depreciation for assets purchased / sold during the period is charged on pro-rata basis.
1.4 INVESTMENTS:
Investments, which are long-term, are stated at cost. A provision for diminution, if any, is made to recognise a decline, other than temporary, in the value of investments.
1.5 INVENTORIES:
Inventories are valued as under:
i. Raw materials: At lower of cost and net realisable value on first-in-first out basis;
ii. Finished Goods and Process Stock: At lower of cost and net realisable value on first-in-first out basis;
iii. Fuel, Stores and Spares: At lower of cost and net realisable value on first-in-first out basis. By-products are valued at the net realisable value.
Cost of inventories comprises of costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition. Excise duty on finished goods awaiting clearance has been provided for and included in cost thereof.
1.6 REVENUE RECOGNITION:
i. Sales are recognised in accordance with Accounting Standard 9 on âRevenue Recognitionâ, that is, when the seller has transferred to the buyer the property in goods for a price or all significant risks and rewards of ownership have been transferred to the buyer without the seller retaining any effective control over the goods and no uncertainty exists regarding the amount of consideration from the sale of goods.
ii. Dividend income from investments is recognised when the Companyâs right to receive the dividend is established.
1.7 FOREIGN CURRENCY TRANSACTIONS:
i. Transactions in foreign currencies are recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
ii. Monetary items which are denominated in foreign currency are translated at the exchange rates prevailing at the Balance Sheet date and profit/loss on translation thereon is credited/charged to the Statement of Profit and Loss.
Non-monetary items denominated in foreign currency which are carried at:
fair value / net realisable value are translated at the exchange rate prevalent at the date when the fair value / net realisable value was determined;
Historical cost, are reported at the exchange rate prevalent at the date of transaction.
iii. Exchange Differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset are recognised in the Statement of Profit and Loss.
iv. In case of forward contracts which are entered into to hedge the foreign currency risk of existing assets and liabilities, the difference between the forward rate specified in the contract and the exchange rate at the inception of the contract (the premium or discount) is recognised as income or expense over the life of the contract. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rate changes.
The Company has not entered into any forward exchange contract which is intended for trading or speculation purposes or to hedge the foreign currency risk for a firm commitment or a highly probable forecast transaction.
1.8 EMPLOYEE BENEFITS:
i. Defined Contribution Plan
Contribution as per the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952 towards Provident Fund and Family Pension Fund are provided for and payments in respect thereof are made to the relevant authorities on actual basis. Therefore, any excess payment made will be considered as an advance and shortfall, if any, will be adjusted.
ii. Defined Benefit Plan
Gratuity - In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (âGratuity Planâ) covering all employees. The Gratuity Plan provides a lumpsum payment to vested employees, at retirement or termination of employment, an amount based on the respective employeeâs last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date carried out by an independent actuary. Actuarial gain or loss is recognised immediately in the statement of profit and loss as income or expense. The Company has an employeeâs gratuity fund managed by the Life Insurance Corporation of India (âLICâ).
Compensated Absences - The Company provides for the encashment of absence or absence with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absences subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.
1.9 BORROWING COSTS:
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred. Borrowing costs comprise of interest and other costs incurred in connection with the borrowing of funds.
1.10 SEGMENT REPORTING POLICIES:
i. Primary Segments are identified based on the nature of products, the different risks and returns and the internal business reporting system. The identification of geographical segments is based on the geographical location of its customers.
The following specific accounting policies have been followed for segment reporting:
Segment revenue includes sales and other income directly identifiable with / allocable to the segment.
Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under Unallocable Expenses.
Income which relates to the Company as a whole and not allocable to segments is included in Unallocable Income.
Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities are those relate to the Company as a whole and not allocable to any segment.
ii. The Company prepares its Segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
1.11 TAXES ON INCOME:
i. Income tax expense comprises of current tax and deferred tax charge/credit.
ii. Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year.
iii. Deferred tax is recognised, subject to consideration of prudence, on timing differences between taxable and accounting income which originates in one period and are capable of reversal in one or more subsequent periods (adjusted for reversals expected during tax holiday period). The tax effect is calculated on accumulated timing differences at the year end based on tax rates and laws enacted or substantially enacted as of the balance sheet date.
In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available to realise such deferred tax assets. In other situations, deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available to realise such deferred tax assets.
The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.
1.12 PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
i. The Company recognises a Provision when there is a present obligation as a result of past event, the settlement of which is probable to result in an outflow of resources and a reliable estimate can be made of the amount of obligation.
ii. Contingent liabilities are not recognised but are disclosed in the notes.
iii. Contingent Assets are neither recognised nor disclosed in the financial statements.
1.13 IMPAIRMENT OF ASSETS:
If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset/cash generating unit is determined on the balance sheet date and if it is less than its carrying amount, the carrying amount of asset/cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognised, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognised for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets / cash generating unit, which is determined by the present value of the estimated future cash flows.
Mar 31, 2016
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 BASIS OF PREPARATION:
These financial statements are prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention except for certain tangible assets which are being carried at revalued amounts as also on accrual basis. These financial statements have been prepared to comply with the accounting standards prescribed under Section 133 of the Companies Act, 2013 (''the Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014 (''the Accounting Standards'') and the relevant provisions of the Act (to the extent notified). In the light of Rule 4A of the Companies (Accounts) Rules 2014, the items contained in these financial statements are in accordance with the definitions and other requirements specified in the Accounting Standards.
1.2 USE OF ESTIMATES:
The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts / advances, deferred tax, etc. Actual results could differ from those estimates. Such difference is recognized in the period/s in which the results are known / materialized.
1.3 FIXED ASSETS AND DEPRECIATION / AMORTISATION:
i. Fixed Assets are stated at historical cost, net of CENVAT/value added tax less accumulated depreciation except Land and Buildings which were revalued. Costs include all costs incurred to bring the assets to their present location and condition.
ii. Depreciation on tangible fixed assets (other than Leasehold Land) is provided on "Straight Line Method" over the useful lives of assets as prescribed under Part C of Schedule II of the Companies Act, 2013.
Where the cost of a part of the asset which is significant to total cost of the asset and useful life of the part is different from the useful life of the remaining asset, the Company has determined the useful life of the significant part separately ("Component Accounting") and accordingly, provided depreciation on such parts.
Leasehold Land is amortized on "Straight Line Method" over its remaining lease period of 72 years commencing from the year 2002-03.
iii. Depreciation for assets purchased / sold during the period is charged on pro-rata basis.
1.4 INVESTMENTS:
Investments, which are long-term, are stated at cost. A provision for diminution, if any, is made to recognize a decline, other than temporary, in the value of investments.
1.5 INVENTORIES:
Inventories are valued as under:
i. Raw materials: At lower of cost and net realizable value on first-in-first out basis;
ii. Finished Goods and Process Stock: At lower of cost and net realizable value on first-in-first out basis;
iii. Fuel, Stores and Spares: At lower of cost and net realizable value on first-in-first out basis.
By-products are valued at the net realizable value.
Cost of inventories comprises of costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition. Excise duty on finished goods awaiting clearance has been provided for and included in cost thereof.
1.6 REVENUE RECOGNITION:
i. Sales are recognized in accordance with Accounting Standard 9 on "Revenue Recognition", that is, when the seller has transferred to the buyer the property in goods for a price or all significant risks and rewards of ownership have been transferred to the buyer without the seller retaining any effective control over the goods and no uncertainty exists regarding the amount of consideration from the sale of goods.
ii. Dividend income from investments is recognized when the Company''s right to receive the dividend is established.
1.7 FOREIGN CURRENCY TRANSACTIONS:
i. Transactions in foreign currencies are recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
ii. Monetary items which are denominated in foreign currency are translated at the exchange rates prevailing at the Balance Sheet date and profit/loss on translation thereon is credited/ charged to the Statement of Profit and Loss.
Non-monetary items denominated in foreign currency which are carried at: fair value / net realizable value are translated at the exchange rate prevalent at the date when the fair value / net realizable value was determined; historical cost, are reported at the exchange rate prevalent at the date of transaction.
iii. Exchange Differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset are recognized in the Statement of Profit and Loss.
iv. In case of forward contracts, the exchange difference between the forward rate and the exchange rate at the date of transaction is recognized as income or expense over the life of the contract.
v. As required by the Announcement of the Institute of Chartered Accountants of India on positions of derivatives, keeping in view the principle of prudence as per Accounting Standard 1 on "Disclosure of Accounting Policies", outstanding forward contracts at the Balance Sheet date are reflected by marking them to market and accordingly, the resulting mark to market losses are provided in the Statement of Profit and Loss.
1.8 EMPLOYEE BENEFITS:
i. Defined Contribution Plan
Contribution as per the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 towards Provident Fund and Family Pension Fund are provided for and payments in respect thereof are made to the relevant authorities on actual basis. Therefore, any excess payment made will be considered as an advance and shortfall, if any, will be adjusted.
ii. Defined Benefit Plan
Gratuity - In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("Gratuity Plan") covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee''s last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date carried out by an independent actuary. Actuarial gain or loss is recognized immediately in the statement of profit and loss as income or expense. The Company has an employee''s gratuity fund managed by the Life Insurance Corporation of India ("LIC").
Compensated Absences - The Company provides for the encashment of absence or absence with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absences subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.
1.9 BORROWING COSTS:
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. Other borrowing costs are recognized as an expense in the period in which they are incurred. Borrowing costs comprise of interest and other costs incurred in connection with the borrowing of funds.
1.10 SEGMENT REPORTING POLICIES:
i. Primary Segments are identified based on the nature of products, the different risks and returns and the internal business reporting system. The identification of geographical segments is based on the geographical location of its customers.
The following specific accounting policies have been followed for segment reporting:
Segment revenue includes sales and other income directly identifiable with / allocable to the segment.
Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under Unallocable Expenses.
Income which relates to the Company as a whole and not allocable to segments is included in Unallocable Income.
Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities are those relate to the Company as a whole and not allocable to any segment.
ii. The Company prepares its Segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
1.11 TAXES ON INCOME:
i. Income tax expense comprises of current tax and deferred tax charge/credit.
ii. Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year.
iii. Deferred tax is recognized, subject to consideration of prudence, on timing differences between taxable and accounting income which originates in one period and are capable of reversal in one or more subsequent periods (adjusted for reversals expected during tax holiday period). The tax effect is calculated on accumulated timing differences at the year end based on tax rates and laws enacted or substantially enacted as of the balance sheet date.
In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available to realize such deferred tax assets. In other situations, deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future taxable income will be available to realize such deferred tax assets.
The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.
1.12 PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
i. The Company recognizes a Provision when there is a present obligation as a result of past event, the settlement of which is probable to result in an outflow of resources and a reliable estimate can be made of the amount of obligation.
ii. Contingent liabilities are not recognized but are disclosed in the notes.
iii. Contingent Assets are neither recognized nor disclosed in the financial statements.
1.13 IMPAIRMENT OF ASSETS:
If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset / cash generating unit is determined on the balance sheet date and if it is less than its carrying amount, the carrying amount of asset/ cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognized, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognized for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets/ cash generating unit, which is determined by the present value of the estimated future cash flows.
Mar 31, 2015
1.1 BASIS OF PREPARATION:
These financial statements are prepared in accordance with the
generally accepted accounting principles in India (Indian GAAP) under
the historical cost convention except for certain tangible assets which
are being carried at revalued amounts as also on accrual basis. These
financial statements have been prepared to comply with the accounting
standards prescribed under Section 133 of the Companies Act, 2013 ('the
Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 ('the
Accounting Standards') and the relevant provisions of the Act (to the
extent notified). In the light of the first proviso to Section 129 (1)
of the Act and Schedule III to the Act, the items and terms contained
in these financial statements are in accordance with the Accounting
Standards.
1.2 USE OF ESTIMATES:
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues
and expenses during the reporting period, the reported amounts of
assets and liabilities and the disclosures of contingent liabilities on
the date of financial statements. Examples of such estimates include
useful lives of Fixed Assets, provision for doubtful debts / advances,
deferred tax, etc. Actual results could differ from those estimates.
Such difference is recognised in the period/s in which the results are
known / materialised.
1.3 FIXED ASSETS AND DEPRECIATION / AMORTISATION:
i. Fixed Assets are stated at historical cost, net of CENVAT/value
added tax less accumulated depreciation except Land and Buildings which
were revalued. Costs include all costs incurred to bring the assets to
their present location and condition.
ii. Depreciation on tangible fixed assets (other than Leasehold Land)
is provided on "Straight Line Method" over the useful lives of
assets as prescribed under Part C of Schedule II of the Companies Act,
2013.
Leasehold Land is amortised on "Straight Line Method" over its
remaining lease period of 72 years commencing from the year 2002-03.
iii. Depreciation for assets purchased / sold during the period is
charged on pro-rata basis.
1.4 INVESTMENTS:
Investments, which are long-term, are stated at cost. A provision for
diminution, if any, is made to recognise a decline, other than
temporary, in the value of investments.
1.5 INVENTORIES:
Inventories are valued as under:
i. Raw materials: At lower of cost and net realisable value on
first-in-first out basis;
ii. Finished Goods and Process Stock: At lower of cost and net
realisable value on first-in-first out basis;
iii. Fuel, Stores and Spares: At lower of cost and net realisable value
on first-in-first out basis. By-products are valued at the net
realisable value.
Cost of inventories comprises of costs of purchase, conversion and
other costs incurred in bringing the inventories to their present
location and condition. Excise duty on finished goods awaiting
clearance has been provided for and included in cost thereof.
1.6 REVENUE RECOGNITION:
i. Sales are recognised in accordance with Accounting Standard 9 on
"Revenue Recognition", that is, when the seller has transferred to
the buyer the property in goods for a price or all significant risks
and rewards of ownership have been transferred to the buyer without the
seller retaining any effective control over the goods and no
uncertainty exists regarding the amount of consideration from the sale
of goods.
ii. Dividend income from investments is recognised when the Company's
right to receive the dividend is established.
1.7 FOREIGN CURRENCY TRANSACTIONS:
i. Transactions in foreign currencies are recorded, on initial
recognition in the reporting currency, by applying to the foreign
currency amount the exchange rate between the reporting currency and
the foreign currency at the date of the transaction.
ii. Monetary items which are denominated in foreign currency are
translated at the exchange rates prevailing at the Balance Sheet date
and profit/loss on translation thereon is credited/ charged to the
Statement of Profit and Loss.
Non-monetary items denominated in foreign currency which are carried
at:
- fair value / net realisable value are translated at the exchange
rate prevalent at the date when the fair value / net realisable value
was determined;
- historical cost, are reported at the exchange rate prevalent at the
date of transaction.
iii. Exchange Differences arising on settlement or restatement of
foreign currency denominated liabilities relating to the acquisition of
fixed asset are recognised in the Statement of Profit and Loss.
iv. In case of forward contracts, the exchange difference between the
forward rate and the exchange rate at the date of transaction is
recognised as income or expense over the life of the contract.
v. As required by the Announcement of the Institute of Chartered
Accountants of India on positions of derivatives, keeping in view the
principle of prudence as per Accounting Standard 1 on "Disclosure of
Accounting Policies", outstanding forward contracts at the Balance
Sheet date are reflected by marking them to market and accordingly, the
resulting mark to market losses are provided in the Statement of Profit
and Loss.
1.8 EMPLOYEE BENEFITS:
i. Defined Contribution Plan
Contribution as per the Employees' Provident Funds and Miscellaneous
Provisions Act, 1952 towards Provident Fund and Family Pension Fund are
provided for and payments in respect thereof are made to the relevant
authorities on actual basis. Therefore, any excess payment made will be
considered as an advance and shortfall, if any, will be adjusted.
ii. Defined Benefit Plan
Gratuity - In accordance with applicable Indian laws, the Company
provides for gratuity, a defined benefit retirement plan ("Gratuity
Plan") covering all employees. The Gratuity Plan provides a lump sum
payment to vested employees, at retirement or termination of
employment, an amount based on the respective employee's last drawn
salary and the years of employment with the Company. Liability with
regard to Gratuity Plan is accrued based on actuarial valuation at the
Balance Sheet date carried out by an independent actuary. Actuarial
gain or loss is recognised immediately in the statement of profit and
loss as income or expense. The Company has an employee's gratuity fund
managed by the Life Insurance Corporation of India ("LIC").
Compensated Absences - The Company provides for the encashment of
absence or absence with pay based on policy of the Company in this
regard. The employees are entitled to accumulate such absences subject
to certain limits, for the future encashment or absence. The Company
records an obligation for compensated absences in the period in which
the employee renders the services that increases this entitlement. The
Company measures the expected cost of compensated absences as the
additional amount that the Company expects to pay as a result of the
unused entitlement that has accumulated at the Balance Sheet date on
the basis of an independent actuarial valuation.
1.9 BORROWING COSTS:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use. Other
borrowing costs are recognised as an expense in the period in which
they are incurred. Borrowing costs comprise of interest and other costs
incurred in connection with the borrowing of funds.
1.10 SEGMENT REPORTING POLICIES:
i. Primary Segments are identified based on the nature of products, the
different risks and returns and the internal business reporting system.
The identification of geographical segments is based on the
geographical location of its customers.
The following specific accounting policies have been followed for
segment reporting:
- Segment revenue includes sales and other income directly identifiable
with / allocable to the segment.
- Expenses that are directly identifiable with / allocable to segments
are considered for determining the segment result. Expenses which
relate to the Company as a whole and not allocable to segments are
included under Unallocable Expenses.
- Income which relates to the Company as a whole and not allocable to
segments is included in Unallocable Income.
- Segment assets and liabilities include those directly identifiable
with the respective segments. Unallocable corporate assets and
liabilities are those relate to the Company as a whole and not
allocable to any segment.
ii. The Company prepares its Segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
1.11 TAXES ON INCOME:
i. Income tax expense comprises of current tax and deferred tax
charge/credit.
ii. Provision for current tax is made on the estimated taxable income
at the rate applicable to the relevant assessment year.
iii. Deferred tax is recognised, subject to consideration of prudence,
on timing differences between taxable and accounting income which
originates in one period and are capable of reversal in one or more
subsequent periods (adjusted for reversals expected during tax holiday
period). The tax effect is calculated on accumulated timing differences
at the year end based on tax rates and laws enacted or substantially
enacted as of the balance sheet date.
In the event of unabsorbed depreciation and carry forward of losses,
deferred tax assets are recognised only to the extent that there is
virtual certainty that sufficient future taxable income will be
available to realise such deferred tax assets. In other situations,
deferred tax assets are recognised only to the extent that there is a
reasonable certainty that sufficient future taxable income will be
available to realise such deferred tax assets.
The Company offsets deferred tax assets and deferred tax liabilities if
it has a legally enforceable right and these relate to taxes on income
levied by the same governing taxation laws.
1.12 PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
i. The Company recognises a Provision when there is a present
obligation as a result of past event, the settlement of which is
probable to result in an outflow of resources and a reliable estimate
can be made of the amount of obligation.
ii. Contingent liabilities are not recognised but are disclosed in the
notes.
iii. Contingent Assets are neither recognised nor disclosed in the
financial statements.
1.13 IMPAIRMENT OF ASSETS:
If internal / external indications suggest that an asset of the Company
may be impaired, the recoverable amount of asset / cash generating unit
is determined on the balance sheet date and if it is less than its
carrying amount, the carrying amount of asset/ cash generating unit is
reduced to the said recoverable amount. Subsequently, if there is a
change in the indication, since the last impairment was recognised, so
that recoverable amount of an asset exceeds its carrying amount, an
impairment recognised for an asset in prior accounting period is
reversed. The recoverable amount is measured as the higher of the net
selling price and value in use of such assets/ cash generating unit,
which is determined by the present value of the estimated future cash
flows.
Mar 31, 2014
1.1 BASIS OF PREPARATION:
The accounts have been prepared on the basis of going concern under
historical cost convention as also on accrual basis and in accordance
with the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956 ("the 1956 Act"), which have been prescribed by the
Companies (Accounting Standards) Rules, 2006, [which continue to be
applicable in respect of Section 133 of the Companies Act, 2013 ("the
2013 Act") in terms of General Circular 15/2013 dated September 13,
2013 of the Ministry of Corporate Affairs], and the relevant provisions
of the 1956 Act / the 2013 Act, as applicable.
1.2 USE OF ESTIMATES:
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues
and expenses during the reporting period, the reported amounts of
assets and liabilities and the disclosures of contingent liabilities on
the date of financial statements. Examples of such estimates include
useful lives of Fixed Assets, provision for doubtful debts / advances,
deferred tax, etc. Actual results could differ from those estimates.
Such difference is recognised in the period/s in which the results are
known / materialised.
1.3 FIXED ASSETS AND DEPRECIATION:
i. Fixed Assets are stated at historical cost net of CENVAT/value
added tax less accumulated depreciation except Land and Buildings which
were revalued. Costs include all costs incurred to bring the assets to
their present location and condition.
ii. Depreciation on fixed assets is provided on "Straight Line Method"
at the rates prescribed in Schedule XIV to the Companies Act, 1956, as
amended. Depreciation on additions to Fixed Assets is charged on
pro-rata basis.
iii. Revalued amount of leasehold land is amortised over its remaining
lease period of 72 years commencing from the year 2002-03.
1.4 INVESTMENTS:
Investments, being for long-term, are stated at cost, except where
there is a diminution in value other than temporary in which case the
carrying value is reduced to recognise the decline.
1.5 INVENTORIES:
Inventories are valued as under:
i. Raw materials: At lower of cost and net realisable value on
first-in-first out basis;
ii. Finished Goods and Process Stock: At lower of cost and net
realisable value;
iii. Fuel, Stores and Spares: At lower of cost and net realisable value
on first-in-first out basis.
Cost of inventories comprises of costs of purchase, conversion and
other costs incurred in bringing the inventories to their present
location and condition. Excise duty on finished goods awaiting
clearance has been provided for and included in cost thereof.
By-products are valued at the net realisable value.
1.6 REVENUE RECOGNITION:
i. Sales are recognised in accordance with Accounting Standard 9 on
"Revenue Recognition", that is, when the seller has transferred to the
buyer the property in goods for a price or all significant risks and
rewards of ownership have been transferred to the buyer without the
seller retaining any effective control over the goods and no
uncertainty exists regarding the amount of consideration from the sale
of goods.
ii. Dividend income from investments is recognised when the Company''s
right to receive the dividend is established.
1.7 FOREIGN CURRENCY TRANSACTIONS:
i. Transactions in foreign currencies are recorded, on initial
recognition in the reporting currency, by applying to the foreign
currency amount the exchange rate between the reporting currency and
the foreign currency at the date of the transaction.
ii. Monetary items which are denominated in foreign currency are
translated at the exchange rates prevailing at the Balance Sheet date
and profit/loss on translation thereon is credited/ charged to the
Statement of Profit and Loss.
Non-monetary items denominated in foreign currency which are carried
at:
* fair value / net realisable value are translated at the exchange rate
prevalent at the date when the fair value / net realisable value was
determined;
* historical cost, are reported at the exchange rate prevalent at the
date of transaction.
iii. Exchange Differences arising on settlement or restatement of
foreign currency denominated liabilities relating to the acquisition of
fixed asset are recognised in the Statement of Profit and Loss.
iv. In case of forward contracts, the exchange difference between the
forward rate and the exchange rate at the date of transaction is
recognised as income or expense over the life of the contract.
v. As required by the Announcement of the Institute of Chartered
Accountants of India on positions of derivatives, keeping in view the
principle of prudence as per Accounting Standard 1 on "Disclosure of
Accounting Policies", outstanding forward contracts at the Balance
Sheet date are reflected by marking them to market and accordingly, the
resulting mark to market losses are provided in the Statement of Profit
and Loss.
1.8 EMPLOYEE BENEFITS:
i. Defined Contribution Plan
Contribution as per the Employees'' Provident Funds and Miscellaneous
Provisions Act, 1952 towards Provident Fund and Family Pension Fund are
provided for and payments in respect thereof are made to the relevant
authorities on actual basis. Therefore, any excess payment made will be
considered as an advance and shortfall, if any, will be adjusted.
ii. Defined Benefit Plan
Gratuity - In accordance with applicable Indian laws, the Company
provides for gratuity, a defined benefit retirement plan ("Gratuity
Plan") covering all employees. The Gratuity Plan provides a lump sum
payment to vested employees, at retirement or termination of
employment, an amount based on the respective employee''s last drawn
salary and the years of employment with the Company. Liability with
regard to Gratuity Plan is accrued based on actuarial valuation at the
Balance Sheet date carried out by an independent actuary. Actuarial
gain or loss is recognised immediately in the statement of profit and
loss as income or expense. The Company has an employee''s gratuity fund
managed by the Life Insurance Corporation of India ("LIC").
Compensated Absences - The Company provides for the encashment of
absence or absence with pay based on policy of the Company in this
regard. The employees are entitled to accumulate such absences subject
to certain limits, for the future encashment or absence. The Company
records an obligation for compensated absences in the period in which
the employee renders the services that increases this entitlement. The
Company measures the expected cost of compensated absences as the
additional amount that the Company expects to pay as a result of the
unused entitlement that has accumulated at the Balance Sheet date on
the basis of an independent actuarial valuation.
1.9 BORROWING COSTS:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use. Other
borrowing costs are recognised as an expense in the period in which
they are incurred. Borrowing costs comprise of interest and other costs
incurred in connection with the borrowing of funds.
1.10 SEGMENT REPORTING POLICIES:
i. Primary Segments are identified based on the nature of products,
the different risks and returns and the internal business reporting
system. The identification of geographical segments is based on the
geographical location of its customers.
The following specific accounting policies have been followed for
segment reporting:
* Segment revenue includes sales and other income directly identifiable
with / allocable to the segment.
* Expenses that are directly identifiable with / allocable to segments
are considered for determining the segment result. Expenses which
relate to the Company as a whole and not allocable to segments are
included under Unallocable Expenses.
* Income which relates to the Company as a whole and not allocable to
segments is included in Unallocable Income.
* Segment assets and liabilities include those directly identifiable
with the respective segments. Unallocable corporate assets and
liabilities are those relate to the Company as a whole and not
allocable to any segment.
ii. The Company prepares its Segment information in conformity with
the accounting policies adopted for preparing and presenting the
financial statements of the Company as a whole.
1.11 TAXES ON INCOME:
i. Income tax expense comprises of current tax and deferred tax
charge/credit.
ii. Provision for current tax is made on basis of the assessable
income under the Income-tax Act, 1961.
iii. Deferred tax is recognised, subject to consideration of prudence,
on timing differences between taxable and accounting income which
originates in one period and are capable of reversal in one or more
subsequent periods (adjusted for reversals expected during tax holiday
period). The tax effect is calculated on accumulated timing differences
at the year end based on tax rates and laws enacted or substantially
enacted as of the balance sheet date.
In the event of unabsorbed depreciation and carry forward of losses,
deferred tax assets are recognised only to the extent that there is
virtual certainty that sufficient future taxable income will be
available to realise such deferred tax assets. In other situations,
deferred tax assets are recognised only to the extent that there is a
reasonable certainty that sufficient future taxable income will be
available to realise such deferred tax assets.
The Company offsets deferred tax assets and deferred tax liabilities if
it has a legally enforceable right and these relate to taxes on income
levied by the same governing taxation laws.
1.12 PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
i. Provisions involving substantial degree of estimation in
measurement are recognised when there is a present obligation as a
result of past events and it is probable that there will be an outflow
of resources.
ii. Contingent liabilities are not recognised but are disclosed in the
notes.
iii. Contingent Assets are neither recognised nor disclosed in the
financial statements.
1.13 IMPAIRMENT OF ASSETS:
If internal / external indications suggest that an asset of the Company
may be impaired, the recoverable amount of asset / cash generating unit
is determined on the balance sheet date and if it is less than its
carrying amount, the carrying amount of asset/ cash generating unit is
reduced to the said recoverable amount. Subsequently, if there is a
change in the indication, since the last impairment was recognised, so
that recoverable amount of an asset exceeds its carrying amount, an
impairment recognised for an asset in prior accounting period is
reversed. The recoverable amount is measured as the higher of the net
selling price and value in use of such assets/ cash generating unit,
which is determined by the present value of the estimated future cash
flows.
Mar 31, 2013
1.1 ACCOUNTING CONVENTION:
The accounts are prepared on a going concern basis under historical
cost convention as also accrual basis and in accordance with the
Accounting Standards referred to in Section 211 (3C) of the Companies
Act, 1956, which have been prescribed by the Companies (Accounting
Standards) Rules, 2006, and the relevant provisions of the Companies
Act, 1956.
1.2 USE OF ESTIMATES:
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues
and expenses during the reporting period, the reported amounts of
assets and liabilities and the disclosures of contingent liabilities on
the date of financial statements. Examples of such estimates include
useful life of Fixed Assets, provision for doubtful debts / advances,
deferred tax, etc. Actual results could differ from those estimates.
Such difference is recognised in the year/s in which the results are
known / materialised.
1.3 FIXED ASSETS AND DEPRECIATION:
i. Fixed Assets are stated at historical cost net of CENVAT/value added
tax less accumulated depreciation except Land and Buildings which were
revalued. Costs include all costs incurred to bring the assets to their
present location and condition.
ii. Depreciation on fixed assets is provided on "Straight Line Method"
at the rates prescribed in Schedule XIV to the Companies Act, 1956, as
amended. Depreciation on additions to Fixed Assets is charged on pro
rata basis.
iii. Revalued amount of leasehold land is amortised over its remaining
lease period of 72 years commencing from the year 2002-03.
1.4 INVESTMENTS:
Investments, being for long-term, are stated at cost, except where
there is a diminution in value other than temporary in which case the
carrying value is reduced to recognise the decline.
1.5 INVENTORIES:
Inventories are valued as under:
i. Raw materials: At lower of cost and net realisable value on
firstÂinÂfirst out basis;
ii. Finished Goods and Process Stock: At lower of cost and net
realisable value;
iii. Fuel, Stores and Spares: At lower of cost and net realisable
value on firstÂin first out basis.
Cost of inventories comprises of costs of purchase, conversion and
other costs incurred in bringing the inventories to their present
location and condition.
By-products are valued at net realisable value.
1.6 REVENUE RECOGNITION:
i. Sales are recognised in accordance with Accounting Standard 9 on
"Revenue Recognition", that is, when the seller has transferred to the
buyer the property in goods for a price or all significant risks and
rewards of ownership have been transferred to the buyer without the
seller retaining any effective control over the goods and no
uncertainty exists regarding the amount of consideration from the sale
of goods.
ii. Dividend income from investments is recognised when the company`''s
right to receive the dividend is established.
1.7 FOREIGN CURRENCY TRANSACTIONS:
i. Transactions in foreign currencies are recorded, on initial
recognition in the reporting currency, by applying to the foreign
currency amount the exchange rate between the reporting currency and
the foreign currency at the date of the transaction.
ii. Monetary items which are denominated in foreign currency are
translated at the exchange rates prevailing at the Balance Sheet date
and profit/loss on translation thereon is credited/ charged to the
Statement of Profit and Loss.
Non-monetary items denominated in foreign currency which are carried
at:
- fair value / net realisable value are translated at the exchange rate
prevalent at the date when the fair value / net realisable value was
determined;
- historical cost, are reported at the exchange rate prevalent at the
date of transaction.
iii. Exchange Differences arising on settlement or restatement of
foreign currency denominated liabilities relating to the acquisition of
fixed asset are recognised in the Statement of Profit and Loss.
iv. In case of forward contracts, the exchange difference between the
forward rate and the exchange rate at the date of transaction is
recognised as income or expense over the life of the contract.
v As required by the Announcement of the Institute of Chartered
Accountants of India on positions of derivatives, keeping in view the
principle of prudence as per Accounting Standard 1 on "Disclosure of
Accounting Policies", outstanding forward contracts at the Balance
Sheet date are reflected by marking them to market and accordingly, the
resulting mark to market losses are provided in the Statement of Profit
and Loss.
1.8 EMPLOYEE BENEFITS:
i. Defined Contribution Plan
Contribution as per the Employees`'' Provident Funds and Miscellaneous
Provisions Act, 1952 towards Provident Fund and Family Pension Fund are
provided for and payments in respect thereof are made to the relevant
authorities on actual basis.
ii. Defined Benefit Plan
Gratuity - In accordance with applicable Indian laws, the Company
provides for gratuity, a defined benefit retirement plan ("Gratuity
Plan") covering all employees. The Gratuity Plan provides a lump sum
payment to vested employees, at retirement or termination of
employment, an amount based on the respective employee`''s last drawn
salary and the years of employment with the Company. Liability with
regard to Gratuity Plan is accrued based on actuarial valuation at the
Balance Sheet date carried out by an independent actuary. Actuarial
gain or loss is recognised immediately in the statement of profit and
loss as income or expense. The Company has an employee`''s gratuity fund
managed by the Life Insurance Corporation of India ("LIC").
Compensated Absences - The Company provides for the encashment of
absence or absence with pay based on policy of the Company in this
regard. The employees are entitled to accumulate such absences subject
to certain limits, for the future encashment or absence. The Company
records an obligation for compensated absences in the period in which
the employee renders the services that increases this entitlement. The
Company measures the expected cost of compensated absences as the
additional amount that the Company expects to pay as a result of the
unused entitlement that has accumulated at the Balance Sheet date on
the basis of an independent actuarial valuation.
1.9 BORROWING COSTS:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use. Other
borrowing costs are recognised as an expense in the period in which
they are incurred. Borrowing costs comprise of interest and other costs
incurred in connection with the borrowing of funds.
1.10TAXES ON INCOME:
i. Income tax expense comprises of current tax and deferred tax
charge/credit.
ii. Provision for current tax is made on basis of the assessable income
under the Income-tax Act, 1961.
iii. Deferred tax is recognised, subject to consideration of prudence,
on timing differences between taxable and accounting income which
originates in one period and are capable of reversal in one or more
subsequent periods (adjusted for reversals expected during tax holiday
period). The tax effect is calculated on accumulated timing differences
at the year end based on tax rates and laws enacted or substantially
enacted as of the balance sheet date. The deferred tax asset is
recognised and carried forward only to the extent that there is a
reasonable certainty that the asset will be realised in future.
1.11 PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
i. Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
ii. Contingent liabilities are not recognised but are disclosed in the
notes.
iii. Contingent Assets are neither recognised nor disclosed in the
financial statements.
1.12 IMPAIRMENT OF ASSETS:
If internal/ external indications suggest that an asset of the Company
may be impaired, the recoverable amount of asset / cash generating unit
is determined on the balance sheet date and if it is less than its
carrying amount, the carrying amount of asset/ cash generating unit is
reduced to the said recoverable amount. Subsequently, if there is a
change in the indication, since the last impairment was recognised, so
that recoverable amount of an asset exceeds its carrying amount, an
impairment recognised for an asset in prior accounting period is
reversed. The recoverable amount is measured as the higher of the net
selling price and value in use of such assets/ cash generating unit,
which is determined by the present value of the estimated future cash
flows.
Mar 31, 2012
1.1 ACCOUNTING CONVENTION:
i. The accounts are prepared on a going concern basis under historical
cost convention as also accrual basis and in accordance with the
Accounting Standards referred to in Section 211 (3C) of the Companies
Act, 1956, which have been prescribed by the Companies (Accounting
Standards) Rules, 2006, and the relevant provisions of the Companies
Act, 1956.
ii. The financial statements for the year ended March 31, 2012 had been
prepared as per the then applicable pre-revised Schedule VI to the
Companies Act, 1956. Consequent to the notification of the Revised
Schedule VI under the Companies Act, 1956, the financial statements for
the year ended March 31, 2012 are prepared as per the Revised Schedule
VI. Accordingly, the previous year figures have also been
reclassified/regrouped to conform to this year's classification. The
adoption of Revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements.
1.2 USE OF ESTIMATES:
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosures of contingent amounts as at the date of
financial statements and the reported amounts of revenues and expenses
during the reporting period. Examples of such estimates include useful
lives of Fixed Assets, provision for doubtful debts / advances,
deferred tax, etc. Actual results could differ from these estimates.
Such difference is recognized in the period/s in which the results are
known / materialized.
1.3 FIXED ASSETS AND DEPRECIATION:
i. Fixed Assets are stated at historical cost net of cenvat/value added
tax less accumulated depreciation except Land and Buildings which were
revalued as detailed in Note 29.1. Costs include all costs incurred to
bring the assets to their present location and condition.
ii. Depreciation on fixed assets is provided on "Straight Line Method"
at the rates prescribed in Schedule XIV to the Companies Act, 1956, as
amended. Depreciation on additions to Fixed Assets is charged on pro
rata basis.
iii. Revalued amount of leasehold land is amortised over its remaining
lease period of 72 years commencing from the year 2002-03.
1.4 INVESTMENTS:
Investments, being for long-term, are stated at cost, except where
there is a diminution in value other than temporary in which case the
carrying value is reduced to recognise the decline.
1.5 INVENTORIES:
Inventories are valued as under:
i. Raw materials: At lower of cost and net realisable value on
firstÃinÃfirst out basis;
ii. Finished Goods and Process Stock: At lower of cost and net
realisable value;
iii. Fuel, Stores and Spares: At lower of cost and net realisable
value on firstÃinà first out basis.
Cost of inventories comprises of costs of purchase, conversion and
other costs incurred in bringing the inventories to their present
location and condition.
By-products are valued at net realisable value.
1.6 REVENUE RECOGNITION:
i. Sales are recognised in accordance with Accounting Standard 9 on
"Revenue Recognition", that is, when the seller has transferred to the
buyer the property in goods for a price or all significant risks and
rewards of ownership have been transferred to the buyer without the
seller retaining any effective control over the goods and no
uncertainty exists regarding the amount of consideration from the sale
of goods.
ii. Dividend income from investments is recognised when the
shareholder's right to receive payments is established.
1.7 FOREIGN CURRENCY TRANSACTIONS:
i. Transactions in foreign currencies (monetary or non-monetary items)
are recorded at the rates of exchange prevailing on the date when the
relevant transaction takes place or that approximates the actual rate
at the date of the transaction.
ii. Monetary items, which are denominated in foreign currency, at the
year end and reported are restated at the exchange rates prevailing on
the date of the Balance Sheet.
Non-monetary items denominated in foreign currency which are carried
at:
- fair value / net realisable value are translated at the exchange rate
prevalent at the date when the fair value / net realisable value was
determined;
- historical cost, are reported at the exchange rate prevalent at the
date of transaction.
iii. Gain or Loss on account of exchange differences, either on
settlement or on restatement, are recognised in the Statement of Profit
and Loss.
iv Exchange Differences arising on settlement or restatement of foreign
currency denominated liabilities relating to the acquisition of fixed
asset are recognised in the Statement of Profit and Loss.
v In case of forward contracts, the exchange difference between the
forward rate and the exchange rate at the date of transaction is
recognised as income or expenses over the life of the contract.
vi. Outstanding forward contracts at the Balance Sheet date are
reflected by marking them to market and accordingly, the resulting mark
to market losses are provided in the Statement of Profit and Loss.
1.8 EMPLOYEE BENEFITS:
i. Defined Contribution Plan
Contribution as per the Employees' Provident Funds and Miscellaneous
Provisions Act, 1952 towards Provident Fund and Family Pension Fund are
provided for and payments in respect thereof are made to the relevant
authorities on actual basis.
ii. Defined Benefit Plan
Gratuity - In accordance with applicable Indian laws, the Company
provides for gratuity, a defined benefit retirement plan ("Gratuity
Plan") covering all employees. The Gratuity Plan provides a lump sum
payment to vested employees, at retirement or termination of
employment, an amount based on the respective employee's last drawn
salary and the years of employment with the Company. Liability with
regard to Gratuity Plan is accrued based on actuarial valuation at the
Balance Sheet date carried out by an independent actuary. Actuarial
gain or loss is recognized immediately in the statement of profit and
loss as income or expense. The Company has an employee's gratuity fund
managed by the Life Insurance Corporation of India ("LIC").
Compensated Absences - The Company provides for the encashment of
absence or absence with pay based on policy of the Company in this
regard. The employees are entitled to accumulate such absences subject
to certain limits, for the future encashment or absence. The Company
records an obligation for compensated absences in the period in which
the employee renders the services that increases this entitlement. The
Company measures the expected cost of compensated absences as the
additional amount that the Company expects to pay as a result of the
unused entitlement that has accumulated at the Balance Sheet date on
the basis of an independent actuarial valuation.
1.9 BORROWING COSTS:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use. Other
borrowing costs are recognised as an expense in the period in which
they are incurred. Borrowing costs comprise of interest and other costs
incurred in connection with the borrowing of funds.
1.10TAXES ON INCOME:
i. Income tax expense comprises of current tax and deferred tax
charge/credit.
ii. Provision for current tax is made on basis of the assessable income
under the Income-tax Act, 1961.
iii. Deferred tax is recognized, subject to consideration of prudence,
on timing differences between taxable and accounting income which
originates in one period and are capable of reversal in one or more
subsequent periods (adjusted for reversals expected during tax holiday
period). The tax effect is calculated on accumulated timing differences
at the year end based on tax rates and laws enacted or substantially
enacted as of the balance sheet date. The deferred tax asset is
recognised and carried forward only to the extent that there is a
reasonable certainty that the asset will be realised in future.
1.11 PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
i. Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
ii. Contingent liabilities are not recognised but are disclosed in the
notes.
iii. Contingent Assets are neither recognised nor disclosed in the
financial statements.
1.12 IMPAIRMENT OF ASSETS:
If internal / external indications suggest that an asset of the Company
may be impaired, the recoverable amount of asset / cash generating unit
is determined on the balance sheet date and if it is less than its
carrying amount, the carrying amount of asset / cash generating unit is
reduced to the said recoverable amount. Subsequently, if there is a
change in the indication, since the last impairment was recognised, so
that recoverable amount of an asset exceeds its carrying amount, an
impairment recognised for an asset in prior accounting period is
reversed. The recoverable amount is measured as the higher of the net
selling price and value in use of such assets / cash generating unit,
which is determined by the present value of the estimated future cash
flows.
1.13 The Statement of cash flow has been prepared under the indirect
method as set out in Accounting Standard-3 issued under the Companies
(Accounting Standard) Rules, 2006.
Mar 31, 2011
1. ACCOUNTING CONVENTION
The accounts are prepared on the basis of going concern under
historical cost convention as also accrual basis and in accordance with
the Accounting Standards referred to in Section 211 (3C) of the
Companies Act, 1956, which have been prescribed by the Companies
(Accounting Standards) Rules, 2006, and the relevant provisions of the
Companies Act, 1956.
2. USE OF ESTIMATES
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosures of contingent amounts as at the date of
financial statements and the reported amounts of revenues and expenses
during the reporting period. Examples of such estimates include useful
lives of Fixed Assets, provision for doubtful debts / advances,
deferred tax, etc. Actual results could differ from these estimates.
Such difference is recognized in the period/s in which the results are
known / materialised.
3. FIXED ASSETS AND DEPRECIATION:
i. Fixed Assets are stated at historical cost net of cenvat/value added
tax less accumulated depreciation (except for (ii) below). Costs
include all costs incurred to bring the assets to their present
location and condition.
iii. Depreciation on fixed assets is provided on "Straight Line Method"
at the rates prescribed in Schedule XIV to the Companies Act, 1956, as
amended. Depreciation on additions to Fixed Assets is charged on pro
rata basis.
iv. Revalued amount of leasehold land is amortized over its remaining
lease period commencing from the year 2002-03.
4. INVESTMENTS
Investments, being for long term, are stated at cost, except where
there is a diminution in value other than temporary in which case the
carrying value is reduced to recognize the decline.
5. INVENTORIES
Inventories are valued as under:
i. Raw materials: At lower of cost and net realizable value on first Ã
in à first out basis;
ii. Finished Goods and Process Stock: At lower of cost and net
realizable value;
iii. Fuel, Stores and Spares: At lower of cost and net realizable
value on first à in à first out basis.
Cost of inventories comprises of costs of purchase, conversion and
other costs incurred in bringing the inventories to their present
location and condition.
By-products are valued at net realisable value.
6. REVENUE RECOGNITION
a. Sales are recognised in accordance with Accounting Standard 9 on
"Revenue Recognition", that is, when the seller has transferred to the
buyer the property in goods for a price or all significant risks and
rewards of ownership have been transferred to the buyer without the
seller retaining any
effective control over the goods and no uncertainty exists regarding
the amount of consideration from the sale of goods.
b. Dividend income from investments is recognised when the
shareholders right to receive payments is established.
7. FOREIGN CURRENCY TRANSACTION
a. Transactions in foreign currencies (monetary or non-monetary items)
are recorded at the rates of exchange prevailing on the date when the
relevant transaction takes place or that approximates the actual rate
at the date of the transaction.
b. Monetary items, which are denominated in foreign currency, at the
year end are restated and reported at the exchange rates prevailing on
the date of the Balance Sheet.
Non-monetary items denominated in foreign currency which are carried
at:
- fair value / net realisable value are translated at the exchange rate
prevalent at the date when the fair value / net realisable value was
determined;
- historical cost, are reported at the exchange rate prevalent at the
date of transaction.
c. Exchange Differences arising on settlement or restatement of
foreign currency denominated liabilities relating to the acquisition of
fixed asset are recognised in the Profit and Loss Account.
d. In case of forward contracts, the exchange difference between the
forward rate and the exchange rate at the date of transaction is
recognised as income or expenses over the life of the contract.
e. Outstanding forward contracts at the Balance Sheet date are
reflected by marking them to market and accordingly, the resulting mark
to market losses are provided in the Profit and Loss Account.
f. Gains or Losses on account of exchange differences, either on
settlement or on restatement, are recognised in the Profit and Loss
Account.
8. EMPLOYEE BENEFITS
i. Defined Contribution Plan
Contribution as per the Employees Provident Funds and Miscellaneous
Provisions Act, 1952 towards Provident Fund and Family Pension Fund are
provided for and payments in respect thereof are made to the relevant
authorities on actual basis.
ii. Defined Benefit Plan
Gratuity - In accordance with applicable Indian laws, the Company
provides for gratuity, a defined benefit retirement plan ("Gratuity
Plan") covering all employees. The Gratuity Plan provides a lump sum
payment to vested employees, at retirement or termination of
employment, an amount based on the respective employees last drawn
salary and the years of employment with the Company. Liability with
regard to Gratuity Plan is accrued based on actuarial valuation at the
Balance Sheet date carried out by an independent actuary. Actuarial
gain or loss is recognised immediately in the statement of profit and
loss as income or expense. The Company has an employees gratuity fund
managed by the Life Insurance Corporation of India ("LIC").
Compensated Absences - The Company provides for the encashment of
absence or absence with pay based on policy of the Company in this
regard. The employees are entitled to accumulate such absences subject
to certain limits, for the future encashment or absence. The Company
records an obligation for compensated absences in the period in which
the employee renders the services that increases this entitlement. The
Company measures the expected cost of compensated absences as the
additional amount that the Company expects to pay as a result of the
unused entitlement that has accumulated at the Balance Sheet date on
the basis of an independent actuarial valuation.
9. BORROWING COST
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use. Other
borrowing costs are recognized as an expense in the period in which
they are incurred. Borrowing costs comprise of interest and other costs
incurred in connection with the borrowing of funds.
10. TAXES ON INCOME
i. Income tax expense comprises of current tax and deferred tax
charge/credit.
ii. Provision for current tax is made on basis of the assessable income
under the Income-tax Act, 1961.
iii. Deferred tax is recognised, subject to consideration of prudence,
on timing differences between taxable and accounting income which
originates in one period and are capable of reversal in one or more
subsequent periods (adjusted for reversals expected during tax holiday
period). The tax effect is calculated on accumulated timing differences
at the year end based on tax rates and laws enacted or substantially
enacted as of the balance sheet date. The deferred tax asset is
recognised and carried forward only to the extent that there is a
reasonable certainty that the asset will be realized in future.
11. PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
a. Provisions involving substantial degree of estimation in
measurement are recognized when there is a present obligation as a
result of past events and it is probable that there will be an outflow
of resources.
b. Contingent liabilities are not recognised but are disclosed in the
notes.
c. Contingent Assets are neither recognised nor disclosed in the
financial statements.
12. IMPAIRMENT OF ASSETS :
If internal / external indications suggest that an asset of the Company
may be impaired, the recoverable amount of asset / cash generating unit
is determined on the balance sheet date and if it is less than its
carrying amount, the carrying amount of asset / cash generating unit is
reduced to the said recoverable amount. Subsequently, if there is a
change in the indication, since the last impairment was recognised, so
that recoverable amount of an asset exceeds its carrying amount, an
impairment recognised for an asset in prior accounting period is
reversed. The recoverable amount is measured as the higher of the net
selling price and value in use of such assets / cash generating unit,
which is determined by the present value of the estimated future cash
flows.
Mar 31, 2010
1. Accounting Convention
The accounts are prepared on the basis of going concern under
historical cost convention as also accrual basis and in accordance with
the Accounting Standards referred to in Section 211 (3C) of the
Companies Act, 1956, which have been prescribed by the Companies
(Accounting Standards) Rules, 2006, and the relevant provisions of the
Companies Act, 1956.
2. Use of estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosures of contingent amounts as at the date of
financial statements and the reported amounts of revenues and expenses
during the reporting period. Examples of such estimates include useful
lives of Fixed Assets, provision for doubtful debts / advances,
deferred tax, etc. Actual results could differ from these estimates.
Such difference is recognized in the period/s in which the results are
known / materialized.
3. Fixed assets and depreciation:
i. Fixed Assets are stated at historical cost net of cenvat/value added
tax less accumulated depreciation (except for (ii) below). Costs
include all costs incurred to bring the assets to their present
location and condition.
ii. Land and buildings as on March 1, 1997 had been restated at Rs.
55,914,629 for its historical cost of Rs. 8,500,940, on the basis of
their prevailing market rates as on that day as per valuation made by
an approved external valuer.
iii. Depreciation on fixed assets is provided on "Straight Line Method"
at the rates prescribed in Schedule XIV to the Companies Act, 1956, as
amended. Depreciation on additions to Fixed Assets is charged on pro
rata basis.
iv. Revalued amount of leasehold land is amortized over the remaining
lease period.
4. Investments
Investments, being for long term, are stated at cost, except where
there is a diminution in value other than temporary in which case the
carrying value is reduced to recognize the decline.
5. Inventories
Inventories are valued as under:
i. Raw materials: At lower of cost and net realizable value on
first-in-first out basis;
ii. Finished Goods and Process Stock: At lower of cost and net
realizable value;
iii. Fuel, Stores and Spares: At lower of cost and net realizable
value on first-in-first out basis.
Cost of inventories comprises of costs of purchase, conversion and
other costs incurred in bringing the inventories to their present
location and condition.
By-products are valued at net realisable value.
6. Revenue recognition
a. Sates are recognised in accordance with Accounting Standard 9 on
"Revenue Recognition", that is, when the seller has transferred to the
buyer, the property in goods, for a price, or all significant risk and
rewards of ownership have been transferred to the buyer without the
seller retaining any effective control over the goods.
b. Dividend income from investments is recognised when the share
holders right to receive payments is established.
7. Foreign currency transaction
All transactions in foreign currency are recorded at the rates of
exchange prevailing on the dates when the relevant transactions take
place.
Monetary items, which are denominated in foreign currency, are
translated at the exchange rates prevailing at the Balance Sheet.
Non-monetary items denominated in foreign currency which are carried
at: fair value / net realisable value are translated at the exchange
rate prevalent at the date when the fair value / net realisable value
was determined;
Historical cost, are translated at the exchange rate prevalent at the
date of transaction. Exchange Differences arising on settlement or
restatement of foreign currency denominated liabilities relating to the
acquisition of fixed asset are recognized in the Profit and Loss
Account.
In case of forward contracts, the exchange difference between the
forward rate and the exchange rate at the date of transaction is
recognized as income or expenses over the life of the contract.
Outstanding forward contracts at the Balance Sheet date are reflected
by marking them to market and accordingly, the resulting mark to market
losses are provided in the profit and loss account.
Any gains or losses on account of exchange difference either on
settlement or on translation are recognized in the Profit and Loss
Account.
8. Employee benefits
i. Defined Contribution Plan
Contribution as per the Employees Provident Funds and Miscellaneous
Provisions Act, 1952 towards Provident Fund and Family Pension Fund are
provided for and payments in respect thereof are made to the relevant
authorities on actual basis.
ii. Defined Benefit Plan
Gratuity - In accordance with applicable Indian laws, the Company
provides for gratuity, a defined benefit retirement plan ("Gratuity
Plan") covering all employees. The Gratuity Plan provides a lump sum
payment to vested employees, at retirement or termination of
employment, an amount based on the respective employees last drawn
salary and the years of employment with the Company. Liability with
regard to Gratuity Plan is accrued based on actuarial valuation at the
Balance Sheet date carried out by an independent actuary. Actuarial
gain or loss is recognized immediately in the statement of profit and
loss as income or expense. The Company has an employees gratuity fund
managed by the Life Insurance Corporation of India ("LIC").
Compensated Absences - The Company provides for the encashment of
absence or absence with pay based on policy of the Company in this
regard. The employees are entitled to accumulate such absences subject
to certain limits, for the future encashment or absence. The Company
records an obligation for compensated absences in the period in which
the employee renders the services that increases this entitlement. The
Company measures the expected cost of compensated absences as the
additional amount that the Company expects to pay as a result of the
unused entitlement that has accumulated at the Balance Sheet date on
the basis of an independent actuarial valuation.
9. Borrowing Cost
Borrowing cost that are attributed to the acquisition or construction
of qualifying assets are capitalized as part of the cost of such
assets. A qualifying asset is one that necessary takes substantial of
time to get ready for intended use. All other borrowing costs are
charged to revenue.
10. Taxes on Income
i. Income tax expense comprises of current tax and deferred tax
charge/credit.
ii. Provision for current tax is made on basis of the assessable income
under the Income-tax Act, 1961.
iii. Deferred tax is recognised, subject to consideration of prudence,
on timing differences :. between taxable and accounting income which
originates in one period and are capable of reversal in one or more
subsequent periods (adjusted for reversals expected during tax holiday
period). The tax effect is calculated on accumulated timing differences
at the year end based on tax rates and laws enacted or substantially
enacted as of the balance sheet date. The deferred tax asset is
recognised and carried forward only to the extent that there is a
reasonable certainty that the asset will be realized in future.
11. Provision, contingent liabilities and contingent assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
12. Impairment of Assets :
If internal / external indications suggest that an asset of the Company
may be impaired, the recoverable amount of asset / cash generating unit
is determined on the balance sheet date and if it is less than its
carrying amount, the carrying amount of asset / cash generating unit is
reduced to the said recoverable amount. Subsequently, if there is a
change in the indication, since the last impairment was recognised, so
that recoverable amount of an asset exceeds its carrying amount, an
impairment recognised for an asset in prior accounting period is
reversed. The recoverable amount is measured as the higher of the net
selling price and value in use of such assets / cash generating unit,
which is determined by the present value of the estimated future cash
flows.
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