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Accounting Policies of Foods & Inns Ltd. Company
Mar 31, 2025
2.[ MATERIAL ACCOUNTING POLICIES
This note provides a list of the material accounting policies
adopted in the presentation of these standalone financial
statements.
2.1 Basis of Preparation
i. Compliance with Ind AS
The standalone 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 "Act") and other relevant
provisions of the Act. In accordance with proviso
to Rule 4A of The Companies (Accounts) Rules,
2014, the terms used in these financial statements
are in accordance with the definition and other
requirements specified in the applicable Accounting
Standards.
ii. Authorization of standalone financial statements
The authorization of standalone financial statements
(hereinafter referred as "Financial Statements") of
the Company for the year ended March 31, 2025
were authorized for issue by the Board of Directors at
their meeting held on May 19, 2025.
iii. Accrual Basis of Accounting
These standalone financial statements have been
prepared on an accrual basis under the historical
cost convention or amortization cost basis except for
the following assets and liabilities, which have been
measured at fair value:
a. Certain financial assets and liabilities (including
derivative instruments) that are measured at
fair value.
b. Defined benefits plans-plan assets measured at
fair value.
2.2 Functional and presentation currency
These standalone financial statements are presented in
Indian Rupees (''), which is also the Companyâs functional
currency and all amounts disclosed in the standalone
financial statements and notes have been rounded off to
the nearest Lakhs ('' ''00,000) upto two decimals, except
when otherwise indicated.
2.3 Current versus non-current classification
The Company presents its assets and liabilities in
the Balance Sheet based on current or non-current
classification.
An asset is treated as current if it is:
a) expected to be realized or intended to be sold or
consumed in normal operating cycle;
b) held primarily for the purpose of trading;
c) expected to be realized within twelve months after
the reporting period; or
d) the cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is treated as current when:
a) it is expected to be settled in normal operating cycle;
b) it is held primarily for the purpose of trading;
c) it is due to be settled within twelve months after the
reporting period; or
d) there is no unconditional right to defer the settlement
of the liability for at least twelve months after the
reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non¬
current on net basis.
All assets and liabilities have been classified as current
or non-current as per Companyâs normal operating
cycle. Based on the nature of operations, the Company
has ascertained its operating cycle as twelve months for
the purpose of current and non-current classification of
assets and liabilities.
2.4 Property, Plant and Equipment
Recognition and Measurement
Property, Plant and Equipment is recognized 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.
Property, Plant and Equipment stated at cost less
accumulated depreciation and accumulated 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,
and, for assets that necessarily take a substantial period
of time to get ready for their intended use, finance costs.
The purchase price is the aggregate amount paid and the
fair value of any other consideration given to acquire the
asset.
If significant parts of an item of Property, Plant and
Equipment have different useful lives, then those are
accounted as separate items (major components) of
Property, Plant and Equipment. The carrying amount
of any component accounted as a separate asset is
derecognized when replaced. All other repairs and
maintenance are charged to Statement of Profit or Loss
during the reporting period in which they are incurred.
Store and spares which meets the definition of Property,
Plant and Equipment and satisfy the recognition criteria
as per Ind AS 16 are capitalized as Property, Plant and
Equipment.
Freehold land is carried at historical cost less impairment
loss, if any.
Derecognition
The carrying amount of an item of Property, Plant and
Equipment is de-recognized upon disposal or when
no future economic benefit is expected to arise from
its continued use. Any gain or loss arising on the de¬
recognition of an item of Property, Plant and Equipment
is determined as the difference between the net disposal
proceeds and the carrying amount of the item and is
recognized in Statement of Profit or Loss. Gain or loss
arising from de-recognition of an intangible are recognized
in Statement of Profit or Loss when asset is derecognized.
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 recognized impairment loss. Such properties are
classified and capitalized 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.
2.6 Depreciation
Depreciation on Property, Plant and Equipment is
provided on the Straight-Line Method in accordance with
requirements prescribed under Schedule II to the Act. The
Company has assessed the estimated useful lives of its
Property, Plant and Equipment and has adopted the useful
lives and residual value as prescribed.
Freehold land is not depreciated.
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period,
and changes, if any, are accounted prospectively.
Depreciation is calculated on a straight line basis over the
estimated useful life of the assets as follows:
Items of Property, Plant and Equipment costing up to
'' 5,000 are fully depreciated in the year of purchase or
capitalization.
Depreciation for assets purchased or sold during the
period is charged on a pro-rata basis.
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.
2.7 Investments in Subsidiary, Associates and Joint ventures
The Companyâs investments in its subsidiaries, associates
and joint ventures are accounted at cost and reviewed for
impairment at each reporting date in accordance with the
policy described in note 2.9 below.
2.8 Intangible Assets
Recognition and Measurement
Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are stated at acquisition cost, net of
accumulated amortization and accumulated impairment
losses, if any.
Amortization
Intangible assets with finite useful lives are amortized
on straight line basis over their economic useful life and
assessed for impairment whenever there is an indication
that the intangible asset may be impaired. The estimated
useful life and amortization method are reviewed at the
end of each reporting period, and any changes, if any, are
accounted prospectively.
Derecognition of intangible assets
An 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, measured as the difference between
the net disposal proceeds and the carrying amount of the
asset, are recognized in statement of profit and loss when
the asset is derecognized.
Goodwill
Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill is not amortized but it is
tested for impairment annually, or more frequently if
events or changes in circumstances indicate that it might
be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of
an entity include the carrying amount of goodwill relating
to the entity sold.
Goodwill is allocated to cash-generating units for the
purpose of impairment testing. The allocation is made to
those cash-generating units or groups of cash-generating
units that are expected to benefit from the business
combination in which the goodwill arose. The units or
groups of units are identified at the lowest level at which
goodwill is monitored for internal management purposes,
which in our case are the operating segments.
2.9 Impairment of assets
At the end of each reporting period, the Company reviews
the carrying amounts of its tangible, intangible assets
and investment in subsidiary, associate and joint-venture
to determine whether there is any indication that those
assets may be impaired and also whether there is any
indication of reversal of impairment loss recognized
in previous periods. If any such indication exists, the
recoverable amount is estimated, and impairment loss,
if any, is recognized and the carrying amount is reduced
to its recoverable amount. Recoverable amount 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.
Recoverable amount is determined for individual assets,
unless asset does not generate cash inflows that are
largely independent of those from other assets or group of
assets. 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.
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.
An impairment loss is recognized immediately in
the Statement of Profit or Loss. When impairment
subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount,
but upto 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
recognized immediately in the Statement of Profit or Loss.
2.10 Inventories
Inventories are valued as follows:
Raw materials, components and stores and spares:
At lower of cost and net realizable value. Cost of inventory
comprises all costs of purchases, duties, taxes (other
than those subsequently recoverable from tax authorities)
and all other costs incurred in bringing the inventory to
their present location and condition and is determined
on a moving weighted average cost 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.
At lower of cost and net realizable value. Cost for this
purpose includes material, labour and appropriate
allocation of overheads including depreciation. Cost is
determined on a weighted average basis.
Finished goods:
At lower of cost and net realizable value. Cost for this
purpose includes material, labour, and appropriate
allocation of overheads. Cost is determined on a weighted
average basis.
Net realizable 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. Provision for obsolescence is determined based
on management''s assessment and is charged to the
Standalone Statement of Profit and Loss.
2.11 Financial Instruments
Financial assets and Financial liabilities are recognized
when the Company becomes a party to the contractual
provisions of the instruments.
Initial Recognition Financial Assets and Financial
Liabilities:
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
and ancillary costs related to borrowings) 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 recognized in the Statement of Profit or
Loss. Since, trade receivables do not contain significant
financing component they are measured at transaction
price.
Classification and Subsequent Measurement: Financial
Assets
The Company classifies financial assets as subsequently
measured at amortized cost, fair value through other
comprehensive income (FVTOCI) or fair value through
profit or loss (FVTPL) 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.
Amortized Cost:
A financial asset shall be classified and measured at
amortized 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.
FVTOCI:
A financial asset is classified and measured at FVTOCI if
both of the following conditions are met: -
it is held within a business model whose objective is
achieved by both collecting contractual cash flows and
selling financial assets; and -
the contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on
the principal amount outstanding.
Movements in the carrying amount are taken through
OCI, except for the recognition of impairment gains or
losses and interest revenue which are recognized in profit
and loss. When the financial asset is derecognized, the
cumulative gain or loss previously recognized in OCI is
reclassified from equity to profit or loss and recognized in
other gains/ (losses). Interest income from these financial
assets is included in other income using the effective
interest rate method.
FVTPL:
A financial asset shall be classified and measured at FVTPL
unless it is measured at amortized cost or at FVTOCI.
All recognized financial assets are subsequently measured
in their entirety at either amortized cost or fair value,
depending on the classification of the financial assets.
Trade receivables are recognized initially at fair value
and subsequently measured at amortized cost using the
effective interest method less provision/or impairment.
Classification and Subsequent Measurement: Financial
liabilities:
The Companyâs financial liabilities include trade and other
payables, loans and borrowing including bank overdrafts,
financial guarantee contracts and derivative financial
instruments.
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 recognized
in the Statement of Profit or Loss.
Write-off:
The gross carrying amount of a financial asset is written
off when there no reasonable expectations of recovering
a financial asset in its entirety or a portion thereof. The
Company individually makes an assessment with
respect to the timing and amount of write-off based on
whether there is a reasonable expectation of recovery.
The Company expects no significant recovery from the
amount written off. However, financial assets that are
written off could still be subject to enforcement activities
in order to comply with the Companyâs procedures for
recovery of amounts due.
2.12 Other Financial Liabilities:
Other financial liabilities (including borrowings and trade
and other payables) are subsequently measured at
amortized cost using the effective interest method.
The effective interest method is a method of calculating
the amortized 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.
2.13 Impairment of financial assets:
The Company recognizes loss allowance using expected
credit loss model for financial assets which carried at
amortized cost. 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 uses the simplified
approach permitted by Ind AS 109 Financial Instruments
which requires expected life time losses to be recognized
from initial recognition of receivables.
2.14 Derecognition of financial assets:
The Company derecognizes 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
recognizes 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 recognize the financial asset and also
recognizes 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 recognized in
other comprehensive income and accumulated in equity is
recognized in profit or loss if such gain or loss would have
otherwise been recognized 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 recognize under
continuing involvement, and the part it no longer
recognizes 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
recognized and the sum of the consideration received for
the part no longer recognized and any cumulative gain
or loss allocated to it that had been recognized in other
comprehensive income is recognized in profit or loss if
such gain or loss would have otherwise been recognized
in profit or loss on disposal of that financial asset. A
cumulative gain or loss that had been recognized in other
comprehensive income is allocated between the part that
continues to be recognized and the part that is no longer
recognized on the basis of the relative fair values of those
parts.
2.15 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
recognized at the proceeds received.
2.16 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.
2.17 Offsetting financial Instruments:
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 recognized
amounts and there is an intention to settle on a net basis
or realize the asset and settle the liability simultaneously.
The legally enforceable right must not be contingent on
future events and must be enforceable in the normal
course of business and in the event of default, insolvency
or bankruptcy of the Company or the counter party.
2.18 Cash and Cash Equivalent
Cash and Cash Equivalent in the Balance Sheet Comprises
of cash at bank and on hand and short-term deposit with
an original deposit of three months or less, which are
subject to an insignificant risk of change in value.
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 as defined above,
bank overdraft, and short term highly liquid investments
that are readily convertible into cash and which are subject
to an insignificant risk of changes in value.
2.19 Employee Stock Option Plan (ESOP)
Equity settled share-based payments to employees and
other providing similar services are measured at fair value
of the equity instruments at grant date.
The fair value determined at the grant date of the equity-
settled share-based payment is expensed on a straight¬
line basis over the vesting period, based on the Companyâs
estimate of equity instruments that will eventually vest,
with a corresponding increase in equity.
At the end of each reporting period, the Company revises
its estimates of the number of equity instruments
expected to vest. The impact of the revision of the original
estimates, if any is, recognized in Statement of Profit
and Loss such that the cumulative expenses reflects the
revised estimate, with a corresponding adjustment to the
shared option outstanding account.
No expense is recognized for options that do not ultimately
vest because non market performance and/or service
conditions have not been met.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted
earnings per share.
2.20 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 capitalized 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.
Mar 31, 2024
1*1 CORPORATE INFORMATION
Foods and Inns Limited (hereinafter referred as "FNI" or "the Company") is domiciled and incorporated in India and its shares are publicly traded on the BSE Limited as well as on NSE Limited in India. The Company is engaged in business of processing and marketing fruit pulps, concentrates and spray dried fruit and vegetable powders both into domestic and international markets.
2*[ MATERIAL ACCOUNTING POLICIES
This note provides a list of the material accounting policies adopted in the presentation of these standalone financial statements.
i. Compliance with Ind AS
The standalone 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 "Act") and other relevant provisions of the Act. In accordance with proviso to Rule 4A of The Companies (Accounts) Rules, 2014, the terms used in these financial statements are in accordance with the definition and other requirements specified in the applicable Accounting Standards.
ii. Authorization of standalone financial statements The authorization of standalone financial statements (hereinafter referred as "Financial Statements") of the Company for the year ended March 31, 2024 were authorised for issue by the Board of Directors at their meeting held on May 17, 2024.
iii. Accrual Basis of Accounting
These standalone financial statements have been prepared on an accrual basis under the historical cost convention or amortization cost basis except for the following assets and liabilities, which have been measured at fair value:
a. Certain financial assets and liabilities (including derivative instruments) that are measured at fair value.
b. Defined benefits plans-plan assets measured at fair value.
2.2 Functional and presentation currency
These standalone financial statements are presented in Indian Rupees (INR), which is also the Companyâs
functional currency and all amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest Lakhs (INR ''00,000) upto two decimals, except when otherwise indicated.
2.3 Current versus non-current classification
The Company presents its assets and liabilities in the Balance Sheet based on current or non-current classification.
An asset is treated as current if it is:
a) expected to be realised or intended to be sold or consumed in normal operating cycle;
b) held primarily for the purpose of trading;
c) expected to be realised within twelve months after the reporting period; or
d) t he cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is treated as current when:
a) it is expected to be settled in normal operating cycle;
b) it is held primarily for the purpose of trading;
c) i t is due to be settled within twelve months after the reporting period; or
d) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as noncurrent on net basis.
All assets and liabilities have been classified as current or non-current as per Companyâs normal operating cycle. Based on the nature of operations, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
2.4 Property, Plant and Equipment Recognition and Measurement
Property, Plant and Equipment 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.
Property, Plant and Equipment stated at cost less accumulated depreciation and accumulated 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, and, for assets that necessarily take a substantial period of time to get ready for their intended use, finance costs. The purchase price is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
If significant parts of an item of Property, Plant and Equipment have different useful lives, then those are accounted as separate items (major components) of Property, Plant and Equipment. The carrying amount of any component accounted as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to Statement of Profit or Loss during the reporting period in which they are incurred.
Store and spares which meets the definition of Property, Plant and Equipment and satisfy the recognition criteria as per Ind AS 16 are capitalised as Property, Plant and Equipment.
Freehold land is carried at historical cost less impairment loss, if any.
The carrying amount of an item of Property, Plant and Equipment is de-recognised 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 Property, Plant and Equipment is determined as the difference between the net disposal proceeds and the carrying amount of the item and is recognised in Statement of Profit or Loss. Gain or loss arising from de-recognition of an intangible are recognized in Statement of Profit or Loss when asset is derecognized.
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.
Depreciation on Property, Plant and Equipment is provided on the Straight-Line Method in accordance with requirements prescribed under Schedule II to the Act. The Company has assessed the estimated useful lives of its Property, Plant and Equipment and has adopted the useful lives and residual value as prescribed.
Freehold land is not depreciated.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, and changes, if any, are accounted prospectively.
Depreciation is calculated on a straight line basis over the estimated useful life of the assets as follows:
|
Asset Category |
Useful life (Number of Years) |
|
Buildings |
30 |
|
Plant and Machinery |
15 |
|
Furniture and Fixtures |
10 |
|
Office Equipments |
05 |
|
Vehicles |
08 |
|
Computers |
03 |
Items of Property, Plant and Equipment costing up to '' 5,000 are fully depreciated in the year of purchase or capitalisation.
Depreciation for assets purchased or sold during the period is charged on a pro-rata basis.
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.
2.7 Investments in Subsidiary, Associates and Joint ventures
The Companyâs investments in its subsidiaries, associates and joint ventures are accounted at cost and reviewed for impairment at each reporting date in accordance with the policy described in note 2.9 below.
2.8 Intangible Assets Recognition and Measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any.
Intangible assets with finite useful lives are amortised on straight line basis over their economic useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The estimated useful life and amortisation method are reviewed at the end of each reporting period, and any changes, if any, are accounted prospectively.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in statement of profit and loss when the asset is derecognised.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which goodwill is monitored for internal management purposes, which in our case are the operating segments.
At the end of each reporting period, the Company reviews the carrying amounts of its tangible, intangible assets and investment in subsidiary, associate and joint-venture to determine whether there is any indication that those assets may be impaired and also whether there is any indication of reversal of impairment loss recognized in previous periods. If any such indication exists, the recoverable amount is estimated, and impairment loss, if any, is recognised and the carrying amount is reduced to its recoverable amount. Recoverable amount 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. Recoverable amount is determined
for individual assets, unless asset does not generate cash inflows that are largely independent of those from other assets or group of assets. 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.
I n 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.
An impairment loss is recognised immediately in the Statement of Profit or Loss. When impairment subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but upto 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 or Loss.
Inventories are valued as follows:
Raw materials, components and stores and spares:
At lower of cost and net realisable value. Cost of inventory comprises all costs of purchases, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition and is determined on a moving weighted average cost 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.
At lower of cost and net realisable value. Cost for this purpose includes material, labour and appropriate
allocation of overheads including depreciation. Cost is determined on a weighted average basis.
At lower of cost and net realisable value. Cost for this purpose includes material, labour, and appropriate
allocation of overheads. Cost is determined on a weighted average basis.
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. Provision for obsolescence is determined based on management''s assessment and is charged to the Standalone Statement of Profit and Loss.
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:
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 and ancillary costs related to borrowings) 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 or Loss. Since, trade receivables do not contain significant financing component they 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 (FVTOCI) or fair value through profit or loss (FVTPL) 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.
A financial asset is classified and measured at FVTOCI if both of the following conditions are met:
⢠It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
⢠The contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses and interest revenue which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
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.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less provision/or impairment.
Classification and Subsequent Measurement: Financial liabilities:
The Companyâs financial liabilities include trade and other payables, loans and borrowing including bank overdrafts, financial guarantee contracts and derivative financial instruments.
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 or Loss.
The gross carrying amount of a financial asset is written off when there no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Companyâs procedures for recovery of amounts due.
2.12 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.
2.13 Impairment of financial assets
The Company recognises loss allowance using expected credit loss model for financial assets which carried at amortised cost. 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 uses the simplified approach permitted by Ind AS 109 Financial Instruments which requires expected life time losses to be recognized from initial recognition of receivables.
2.14 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.
2.15 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.
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.
2.16 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.
2.17 Offsetting financial Instruments
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. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counter party.
Cash and Cash Equivalent in the Balance Sheet Comprises of cash at bank and on hand and short-term deposit with an original deposit of three months or less, which are subject to an insignificant risk of change in value.
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 as defined above, bank overdraft, and short term highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value.
2.19 Employee Stock Option Plan (ESOP)
Equity settled share-based payments to employees and other providing similar services are measured at fair value of the equity instruments at grant date.
The fair value determined at the grant date of the equity-settled share-based payment is expensed on a straightline basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
At the end of each reporting period, the Company revises its estimates of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any is, recognised in Statement of Profit and Loss such that the cumulative expenses reflects the revised estimate, with a corresponding adjustment to the shared option outstanding account.
No expense is recognised for options that do not ultimately vest because non market performance and/or service conditions have not been met.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
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.
2.21 Provisions, Contingent Liabilities and Contingent Assets Provisions
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, unless the probability of outflow of resources are remote.
Contingent Assets are not recognised but where an inflow of economic benefits is probable, contingent assets
are disclosed in the financial statements. Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.
2.22 Revenue Recognitioni. Revenue from contracts with customers
The Company derives revenues primarily from sale of products and services. Revenue from sale of goods is recognised net of returns and discounts.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract.
To recognise revenues, the Company applies the following five step approach
a. Identify the contract with a customer;
b. Identify the performance obligations in the contract;
c. Determine the transaction price;
d. Allocate the transaction price to the performance obligations in the contract; and
e. Recognise revenues when a performance obligation is satisfied.
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties.
A receivable represents the companyâs right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
2.23 Recognition of Dividend Income and Interest Income i. 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.
Dividend income from investments is recognised when the Companyâs right to receive dividend is established, it is probable that the economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably which is generally when shareholders approve the dividend.
2.24 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. Nonmonetary 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 the Statement of Profit or Loss account in the period in which they arise.
2.25 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 or Loss of the year in which the related service is rendered.
Long-term employee benefits:⢠Defined Contribution Plan:
Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post-employment benefits in respect of provident and family pension fund, in which both employees and the Company make monthly contributions at a specified percentage of the employeesâ eligible salary. The contributions are made to the Provident Fund Account under the Employeesâ Provident Fund and Misc. Provisions Act, 1952. Provident Fund and Family Pension Fund are classified as Defined Contribution Plans as the Company has no further obligations beyond making
the contribution. The Companyâs contributions to Defined Contribution Plan are charged to the Statement of Profit or Loss as incurred.
The superannuation fund benefits are administrated by a Trust formed for this purpose through the Group scheme of Life Insurance Corporation of India. The Companyâs contribution to superannuation fund are charged to the Statement of Profit or Loss as paid.
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 death while in employment or termination of employment, an amount based on the respective employeeâs last drawn salary and the years of employment with the Company. Vesting occurs upon completion of five years of service. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date, carried out by an independent actuary. The Company makes contribution to the Group Gratuity Scheme with SBI Life Insurance Company Limited based on an independent actuarial valuation made at the year-end.
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.
The liabilities for leave are not expected to be settled wholly within twelve months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The 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.
2.27 Taxes on Income Current Tax
Tax on income for the current period is determined on the basis on estimated taxable income and tax credits computed in accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments /appeals.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the Statement of Profit or Loss.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax is provided using the Balance Sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside the Statement of Profit or Loss is recognised outside the Statement of Profit or Loss. Deferred tax items are recognised in correlation to the underlying transaction either in Other Comprehensive Income or directly in equity.
The break-up of the major components of the deferred tax assets and liabilities as at Balance Sheet date has been arrived at after setting off deferred tax assets and liabilities where the Company have a legally enforceable right to set-off assets against liabilities and where such assets and liabilities relate to taxes on income levied by the same governing taxation laws.
Minimum Alternate Tax ("MAT") credit is recognised as an asset only when and to the extent there is convincing evidence that the relevant members of the Company will pay normal income tax during the specified period. Such asset is reviewed at each reporting period end and the adjusted based on circumstances then prevailing.
MAT Credits are in the form of unused tax credits that are carried forward by the Company for a specified period of time, hence it is grouped with Deferred Tax Asset.
The Company, as a lessee, recognizes a right-of-use asset and a lease liability for its leasing arrangements, if the contract conveys the right to control the use of an identified asset.
The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset and the Company has substantially all of the economic benefits from use of the asset and has right to direct the use of the identified asset. The cost of the right-of-use asset shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs incurred. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any re-measurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate.
Short-term leases and leases of low-value assets
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term ending within 12 months and The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. Lease income from operating leases where the Company is a lessor are recognized on either a straight-line basis or another systematic basis. The Company shall apply another systematic basis if that basis is more representative of the pattern in which benefit from the use of the underlying asset is diminished. The Company present underlying assets subject to operating leases in its balance sheet according to the nature of the underlying asset.
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, adjusted for after income tax effect of interest and other financing costs associated with dilutive potential equity shares 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.
The Company incurs various costs in issuing or acquiring its own equity instruments. The transaction costs of an equity transaction are accounted for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided. The costs of an equity transaction that is abandoned are recognised as an expense in the statement of profit and loss.
Revenue expenditure on research and development is charged to Statement of Profit or 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.
2.32 Government Grants and Subsidies:
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.
Government grants are recognised in the Statement of Profit and Loss on a systematic basis over the years in which the Company recognises as expenses the related costs for which the grants are intended to compensate or when performance obligations are met.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in Statement of Profit and Loss in the period in which they become receivable.
Government Grant relating to asset is reduced from the carrying value of the relevant assets. Such grant is then gets recognized in the Statement of Profit and Loss over the useful life of the depreciable asset by way of a reduced depreciation charge.
Government grants in the nature of export incentives are accounted for in the period of export of goods if the entitlements can be estimated with reasonable accuracy and conditions precedent to claim are reasonably expected to be fulfilled.
2.33 Use of Judgements, Estimates and assumptions
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.
The 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:
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 37.
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.
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 judgment 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.
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 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.
The Company on case-to-case basis elects to account for financial guarantee contracts as financial instruments or as an insurance contract, as specified in Ind AS 109 on Financial Instruments and Ind AS 104 on Insurance Contracts. The Company has regarded its financial guarantee contracts as insurance contracts on contract-by-contract basis. At the end of each reporting period the Company performs liability adequacy test, (i.e., it assesses the likelihood of a pay-out based on current undiscounted estimates of future cash flows) on financial guarantee contracts regarded as insurance contracts, and the deficiency is recognized in the Statement of Profit and Loss.
Mar 31, 2023
2. Significant Accounting Policies
This note provides a list of the significant accounting policies adopted in the presentation of these standalone financial statements.
2.1 Basis of Preparation
i. Compliance with Ind AS
The standalone 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 "Act") and other relevant provisions of the Act. In accordance with proviso to Rule 4A of The Companies (Accounts) Rules, 2014, the terms used in these financial statements are in accordance with the definition and other requirements specified in the applicable Accounting Standards.
ii. Authorisation of standalone financial statements
The authorisation of standalone financial statements (hereinafter referred as "Financial Statements") of the Company for the year ended March 31, 2023 were authorised for issue by the Board of Directors at their meeting held on May 12, 2023.
iii. Accrual Basis of Accounting
These standalone financial statements have been prepared on an accrual basis under the historical cost convention or amortisation cost basis except for the following assets and liabilities, which have been measured at fair value:
a. Certain financial assets and liabilities (including derivative instruments) that are measured at fair value.
b. Defined benefits plans-plan assets measured at fair value.
2.2 Functional and presentation currency
These standalone financial statements are presented in Indian Rupees (''), which is also the Companyâs functional currency and all amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest Lakhs ('' ''00,000) upto two decimals, except when otherwise indicated.
2.3 Current versus non-current classification
The Company presents its assets and liabilities in the Balance Sheet based on current or non-current classification.
An asset is treated as current if it is:
a) expected to be realised or intended to be sold or consumed in normal operating cycle;
b) held primarily for the purpose of trading;
c) expected to be realised within twelve months after the reporting period; or
d) t he cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is treated as current when:
a) it is expected to be settled in normal operating cycle;
b) it is held primarily for the purpose of trading;
c) it is due to be settled within twelve months after the reporting period; or
d) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as noncurrent on net basis.
All assets and liabilities have been classified as current or non-current as per Companyâs normal operating cycle. Based on the nature of operations, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
2.4 Property, Plant and Equipment Recognition and Measurement
Property, Plant and Equipment 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.
Property, Plant and Equipment stated at cost less accumulated depreciation and accumulated 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, and, for assets that necessarily take a substantial period of time to get ready for their intended use, finance costs. The purchase price is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
If significant parts of an item of Property, Plant and Equipment have different useful lives, then those are accounted as separate items (major components) of Property, Plant and Equipment. The carrying amount of any component accounted as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to Statement of Profit or Loss during the reporting period in which they are incurred.
Store and spares which meets the definition of Property, Plant and Equipment and satisfy the recognition criteria as per Ind AS 16 are capitalised as Property, Plant and Equipment.
Freehold land is carried at historical cost less impairment loss, if any.
Derecognition
The carrying amount of an item of Property, Plant and Equipment is de-recognised 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 Property, Plant and Equipment is determined as the difference between the net disposal proceeds and the carrying amount of the item and is recognised in Statement of Profit or Loss. Gain or loss arising from de-recognition of an intangible are recognised in Statement of Profit or Loss when asset is derecognised.
2.5. 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.
2.6 Depreciation
Depreciation on Property, Plant and Equipment is provided on the Straight-Line Method in accordance with requirements prescribed under Schedule II to the Act. The Company has assessed the estimated useful lives of its Property, Plant and Equipment and has adopted the useful lives and residual value as prescribed.
Freehold land is not depreciated.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, and changes, if any, are accounted prospectively.
Depreciation is calculated on a straight line basis over the estimated useful life of the assets as follows:
Items of Property, Plant and Equipment costing up to '' 5,000 are fully depreciated in the year of purchase or capitalisation.
Depreciation for assets purchased or sold during the period is charged on a pro-rata basis.
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.
2.7 Investments in Subsidiary, Associates and Joint ventures Subsidiary:
A Subsidiary is an entity that is controlled by another entity. An investor controls an investee if and only if the investor has the following;
(i) Power over the investee,
(ii) exposure, or rights, to variable returns from its involvement with the investee and
(iii) the ability to use its power over the investee to affect the amount of the investor''s returns.
Associates:
An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.
Joint ventures :
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The Company''s investments in its subsidiaries, associates and joint ventures are accounted at cost and reviewed for impairment at each reporting date in accordance with the policy described in note 2.9 below.
2.8 Intangible Assets
Recognition and Measurement
I ntangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any.
Amortisation
Intangible assets with finite useful lives are amortised on straight line basis over their economic useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The estimated useful life and amortisation method are reviewed at the end of each reporting period, and any changes, if any, are accounted prospectively.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of the asset, are recognised in statement of profit and loss when the asset is derecognised.
Goodwill
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which goodwill is monitored for internal management purposes, which in our case are the operating segments.
2.9 Impairment of assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible, intangible assets and investment in subsidiary, associate and joint-venture to determine whether there is any indication that those assets may be impaired and also whether there is any indication of reversal of impairment loss recognised in previous periods. If any such indication exists, the recoverable amount is estimated, and impairment loss, if any, is recognised and the carrying amount is reduced to its recoverable amount. Recoverable amount 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. Recoverable amount is determined for individual assets, unless asset does not generate cash inflows that are largely independent of those from other assets or group of assets. 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.
I n 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.
An impairment loss is recognised immediately in the Statement of Profit or Loss. When impairment subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but upto the amount that would have been determined, had no impairment loss been recognised for that asset or cash generating unit. A reversal of an impairment loss is recognised immediately in the Statement of Profit or Loss.
2.10 Inventories
Inventories are valued as follows:
Raw materials, components and stores and spares:
At lower of cost and net realisable value. Cost of inventory comprises all costs of purchases, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition and is determined on a moving weighted average cost 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:
At lower of cost and net realisable value. Cost for this purpose includes material, labour and appropriate allocation of overheads including depreciation. Cost is determined on a weighted average basis.
Finished goods:
a) Self-manufactured - At lower of cost and net realisable value. Cost for this purpose includes material, labour, and appropriate allocation of overheads. Cost is determined on a weighted average basis.
b) Traded - At lower of cost and net realisable value. Cost of inventory comprises all costs of purchases, duties, taxes (other than those subsequently recoverable from tax authorities), and all other costs incurred in bringing the inventory to their present location and condition and is determined on a weighted average cost basis.
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. Provision for obsolescence is determined based on management''s assessment and is charged to the Standalone Statement of Profit and Loss
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:
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 and ancillary costs related to borrowings) 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 or Loss. Since, trade receivables do not contain significant financing component they 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 (FVTOCI) or fair value through profit or loss (FVTPL) 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.
FVTOCI:
A financial asset is classified and measured at FVTOCI if both of the following conditions are met: - it is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling financial assets; and - the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses and interest revenue which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
FVTPL:
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.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less provision/or impairment.
Classification and Subsequent Measurement: Financial liabilities:
The Companyâs financial liabilities include trade and other payables, loans and borrowing including bank overdrafts, financial guarantee contracts and derivative financial instruments.
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 or Loss.
Write-off:
The gross carrying amount of a financial asset is written off when there no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are
written off could still be subject to enforcement activities in order to comply with the Companyâs procedures for recovery of amounts due.
2.12 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.
2.13 Impairment of financial assets:
The Company recognises loss allowance using expected credit loss model for financial assets which carried at amortised cost. 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 uses the simplified approach permitted by Ind AS 109 Financial Instruments which requires expected life time losses to be recognised from initial recognition of receivables.
2.14 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.
2.15 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.
2.16 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.
2.17 Offsetting financial Instruments:
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. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counter party.
2.18 Cash and Cash Equivalent
Cash and Cash Equivalent in the Balance Sheet Comprises of cash at bank and on hand and short-term deposit with an original deposit of three months or less, which are subject to an insignificant risk of change in value.
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 as defined above, bank overdraft, and short term highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value.
2.19 Employee Stock Option Plan (ESOP)
Equity settled share-based payments to employees and other providing similar services are measured at fair value of the equity instruments at grant date.
The fair value determined at the grant date of the equity-settled share-based payment is expensed on a straightline basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
At the end of each reporting period, the Company revises its estimates of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any is, recognised in Statement of Profit and Loss such that the cumulative expenses reflects the revised estimate, with a corresponding adjustment to the shared option outstanding account.
No expense is recognised for options that do not ultimately vest because non market performance and/or service conditions have not been met.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
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.
Mar 31, 2018
1. Significant Accounting Policies
1.1 Basis of Preparation
The standalone 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. In accordance with proviso to Rule 4A of The Companies (Accounts) Rules, 2014, the terms used in these financial statements are in accordance with the definition and other requirements specified in the applicable Accounting Standards.
For all period''s upto and including the financial year ended March 31, 2017, the Company prepared its standalone financial statements in accordance with the Accounting Standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) (âprevious GAAPâ) and other relevant provisions of the Act. The figures for the year ended March 31, 2017 have now been restated as per Ind AS to provide comparability.
The standalone financial statements for the year ended March 31, 2018 are the Company''s first Ind AS standalone financial statements.
These standalone financial statements have been prepared on an accrual basis under the historical cost convention or amortization cost basis 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, and
iii. Assets held for sale measured at fair value less cost to sell
Refer note no. 47 for an explanination of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flow. The date of transition to Ind AS is April 1, 2016.
The standalone financial statements are presented in Indian Rupees (INR), which is also the Company''s functional currency and all amounts are rounded off to the nearest Lakhs (INR â00,000) upto two decimals, except when otherwise indicated.
2.2 Current versus non-current classification
The Company presents its assets and liabilities in the Balance Sheet based on current / non-current classification. An asset is treated as current if it is :
a) expected to be realised or intended to be sold or consumed in normal operating cycle;
b) held primarily for the purpose of trading;
c) expected to be realised within twelve months after the reporting period; or
d) the cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when :
a) it is expected to be settled in normal operating cycle;
b) it is held primarily for the purpose of trading;
c) it is due to be settled within twelve months after the reporting period; or
d) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current on net basis.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.
The Company has identified twelve months as its normal operating cycle.
2.3 Property, Plant and Equipment
Property, Plant and Equipment 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. Property, Plant and Equipment stated at cost less accumulated depreciation and accumulated 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, and, for assets that necessarily take a substantial period of time to get ready for their intended use, finance costs. The purchase price is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
If significant parts of an item of Property, Plant and Equipment have different useful lives, then those are accounted as separate items (major components) of Property, Plant and Equipment. The carrying amount of any component accounted as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to Statement of Profit or Loss during the reporting period in which they are incurred.
Store and spares which meets the definition of Property, Plant and Equipment and satisfy the recognition criteria as per Ind As 16 are capilaised as Property, Plant and Equipment.
Freehold land is carried at historical cost less impairment loss, if any.
The carrying amount of an item of Property, Plant and Equipment is de-recognised upon disposal or when no future economic benefit is expected to arise from its continued use. Any gain or loss arising on the de-recognition of an item of Property, Plant and Equipment is determined as the difference between the net disposal proceeds and the carrying amount of the item and is recognised in Statement of Profit or 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.
2.4 Depreciation
Depreciation on Property, Plant and Equipment is provided on the Straight-Line Method in accordance with requirements prescribed under Schedule II to the Act. The Company has assessed the estimated useful lives of its Property, Plant and Equipment and has adopted the useful lives and residual value as prescribed therein except for Land on finance lease which is amortised over the period of lease.
Freehold land is not depreciated.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, and changes, if any, are accounted prospectively.
Depreciation for assets purchased/sold during the period is charged on a pro-rata basis.
Items of Property, Plant and Equipment costing up to Rs.5,000 are fully depreciated in the year of purchase/capitalisation.
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.
2.5 Intangible Assets and Amortisation
Intangible assets acquired separately are measured on initial recognisation at cost. Following initial recognistion, intangible assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Intangible assets with finite useful lives are amortised on straight line basis over their economic useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The estimated useful life and amortisation method are reviewed at the end of each reporting period, and any changes, if any, are accounted prospectively. Gain or loss arising from de-recognition of an intangible are recognized in Statement of Profit or Loss when asset is derecognized.
2.6 Impairment of assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible, intangible assets, investment in subsidiaries ard associate to determine whether there is any indication that those assets may be impaired and also whether there is any indication of reversal of impairment loss recognized in previous periods. If any such indication exists, the recoverable amount is estimated, and impairment loss, if any, is recognised and the carrying amount is reduced to its recoverable amount. Recoverable amount 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. Recoverable amount is determined for individual assets, unless asset does not generate cash inflows that are largely independent of those from other assets or group of assets. 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.
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.
An impairment loss is recognised immediately in the Statement of Profit or Loss. When impairment subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but upto 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 or Loss.
2.7 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 and components which are not considered as Property, Plant and Equipment, 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.
Cost of Finished Goods consists of direct materials, labour and other direct cost and a proportion of manufacturing overheads based on normal operating capacity. Excise duty is accounted for at the point of manufacture of goods, accordingly, is considered for valuation of finished goods stock lying in the factories and depots as on balance Sheet date.
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.
Stock of materials sold by one unit to other is works/ factory costs of the transferor unit/ division, plus transport and other charges.
2.8 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 and ancillary costs related to borrowings) 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 or Loss.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (FVTOCI) or fair value through profit or loss (FVTPL) 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.
FVTOCI:
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.
FVTPL:
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 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 Statement of Profit or 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 carried at amortised cost. 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 uses the simplified approach permitted by Ind AS 109 Financial Instruments which requires expected life time losses to be recognized from initial recognition of receivables.
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 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.
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 Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counter party.
2.9 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 or Loss.
2.10 Cash and Cash Equivalent
Cash and Cash Equivalent in the Balance Sheet Comprises of cash at bank and on hand and short term deposit with an original deposit of three months or less, which are subject to an insignificant risk of change in value.
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 as defined above, bank overdraft, and short term highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value.
2.11 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.
The identification of geographical information is based on the geographical location of its customers.
2.12 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.
Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets. Property, Plant and Equipments and Intangible Assets are not depreciated or amortised once classified as held for sale.
2.13 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.
2.14 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 management''s 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, unless the probability of outflow of resources are remote.
Contingent Assets are not recognised but where an inflow of economic benefits is probable, contingent assets are disclosed in the financial statements.
2.15 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. Amount disclosed as revenue are inclusive of excise duty and net of returns and allowances, trade discounts but does not include Value Added Tax (VAT), Central Sale Tax (CST) and 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 Company''s historical experience of expected sales returns on account of expiry, breakages and damages. The Company considers its historical experience of sales return to account for such Provision.
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 Company''s right to receive dividend is established, which is generally when shareholders approve the dividend.
2.16 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 the Statement of Profit or Loss account in the period in which they arise.
Non-monetary items that are measured in terms of historical cost foreign currency are translated using exchange rates at the dates of the initial transaction.
2.17 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 or Loss of the year in which the related service is rendered.
Long-term employee benefits:
- Defined Contribution Plan:
a. Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension fund, in which both employees and the Company make monthly contributions at a specified percentage of the employees'' eligible salary. The contributions are made to the Provident Fund Account under the Employees'' Provident Fund and Misc. Provisions Act, 1952. Provident Fund and Family Pension Fund are classified as Defined Contribution Plans as the Company has no further obligations beyond making the contribution. The Company''s contributions to Defined Contribution Plan are charged to the Statement of Profit or Loss as incurred.
b. Superannuation fund:
The superannuation fund benefits are administrated by a Trust formed for this purpose through the Group scheme of Life Insurance Corporation of India. The Company''s contribution to superannuation fund are charged to the Statement of Profit or Loss as paid.
- 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 death while in employment or termination of employment, an amount based on the respective employee''s last drawn salary and the years of employment with the Company. Vesting occurs upon completion of five years of service. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date, carried out by an independent actuary. The Company makes contribution to the Group Gratuity Scheme with SBI Life Insurance Company Limited based on an independent actuarial valuation made at the year-end.
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 liabilities for leave are not expected to be settled wholly within twelve months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The 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.
2.18 Taxes on Income Current Tax
Tax on income for the current period is determined on the basis on estimated taxable income and tax credits computed in accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments /appeals.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the Statement of Profit or Loss.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred Tax
Deferred tax is provided using the Balance Sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside the Statement of Profit or Loss is recognised outside the Statement of Profit or Loss. Deferred tax items are recognised in correlation to the underlying transaction either in Other Comprehensive Income or directly in equity.
The break-up of the major components of the deferred tax assets and liabilities as at Balance Sheet date has been arrived at after setting off deferred tax assets and liabilities where the Company have a legally enforceable right to set-off assets against liabilities and where such assets and liabilities relate to taxes on income levied by the same governing taxation laws.
MAT Credits are in the form of unused tax credits that are carried forward by the Company for a specified period of time, hence it is grouped with Deferred Tax Asset.
2.19 Leases Finance Leases
Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.
Operating Leases
Assets taken on lease where significant portion of the risk and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Statement of Profit or Loss on accrual basis.
2.20 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, adjusted for after income tax effect of interest and other financing costs associated with dilutive potential equity shares 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.
2.21 Research and Development
Revenue expenditure on research and development is charged to Statement of Profit or 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.
2.22 Government Grants and Subsidies:
Government grants are recognised in the Statement of Profit or Loss on a systematic basis over the periods in which the Company recognizes the related costs for which the grants are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.
Government grants that are receivable towards capital investments under State Investment Promotion Scheme are recognised in the Statement of Profit or Loss in the period in which they become receivable.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
2.23 First-time adoption-mandatory exceptions, optional exemptions Overall Principle
The Company has prepared the opening balance sheet as per Ind AS as of 1st 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) Deemed cost on investment in subsidiaries and associates.
The Company has elected to measure investments in Equity shares of subsidiary company at deemed cost, which is previous GAAP carrying amount at the entity''s date of transition to Ind AS in its standalone financial statements. Accordingly, under Ind AS, the Company has recognised investments as follows:
- Equity shares of subsidiary and associate companies - At deemed cost
- Equity shares of other companies- At FVTOCI
- Mutual Funds - At FVTPL
Determining whether an arrangement contains a lease
The Company has applied Appendix C of Ind AS 17 determining whether an arrangement contains a lease to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.
Past business combinations
The Company has elected not to apply Ind AS 103 Business Combinations retrospectively to past business combinations that occurred before the transition date of April 1, 2015. Consequently, the Company has kept the same classification for the past business combinations as in its previous GAAP financial statements :
a) The Company has not recognised assets and liabilities that were not recognised in accordance with previous GAAP in the standalone Balance Sheet of the Company and would also not qualify for recognition in accordance with Ind AS in the separate Balance Sheet of the Company;
b) The Company has excluded from its opening Balance Sheet those items recognised in accordance with previous GAAP that do not qualify for recognition as an asset or liability under lnd AS; and
c) The Company has tested the goodwill for impairment at the transition date based on the conditions as of the transition date.
2.24 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 belo
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 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.
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 judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s 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 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.
Mar 31, 2016
1. SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF ACCOUNTING:
a. Accounting Convention:
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 (âthe Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014 (âthe 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.
b. Use of Estimates:
The preparation of the 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 relating to the contingent liabilities on the date of the 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.
B. FIXED ASSETS:
a. Land (Freehold): At cost except Land at Deonar, Mumbai, which is reflected at revalued amount.
b. Buildings: At cost less depreciation and grants related to specific assets except buildings at Deonar, Mumbai, which are reflected at revalued amount less depreciation.
c. Other Fixed Assets: At cost less accumulated depreciation/amortization and impairment losses, if any.
d. Cost for the aforesaid purposes comprises of its purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use, net of recoverable duties and interest on borrowings attributable to the acquisition of qualifying fixed assets up to the date on which the Asset is ready for its intended use, if any.
e. Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest and are disclosed as âCapital Work-in-Progressâ.
C. DEPRECIATION:
a. Depreciation on tangible Fixed Assets is provided on the Straight-Line Method over the useful lives as prescribed under Part C of Schedule II of Companies Act, 2013.
b. The amount of depreciation on the Revalued Fixed Assets over it Original Cost is withdrawn from the Revaluation Reserve Account (to the extent the Reserve is available) and credited to the General Reserve.
c. Depreciation for assets purchased/sold during the period is charged on a pro-rata basis.
D. INVENTORIES:
a. Inventories are valued at the lower of Cost and Net Realizable Value.
b. Raw Materials and Packing Materials are valued at cost computed on FIFO basis. Cost includes cost of purchases and all other costs incurred in bringing the same to its present location and condition (net of Cenvat / Sales Tax set off, if any).
c. Cost of Finished Goods consists of direct cost and an appropriate share of related factory overheads. Excise duty on closing stock of finished goods awaiting clearance has been provided for and included in cost thereof.
d. Stock of materials sold by one unit to other is works/ factory costs of the transferor unit/ division, plus transport and other charges.
E. REVENUE RECOGNITION:
a. Sales of Manufactured Goods:
i. Sale of goods in respect of export sales are recognized as and when the shipment of goods takes place.
ii. Sale of goods in respect of export sales from overseas warehouses are recognized as and when the release order for goods is sent to the warehouse.
iii. Sale of goods in respect of domestic sales are recognized on dispatch of goods to the customer net of VAT and Excise Duty. However, for the purpose of disclosure, Sales are disclosed at gross as reduced by Excise Duty.
iv. Sales are net of returns.
Excise Duty Refund, Octroi Duty Refund and Sales Tax Set off, if any, is taken on accrual basis.
b. Recognition of Export Benefits:
i. Export Incentives are accounted on export of goods, if the entitlement can be estimated with reasonable accuracy and conditions precedent to claims are fulfilled[Refer Note 21.2 of the Statement of Profit and loss]
Export Benefit Entitlements under the Duty drawback Scheme of the Government of India are recognized in the year in which the Export sales are accounted for.
ii. Advance License Benefits on Exports are accounted in the year of utilization of license.
c. Dividend income is recognized when the right to receive payment is established.
d. Interest income is recognized on a time proportionate basis taking into account the amount outstanding and the rate applicable.
e. Claims for insurance are accounted at the time of its lodgment with the Insurance Company.
F. FOREIGN CURRENCY TRANSACTIONS:
a. Transactions in foreign currency (monetary and non-monetary items) are initially recorded at exchange rates prevailing on the respective dates of the relevant transactions.
b. Monetary items (i.e. receivables, payables, loans, etc.), which are denominated in foreign currency are translated and reported using the exchange rates prevailing on the date of Balance Sheet.
c. Exchange differences arising on the settlement of monetary items or on reporting at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or expenses in the year in which they arise.
d. Non-monetary items denominated in foreign currency and carried at:
i. fair value / net realizable value, are translated at the exchange rate prevalent at the date when the fair value / net realizable value was determined;
ii. historical cost, as translated at the exchange rate prevalent at the date of transaction.
e. In case of forward contracts:
i. 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;
ii. the exchange differences are recognized in the Statement of Profit and Loss in the reporting period in which the exchange rates change;
iii. the exchange differences on settlement/restatement are recognized in the Statement of Profit and Loss for the period in which the forward contracts are settled/restated.
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 âDisclosure of Accounting Policiesâ, 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.
G. GRANTS:
a. Grants related to specific fixed assets are shown as deduction from the gross value of the assets.
b. Other revenue grants are deducted from the related expense.
c. Grants are recognized as accrued on the basis of sanction letter received from the concerned authorities.
H. INVESTMENTS:
a. 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.
b. Profit or loss on sale of long-term investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.
c. Current Investments are stated at the lower of cost and fair value.
I. EMPLOYEE BENEFITS:
Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss for the period in which the related service is rendered.
Long-term benefits:
Defined Contribution Plan:
a. Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension fund, in which both employees and the Company make monthly contributions at a specified percentage of the employees'' eligible salary. The contributions are made to the Provident Fund Account under the Employees'' Provident Fund and Misc. Provisions Act, 1952. Provident Fund and Family Pension Fund are classified as Defined Contribution Plans as the Company has no further obligations beyond making the contribution. The Company''s contributions to Defined Contribution Plan are charged to the Statement of Profit and Loss as incurred.
b. Superannuation fund:
The superannuation fund benefits are administrated by a Trust formed for this purpose through the Group scheme of Life Insurance Corporation of India. The Company''s contribution to superannuation fund are charged to the Statement of Profit and Loss as paid.
Defined Benefit Plan:
a. Gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes contribution to the Group Gratuity Scheme with SBI Life Insurance Company Limited based on an independent actuarial valuation made at the year-end. Actuarial gains and losses are recognized in the Statement of Profit and Loss.
b. Compensated Absences:
The Company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/ availment. The liability is recognized based on number of days of unutilized leave at each Balance Sheet date on the basis of an independent actuarial valuation. Actuarial gains and losses are recognized in the Statement of Profit and Loss.
J. BORROWING COSTS:
Borrowing costs, in connection with the borrowing of funds to the extent attributable to the acquisition or construction of a qualifying fixed asset, are capitalized as part of the cost of such asset till such time the asset is ready for its intended use. All other borrowing costs are recognized in the Statement of Profit and Loss in the period in which they are incurred. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use.
K. LEASES:
a. Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalized at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.
b. Assets taken on lease where significant portion of the risk and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on accrual basis.
L. TAXATION:
a. Current Tax: Provision for current tax is made on the estimated taxable income of the period at the rate applicable to the relevant assessment year.
b. Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is a convincing evidence that the Company will pay normal tax within the period specified under the Income-tax Act, 1961 to avail such MAT credit.
c. Deferred Tax: 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 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. The carrying amount of deferred tax assets is reviewed at each Balance Sheet date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred tax asset to be utilized.
M. IMPAIRMENT OF ASSETS:
The Management periodically assesses, using external and internal sources, whether there is an indication that an asset may be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is the higher of the asset''s net selling price and value in use which means the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal.
N. SEGMENT REPORTING POLICIES:
a. 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 (secondary segment) is based on the geographical location of its customers.
b. 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.
O. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
a. 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.
b. Contingent Liability is disclosed by way of a note to the financial statements when there is a possible obligation or a present obligation that may, but probably will not, require outflow of resources. Where there is a possible obligation or present obligation where likelihood of outflow of resources is remote, no provision or disclosure is made.
c. Contingent Assets are neither recognized nor disclosed in the financial statements.
Mar 31, 2015
A. BASIS OF ACCOUNTING
a. Accounting Convention:
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
B. FIXED ASSETS:
a. Land (Freehold): At cost except Land at Deonar, Mumbai, which is
reflected at revalued amount.
b. Buildings: At cost less depreciation and grants related to specific
assets except buildings at Deonar, Mumbai, which are reflected at
revalued amount less depreciation.
c. Other Fixed Assets: At cost less accumulated
depreciation/amortisation and impairment losses, if any.
d. Cost for the aforesaid purposes comprises of its purchase price and
any directly attributable cost of bringing the asset to its working
condition for its intended use, net of recoverable duties and interest
on borrowings attributable to the acquisition of qualifying fixed
assets upto the date on which the Asset is ready for its intended
use,if any.
e. Projects under which tangible fixed assets are not yet ready for
their intended use are carried at cost, comprising direct cost, related
incidental expenses and attributable interest and are disclosed as
"Capital Work-in-Progress".
C. DEPRECIATION:
a. Depreciation on tangible Fixed Assets is provided on the
Straight-Line Method over the the useful lives of assets as prescribed
under Part C of Schedule II of Companies Act,2013.
b. The amount of depreciation on the Revalued Fixed Assets over it
Original Cost is withdrawn from the Revaluation Reserve Account (to the
extent the Reserve is available) and credited to the General Reserve.
c. Depreciation for assets purchased/sold during the period is charged
on a pro-rata basis.
D. INVENTORIES:
a. Inventories are valued at the lower of Cost and Net Realisable
Value.
b. Raw Materials and Packing Materials are valued at cost computed on
FIFO basis. Cost includes cost of purchases, Excise Duties and Taxes
and all other costs incurred in bringing the same to its present
location and condition (net of Cenvat / Sales Tax set off, if any).
c. Cost of Finished Goods consists of direct cost and an appropriate
share of related factory overheads. Excise duty on closing stock of
finished goods awaiting clearance has been provided for and included in
cost thereof.
d. Stock of materials sold by one unit to other is works/ factory
costs of the transferor unit/ division, plus transport and other
charges.
E. REVENUE RECOGNITION:
a. Sales of Manufactured Goods:
i Sale of goods in respect of export sales are recognised as and when
the shipment of goods takes place.
ii Sale of goods in respect of export sales from overseas warehouses
are recognized as and when the release order for goods is sent to the
warehouse.
iii Sale of goods in respect of domestic sales are recognised on
despatch of goods to the customer net of VAT and Excise Duty. However,
for the purpose of disclosure, Sales are disclosed at gross as reduced
by Excise Duty.
iv Sales are net of returns.
v Excise Duty Refund, Octroi Duty Refund and Sales Tax Set off, if any,
is taken on accrual basis.
b. Recognition of Export Benefits:
i Export Incentives are accounted on export of goods, if the
entitlement can be estimated with reasonable accuracy and conditions
precedent to claims are fulfilled[Refer Note 21.2 of the Statement of
Profit and loss]
Export Benefit Entitlements under the Duty drawback Scheme of the
Government of India are recognised in the year in which the Export
sales are accounted for.
ii Advance License Benefits on Exports are accounted in the year of
utilisation of license.
c. Dividend income is recognised when the right to receive payment is
established.
d. Interest income is recognised on a time proportionate basis taking
into account the amount outstanding and the rate applicable.
e. Claims for insurance are accounted at the time of its lodgement
with the Insurance Company.
F. FOREIGN CURRENCY TRANSACTIONS:
a. Transactions in foreign currency (monetary and non-monetary items)
are recorded at exchange rates prevailing on the respective dates of
the relevant transactions.
b. Monetary items (i.e. receivables, payables, loans, etc.), which are
denominated in foreign currency are translated and reported using the
exchange rates prevailing on the date of Balance Sheet.
c. Exchange differences arising on the settlement of monetary items or
on reporting at rates different from those at which they were initially
recorded during the year, or reported in previous financial statements,
are recognised as income or expenses in the year in which they arise.
d. Non-monetary items denominated in foreign currency and carried at:
i. fair value / net realisable value,are translated at the exchange
rate prevalent at the date when the fair value / net realisable value
was determined;
ii. historical cost, as translated at the exchange rate prevalent at
the date of transaction.
e. In case of forward contracts:
i 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;
ii. the exchange differences are recognised in the Statement of Profit
and Loss in the reporting period in which the exchange rates change;
iii the exchange differences on settlement/restatement are recognised
in the Statement of Profit and Loss for the period in which the forward
contracts are settled/restated.
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.
G. GRANTS:
a. Grants related to specific fixed assets are shown as deduction from
the gross value of the assets.
b. Other revenue grants are deducted from the related expense.
c. Grants are recognised as accrued on the basis of sanction letter
received from the concerned authorities.
H. INVESTMENTS:
a. 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.
b. Profit or loss on sale of long-term investments, if any, is
calculated by considering theweighted average amount of the
totalholding of the investment.
c. Current Investments are stated atthe lower of cost and fair value.
I. EMPLOYEE BENEFITS:
Short-term employee benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit and Loss for the period
in which the related service is rendered.
Long-term benefits:
Defined Contribution Plan:
Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post
employment benefits in respect of provident and family pension fund, in
which both employees and the Company make monthly contributions at a
specified percentage of the employees' eligible salary. The
contributions are made to the Provident Fund Account under the
Employees' Provident Fund and Misc. Provisions Act, 1952. Provident
Fund and Family Pension Fund are classified as Defined Contribution
Plans as the Company has no further obligations beyond making the
contribution.The Company's contributions to Defined Contribution Plan
are charged to the Statement of Profit and Loss as incurred.
Defined Benefit Plan:
1. Gratuity
The Company has an obligation towards gratuity, a defined benefit
retirement plan covering eligible employees. The plan provides a
lumpsum payment to vested employees at retirement, death while in
employment or on termination of employment of an amount equivalent to
15 days salary payable for each completed year of service. Vesting
occurs upon completion of five years of service. The Company makes
contribution to the Group Gratuity Scheme with SBI Life Insurance
Company Limited based on an independent actuarial valuation made at the
year-end. Actuarial gains and losses are recognised in the Statement of
Profit and Loss.
2. Compensated Absences:
The Company provides for the encashment of leave or leave with pay
subject to certain rules. The employees are entitled to accumulate
leave subject to certain limits for future encashment/ availment. The
liability is recognised based on number of days of unutilized leave at
each Balance Sheet date on the basis of an independent actuarial
valuation. Actuarial gains and losses are recognised in the Statement
of Profit and Loss.
3. Superannuation fund:
The superannuation fund benefits are administrated by a Trust formed
for this purpose through the Group scheme of Life Insurance Corporation
of India. The Company's contribution to superannuation fund are charged
to the Statement of Profit and Loss as incurred.
J. BORROWING COSTS:
Borrowing costs, in connection with the borrowing of funds to the
extent attributable to the acquisition or construction of a qualifying
fixed asset, are capitalised as part of the cost of such asset till
such time the asset is ready for its intended use. All other borrowing
costs are recognised in the Statement of Profit and Loss in the period
in which they are incurred. A qualifying asset is one that necessarily
takes a substantial period of time to get ready for its intended use.
K. LEASES:
Assets taken on lease where significant portion of the risk and rewards
of ownership are retained by the lessor are classified as operating
leases. Lease rentals are charged to the Statement of Profit and Loss
on accrual basis.
L. TAXATION:
a. Current Tax: Provision for current tax is made on the estimated
taxable income of the period at the rate applicable to the relevant
assessment year.
b. Minimum Alternate Tax (MAT) credit is recognised as an asset only
when and to the extent there is a convincing evidence that the Company
will pay normal tax within the period specified under the Income-tax
Act, 1961 to avail such MAT credit.
c. Deferred Tax: 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 assets.
In other situations,deferred tax assetsarerecognised 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.The carrying amount of
deferred tax assets is reviewed at each Balance Sheet date and reduced
to the extent that it is no longer probable that sufficient taxable
income will be available to allow all or part of the deferred tax asset
to be utilised.
M. IMPAIRMENT OF ASSETS:
The Management periodically assesses, using external and internal
sources, whether there is an indication that an asset may be impaired.
An impairment loss is recognised wherever the carrying value of an
asset exceeds its recoverable amount. The recoverable amount is the
higher of the asset's net selling price and value in use which means
the present value of future cash flows expected to arise from the
continuing use of the asset and its eventual disposal.
N. 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.
a. Identification of Segments
Primary Segment is identified based on the nature of products, the
different risks and returns and the internal business reporting system.
Secondary Segment is identified based on the geographical location of
its customers.
b. Segment Policies
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.
O. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
a. 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.
b. Contingent Liability is disclosed by way of a note to the financial
statementswhen there is a possible obligation or a present obligation
that may, but probably will not, require outflow of resources. Where
there is a possible obligation or present obligation where likelihood
of outflow of resources is remote, no provision or disclosure is made.
c. Contingent Assets are neither recognised nor disclosed in the
financial statements.
Mar 31, 2014
A. BASIS OF ACCOUNTING
a. Accounting Convention:
i. The financial statements are prepared on the basis of going concern
under historical cost convention on an accrual basis 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, (which continue to be applicable in
respect of Section 133 of the Companies Act, 2013 in terms of General
Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate
Affairs) and the relevant provisions of the Companies Act, 1956/the
Companies Act, 2013, as applicable."
b. Use of Estimates:
The preparation of the financial statements in conformity with the
Generally Accepted Accounting Principles requires Management to make
estimates and assumptions to be made that affect the reported amounts
of revenues and expenses during the reporting period, the reported
amounts of assets and liabilities and the disclosure relating to the
contingent liabilities on the date of the financial statements.
Examples of such estimates include useful lives of Fixed Assets,
provision for doubtful debts / advances, deferred tax, export
incentives, provision for retirement benefits, etc. Actual results
could differ from those estimates.
B. FIXED ASSETS:
a. Land (Freehold): At cost except Land at Deonar, Mumbai, which is
reflected at revalued amount;
b. Buildings: At cost less depreciation and grants related to specific
assets except buildings at Deonar, Mumbai, which are reflected at
revalued amount less depreciation;
c. Other Fixed Assets: At cost less depreciation.
Cost'' for the aforesaid purpose comprises of its purchase price,
including import duties and other non-refundable taxes and levies and
any directly attributable cost of bringing the asset to its working
condition for its intended use; trade discount and rebate, if any, are
deducted in arriving at the purchase price.
C. DEPRECIATION:
a. Depreciation on Fixed Assets is provided on the straight-line
method, at the rates prescribed under Schedule XIV to the Companies
Act, 1956.
b. Assets costing below Rs. 5,000 have been depreciated fully in the
period of acquisition.
c. The amount of depreciation on the Revalued Fixed Assets over its
Original Cost is withdrawn from Revaluation Reserve Account (to the
extent the Reserve is available) and credited to the Statement of
Profit and Loss.
D. INVENTORIES:
a. Inventories are valued at the lower of Cost and Net Realisable
Value.
b. Raw Materials and Packing Materials are valued at cost computed on
FIFO basis. Cost includes cost of purchases, Excise Duties and Taxes
and all other costs incurred in bringing the same to its present
location and condition (net of Cenvat / Sales Tax set off, if any).
c. Cost of Finished Goods consists of direct cost and an appropriate
share of related factory overheads. Excise duty on closing stock of
finished goods awaiting clearance has been provided for and included in
cost thereof.
d. Stock of materials sold by one unit to other is works/ factory
costs of the transferor unit/ division, plus transport and other
charges.
E. REVENUE RECOGNITION:
a. Sales of Manufactured Goods:
i. Sale of goods in respect of export sales are recognised as and when
the shipment of goods takes place.
ii. Sale of goods in respect of export sales from overseas warehouses
are recognized as and when the release ord er for goods is sent to the
warehouse.
iii. Sale of goods in respect of domestic sales are recognised on
despatch of goods to the customer net of VAT and Excise Duty. However,
for the purpose of disclosure, Sales are disclosed at gross as reduced
by Excise Duty.
iv. Sales are net of returns.
v. Excise Duty Refund, Octroi Duty Refund and Sales Tax Set off, if
any, is taken on accrual basis. Grants are recognised as accrued on the
basis of sanction letter received from the concerned authorities.
b. Recognition of Export Benefits:
i. Export Incentives are accounted on export of goods, if the
entitlement can be estimated with reasonable accuracy and conditions
precedent to claims are fulfilled [Refer Note 21.2 of the Statement of
Profit and loss]
Export Benefit Entitlements under the Duty drawback Scheme of the
Government of India are recognised in the year in which the Export
sales are accounted for.
ii. Advance License Benefits on Exports are accounted in the year of
utilisation of license.
c. Dividend income is recognised when the right to receive payment is
established.
d. Interest income is recognised on a time proportionate basis taking
into account the amount outstanding and the rate applicable.
e. Claims for insurance are accounted at the time of its lodgement
with the Insurance Company.
F. FOREIGN CURRENCY TRANSACTIONS:
a. Transactions in foreign currency (monetary and non-monetary items)
are recorded at exchange rates prevailing on the respective dates of
the relevant transactions.
b. Monetary items (i.e. receivables, payables, loans, etc.), which are
denominated in foreign currency are translated and reported using the
exchange rates prevailing on the date of Balance Sheet.
c. Exchange differences arising on the settlement of monetary items or
on reporting at rates different from those at which they were initially
recorded during the year, or reported in previous financial statements,
are recognised as income or expenses in the year in which they arise.
d. Non-monetary items denominated in foreign currency and carried at:
i. fair value / net realisable value, are translated at the exchange
rate prevalent at the date when the fair value / net realisable value
was determined;
ii. historical cost, as translated at the exchange rate prevalent at
the date of transaction.
e. In case of forward contracts:
i. 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;
ii. the exchange differences are recognised in the Statement of Profit
and Loss in the reporting period in which the exchange rates change;
iii. the exchange differences on settlement/restatement are recognised
in the Statement of Profit and Loss for the period in which the forward
contracts are settled/restated.
G. GRANTS:
a. Grants related to specific fixed assets are shown as deduction from
the gross value of the assets.
b. Other revenue grants are deducted from the related expense.
H. INVESTMENTS:
Long-term investments are stated at cost. A provision for diminution,
if any, is made to recognise a decline, other than temporary, in the
value of Investments. Current Investments are stated at the lower of
cost and fair value.
I. EMPLOYEE BENEFITS:
Short-term employee benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit and Loss for the period
in which the related service is rendered.
Long-term benefits:
Defined Contribution Plan:
Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post
employment benefits in respect of provident and family pension fund, in
which both employees and the Company make monthly contributions at a
specified percentage of the employees'' eligible salary. The
contributions are made to the Provident Fund Account under the
Employees'' Provident Fund and Misc. Provisions Act, 1952. Provident
Fund and Family Pension Fund are classified as Defined Contribution
Plans as the Company has no further obligations beyond making the
contribution. The Company''s contributions to Defined Contribution Plan
are charged to the Statement of Profit and Loss as incurred.
Defined Benefit Plan:
1. Gratuity
The Company has an obligation towards gratuity, a defined benefit
retirement plan covering eligible employees. The plan provides a
lumpsum payment to vested employees at retirement, death while in
employment or on termination of employment of an amount equivalent to
15 days salary payable for each completed year of service. Vesting
occurs upon completion of five years of service. The Company makes
contribution to the Group Gratuity Scheme with SBI Life Insurance
Company Limited based on an independent actuarial valuation made at the
year-end. Actuarial gains and losses are recognised in the Statement of
Profit and Loss.
2. Compensated Absences:
The Company provides for the encashment of leave or leave with pay
subject to certain rules. The employees are entitled to accumulate
leave subject to certain limits for future encashment/ availment. The
liability is recognised based on number of days of unutilized leave at
each Balance Sheet date on the basis of an independent actuarial
valuation. Actuarial gains and losses are recognised in the Statement
of Profit and Loss.
3. Superannuation fund:
The superannuation fund benefits are administrated by a Trust formed
for this purpose through the Group scheme of Life Insurance Corporation
of India. The Company''s contribution to superannuation fund are charged
to the Statement of Profit and Loss as incurred.
J. BORROWING COSTS:
Borrowing costs, in connection with the borrowing of funds to the
extent attributable to the acquisition or construction of a qualifying
fixed asset, are capitalised as part of the cost of such asset till
such time the asset is ready for its intended use. All other borrowing
costs are recognised in the Statement of Profit and Loss in the period
in which they are incurred. A qualifying asset is one that necessarily
takes a substantial period of time to get ready for its intended use.
K. LEASES:
Assets taken on lease where significant portion of the risk and rewards
of ownership are retained by the lessor are classified as operating
leases. Lease rentals are charged to the Statement of Profit and Loss
on accrual basis.
L. TAXATION:
a. Provision for current tax is made on the estimated taxable income
of the period at the rate applicable to the relevant assessment year.
b. In accordance with the Accounting Standard 22 - "Accounting for
Taxes on Income", the deferred tax for the timing differences is
measured using the tax rates and tax laws that have been enacted or
substantially enacted by the Balance Sheet date.
c. 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 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.
The carrying amount of deferred tax assets is reviewed at each Balance
Sheet date and reduced to the extent that it is no longer probable that
sufficient taxable income will be available to allow all or part of the
deferred tax asset to be utilised.
M. IMPAIRMENT OF ASSETS:
The Management periodically assesses, using external and internal
sources, whether there is an indication that an asset may be impaired.
An impairment loss is recognised wherever the carrying value of an
asset exceeds its recoverable amount. The recoverable amount is the
higher of the asset''s net selling price and value in use which means
the present value of future cash flows expected to arise from the
continuing use of the asset and its eventual disposal.
N. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
a. A provision is recognised, if as a result of past event, the
Company has a present legal obligation that can be measured reliably,
and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are determined by the
best estimate of the outflow of economic benefits required to settle
the obligation at the reporting date. Where no reliable estimate can be
made, a disclosure is made as contingent liability.
b. Contingent Liability is disclosed by way of a note to the financial
statements when there is a possible obligation or a present obligation
that may, but probably will not, require outflow of resources. Where
there is a possible obligation or present obligation where likelihood
of outflow of resources is remote, no provision or disclosure is made.
c. Contingent Assets are neither recognised nor disclosed.
Mar 31, 2013
A. BASIS OF ACCOUNTING
a. Accounting Convention:
i. The financial statements are prepared on the basis of going concern
under historical cost convention on an accrual basis 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 of the Company for the previous financial
year for the period of Eighteen Months from October 1, 2010 to March
31, 2012 had been prepared as per then applicable, pre-revised Schedule
VI to the Companies Act, 1956. Consequent to the notification of
Revised Schedule VI under the Companies Act, 1956, the financial
statements for the year ended March 31, 2013 are prepared as per the
Revised Schedule VI. Accordingly, the figures of previous period of
Eighteen Months from October 1, 2010 to March 31, 2012 have also been
reclassified/regrouped to conform to this year''s classification. The
figures of the current period are for twelve months ended on March 31,
2013 and hence, are not comparable with those of the previous period of
Eighteen Months ended on March 31,2012. The adoption of Revised
Schedule VI does not impact recognition and measurement principles
followed for preparation of financial statements.
b. Use of Estimates:
The preparation of the financial statements in conformity with the
Generally Accepted Accounting Principles requires Management to make
estimates and assumptions to be made that affect the reported amounts
of revenues and expenses during the reporting period, the reported
amounts of assets and liabilities and the disclosure relating to the
contingent liabilities on the date of the financial statements.
Examples of such estimates include useful lives of Fixed Assets,
provision for doubtful debts / advances, deferred tax, export
incentives, provision for retirement benefits, etc. Actual results
could differ from those estimates.
B. FIXED ASSETS:
a. Land (Freehold): At cost except Land at Deonar, Mumbai, which is
reflected at revalued amount;
b. Buildings: At cost less depreciation and grants related to''
specific assets except buildings at Deonar, Mumbai, which are reflected
at revalued amount less depreciation;
c. Other Fixed Assets: At cost less depreciation.
''Cost'' for the aforesaid purpose comprises of its purchase price,
including import duties and other non-refundable taxes and levies and
any directly attributable cost of bringing the asset to its working
condition for its intended use; trade discount and rebate, if any, are
deducted in arriving at the purchase price.
C. DEPRECIATION:
a. Depreciation on Fixed Assets is provided on the straight-line
method, at the rates prescribed under Schedule XIV to the Companies
Act, 1956.
b. Assets costing below Rs. 5,000 have been depreciated fully in the
period of acquisition.
c. The amount of depreciation on the Revalued Fixed Assets over its
Original Cost is withdrawn from Revaluation Reserve Account(to the
extent the Reserve is available) and credited to the Statement of
Profit and Loss.
D. INVENTORIES:
a. Inventories are valued at the lower of Cost and Net Realisable
Value.
b. Raw Materials and Packing Materials are valued at cost computed on
FIFO basis. Cost includes cost of purchases, Excise Duties and Taxes
and all other costs incurred in bringing the same to its present
location and condition (net of Cenvat / Sales Tax set off, if any).
c. Cost of Finished Goods consists of direct cost and an appropriate
share of related factory overheads. Excise duty is provided on closing
stock of finished goods, wherever applicable.
E. REVENUE RECOGNITION:
a. Sales:
i. Sale of goods in respect of export sales are recognised as and when
the shipment of goods takes place.
ii. Sale of goods in respect of export sales from overseas warehouses
are recognized as and when the release order for goods is sent to the
warehouse.
iii. Sale of goods in respect of domestic sales are recognised on
despatch of goods to the customer net of VAT and Excise Duty. However,
for the purpose of disclosure, Sales are disclosed at gross as reduced
by Excise Duty.
iv. Sales are net of returns.
b. Export Incentives are accounted on export of goods, if the
entitlement can be estimated with reasonable accuracy and conditions
precedent to claims are fulfilled[Refer Note 21.2 of the Statement of
Profit and loss]
c. Excise Duty Refund, Octroi Duty Refund and Sales Tax Set off, if
any, is taken on accrual basis. Grants are recognised as accrued on the
basis of sanction letter received from the concerned authorities.
d. Dividend income is recognised when the right to receive payment is
established.
e. Interest income is recognised on a time proportionate basis taking
into account the amount outstanding and the rate applicable.
f. Claims for insurance are accounted at the time of its lodgement
with the Insurance Company.
F. FOREIGN CURRENCY TRANSACTIONS:
a. Transactions in foreign currency (monetary and non-monetary items)
are recorded at exchange rates prevailing on the respective dates of
the relevant transactions.
b. Monetary items (i.e. receivables, payables, loans, etc.), which are
denominated in foreign currency are translated and reported using the
exchange rates prevailing on the date of Balance Sheet. ,
c. Exchange differences arising on the settlement of monetary items or
on reporting at rates different from those at which they were initially
recorded during the year, or reported in previous financial statements,
are recognised as income or expenses in the year in which they arise.
d. Non-monetary items denominated in foreign currency and carried at:
i. fair value / net realisable value, are translated at the exchange
rate prevalent at the date when the fair value / net realisable value
was determined;
ii. historical cost, as translated at the exchange rate prevalent at
the date of transaction.
e. In case of forward contracts:
i. the premium or discount is recognised as income or expense over the
period of the contract;
ii. the exchange differences are recognised in the Statement of Profit
and Loss in the reporting period in which the exchange rates change;
iii. the exchange differences on settlement/restatement are recognised
in the Statement of Profit and Loss for the period in which the forward
contracts are settled/restated.
G. GRANTS:
a. Grants related to specific fixed assets are shown as deduction from
the gross value of the assets.
b. Revenue grants are deducted from the related expense.
H. INVESTMENTS:
Long-term investments are stated at cost. A provision for diminution,
if any, is made to recognise a decline, other than temporary, in the
value of Investments. Current Investments are stated at cost.
I. EMPLOYEE BENEFITS:
Short-term employee benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit and Loss for the period
in which the related service is rendered.
Long-term benefits:
Defined Contribution Plan:
Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post
employment benefits in respect of provident and family pension fund, in
which both employees and the Company make monthly contributions at a
specified percentage of the employees'' eligible salary. The
contributions are made to the Provident Fund Account under the
Employees'' Provident Fund and Misc. Provisions Act, 1952. Provident
Fund and Family Pension Fund are classified as Defined Contribution
Plans as the Company has no further obligations beyond making the
contribution. The Company''s contributions to Defined Contribution Plan
are charged to the Statement of Profit and Loss as incurred.
Defined Benefit Plan:
1. Gratuity
The Company has an obligation towards gratuity, a defined benefit
retirement plan covering eligible employees. The plan provides a lump
sum payment to vested employees at retirement, death while in
employment or on termination of employment of an amount equivalent to
15 days salary payable for each completed year of service. Vesting
occurs upon completion of five years of service. The Company makes
contribution to the Group Gratuity Scheme with SBI Life Insurance
Company Limited based on an independent actuarial valuation made at the
year-end. Actuarial gains and losses are recognised in the Statement of
Profit and Loss..
2. Compensated Absences:
The Company provides for the encashment of leave or leave with pay
subject to certain rules. The employees are entitled to accumulate
leave subject to certain limits for future encashment/ availment. The
liability is recognised based on number of days of unutilized leave at
each Balance Sheet date on the basis of an independent actuarial
valuation. Actuarial gains and losses are recognised in the Statement
of Profit and Loss.
3. Superannuation fund:
The superannuation fund benefits are administrated by a Trust formed
for this purpose through the Group scheme of Life Insurance Corporation
of India. The Company''s contribution*} superannuation fund are charged
to the Statement of Profit and Loss as incurred.
J. BORROWING COSTS:
Borrowing costs, attributable to the acquisition/construction of
qualifying assets are capitalised as part of the cost of such assets
upto the commencement of commercial operations. Other borrowing costs
are charged as an expense in the period in which the same are incurred.
A qualifying asset is one that necessarily takes a substantial period
of time to get ready for its intended use.
K. LEASES:
Assets taken on lease where significant portion of the risk and rewards
of ownership are retained by the iessor are classified as operating
leases. Lease rentals are charged to the Statement of Profit and Loss
on accrual basis.
L. TAXATION:
a. Provision for current tax is made on the estimated taxable income
of the period at the rate applicable to the relevant assessment year.
b. In accordance-with the Accounting Standard 22 - "Accounting for
Taxes on Income", the deferred tax for the timing differences is
measured using the tax rates and tax laws that have been enacted or
substantially enacted by the Balance Sheet date.
Deferred tax assets are recognised only if there is a reasonable or
virtual certainty, as may be applicable, that sufficient future taxable
income will be available, against which they can be realised. The
carrying amount of deferred tax assets is reviewed at each Balance
Sheet date and reduced to the extent that it is no longer probable that
sufficient taxable income will be available to allow all or part of the
deferred tax asset to be utilised.
M. IMPAIRMENT OF ASSETS:
The Management periodically assesses, using external and internal
sources, whether there is an indication that an asset may be impaired.
An impairment loss is recognised wherever the carrying value of an
asset exceeds its recoverable amount. The recoverable amount is the
higher of the asset''s net selling price and value in use which means
the present value of future cash Bows expected to arise from the
continuing use of the asset and its eventual disposal.
N. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
a. A provision is recognised, if as a result of past event, the
Company has a present legal obligation that can be measured reliably,
and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are determined by the
best estimate of the outflow of economic benefits required to settle
the obligation at the reporting date. Where no reliable estimate can be
made, a disclosure is made as contingent liability.
b. A disclosure for a Contingent Liability is made when there is a
possible obligation or a present obligation that may, but probably will
not, require outflow of resources. Where there is a possible obligation
or present obligation where likelihood of outflow of resources is
remote, no provision or disclosure is made.
c. Contingent Assets are neither recognised nor disclosed.
Sep 30, 2010
A. Accounting Convention:
The fnancial statements are prepared under historical cost convention
on an accrual basis 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.
b. Use of Estimates:
The preparation of the fnancial statements in conformity with the
Generally Accepted Accounting Principles requires Management to make
estimates and assumptions to be made that effects the reported amounts
of revenues and expenses during the reporting period, the reported
amounts of assets and liabilities and the disclosure relating to the
contingent liabilities on the date of the fnancial statements. Examples
of such estimates include useful lives of Fixed Assets, provision for
doubtful debts / advances, deferred tax, export incentives, provision
for retirement benefts, etc. Actual results could differ from those
estimates.
B. FIXED ASSETS:
a. Land (Freehold): At cost except Land at Deonar, Mumbai, which is
refected at revalued amount;
b. Buildings: At cost less depreciation and grants related to specifc
assets except buildings at Deonar, Mumbai, which are refected at
revalued amount less depreciation;
c. Other Fixed Assets: At cost less depreciation.
Cost for the aforesaid purpose comprises of its purchase price,
including import duties and other non-refundable taxes and levies and
any directly attributable cost of bringing the asset to its working
condition for its intended use; trade discount and rebate, if any, are
deducted in arriving at the purchase price;
C. DEPRECIATION:
a. Depreciation on Fixed Assets is provided on the straight-line
method, at the rates prescribed under Schedule XIV to the Companies
Act, 1956.
b. Assets costing below Rs.5,000 have been depreciated fully in the
year of acquisition.
c. The amount of depreciation on the Revalued Fixed Assets over its
Original Cost is withdrawn from Revaluation Reserve Account(to the
extent the Reserve is available) and credited to the Proft and Loss
Account.
D. INVENTORIES:
a. Inventories are valued at Cost or Net Realisable Value whichever is
less.
b. Cost of Raw Materials and Packing Materials are valued at cost
computed on FIFO basis. Cost includes all costs of purchase, Excise
Duties and Taxes and all other costs incurred in bringing the same to
its present condition and location (net of Cenvat/ Sales tax set off,
if any).
c. Cost of Finished Goods consists of direct cost and an appropriate
share of related factory overheads. Excise duty is provided on closing
stock of fnished goods, wherever applicable.
E. REVENUE RECOGNITION:
a. Sales:
i. Sale of goods in respect of export sales are recognised as and when
the shipment of goods takes place.
ii. Sale of goods in respect of export sales from overseas warehouses
are recognized as and when the release order for goods is sent to the
warehouse.
iii. Sale of goods in respect of domestic sales are recognised on
despatch of goods to the customer net of VAT and excise duties.
iv. Sales are net of returns.
b. Export Incentives are accounted for on export of goods, if the
entitlement can be estimated with reasonable accuracy and conditions
precedent to claims are fulflled (Refer Note 8 to Accounts of Schedule
15).
c. Excise Duty Refund, Octroi Duty Refund and Sales Tax Set off, if
any, is taken on accrual basis. Grants are recognised as accrued on the
basis of sanction letter received from the concerned authorities.
d. Dividend income is recognised when the right to receive payment is
established.
e. Interest income is recognised on a time proportionate basis taking
into account the amount outstanding and the rate applicable.
F. FOREIGN CURRENCY TRANSACTIONS:
a. Transactions in foreign currency are recorded at exchange rates
prevailing on the respective dates of the relevant transactions.
b. Monetary items which are denominated in foreign currency are
translated at the exchange rates prevailing at the Balance Sheet date
and proft/loss on translation thereon is credited/charged to the Proft
and Loss Account.
c. Non-monetary items denominated in foreign currency and measured 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.
d. In case of forward contracts:
- the premium or discount is recognised as income or expense over the
period of the contract;
- the exchange differences are recognised in the Proft and Loss account
in the reporting period in which the exchange rates change;
- the exchange differences on settlement/restatement are recognised in
the Proft and Loss account in the period in which the forward contracts
are settled/restated.
G. GRANTS:
a. Grants related to specifc fxed assets is shown as deduction from
the gross value of the assets.
b. Revenue grants are deducted from the related expense.
H. INVESTMENTS:
Long term investments are stated at cost. A provision for diminution,
if any, is made to recognise a decline, other than temporary, in the
value of Investments.
I. EMPLOYEE BENEFITS:
Short term employee benefts are recognised as an expense at the
undiscounted amount in the proft and loss account of the year in which
the related service is rendered.
Long term benefts:
Defned Contribution Plan:
Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post
employment benefts in respect of provident and family pension fund, in
which both employees and the Company make monthly contributions at a
specifed percentage of the employees eligible salary. The
contributions are made to the Provident Fund Account under the
Employees Provident Funds and Misc. Provisions Act, 1952. Provident
Fund and Family Pension Fund are classifed as Defned Contribution Plans
as the Company has no further obligations beyond making the
contribution. The Companys contributions to Defned Contribution Plan
are charged to proft and loss account as incurred.
Defned Beneft Plan:
1. Gratuity
The Company has an obligation towards gratuity, a defned beneft
retirement plan covering eligible employees. The plan provides a lump
sum payment to vested employees at retirement, death while in
employment or on termination of employment of an amount equivalent to
15 days salary payable for each completed year of service. Vesting
occurs upon completion of fve years of service. The Company makes
contribution to the Group Gratuity Scheme with SBI Life Insurance
Company Limited based on an independent actuarial valuation made at the
year-end. Actuarial gains and losses are recognised in the proft and
loss account.
2. Compensated absences
The Company provides for the encashment of leave or leave with pay
subject to certain rules. The employees are entitled to accumulate
leave subject to certain limits for future encashment/ availment. The
liability is recognised based on number of days of unutilized leave at
each balance sheet date on the basis of an independent actuarial
valuation. Actuarial gains and losses are recognised in the proft and
loss account.
3. Superannuation fund
The superannuation fund benefts are administrated by a trust formed for
this purpose through the group scheme of Life Insurance Corporation of
India.
J. BORROWING COSTS:
Borrowing costs, attributable to the acquisition/construction of
qualifying assets are capitalised as part of the cost of such assets
upto the commencement of commercial operations. Other borrowing costs
are charged as an expense in the period in which the same are incurred.
A qualifying asset is one that necessarily takes a substantial period
of time to get ready for its intended use.
K. LEASES:
Assets taken on lease where signifcant portion of the risk and rewards
of ownership are retained by the lessor are classifed as operating
leases. Lease rentals are charged to the Proft and Loss Account on
accrual basis.
L. TAXATION:
a. Provision for current tax is made on the estimated taxable income
of the period at the rate applicable to the relevant assessment year.
b. In accordance with the Accounting Standard 22Ã "Accounting for
taxes on Income", the deferred tax for the timing differences is
measured using the tax rates and tax laws that have been enacted or
substantially enacted by the Balance Sheet date.
Deferred tax assets are recognised only if there is a reasonable or
virtual certainty, as may be applicable, that suffcient future taxable
income will be available, against which they can be realised. The
carrying amount of deferred tax assets is reviewed at each Balance
Sheet date and reduced to the extent that it is no longer probable that
suffcient taxable income will be available to allow all or part of the
deferred tax asset to be utilised.
M. IMPAIRMENT OF ASSETS:
The Management periodically assesses, using external and internal
sources, whether there is an indication that an asset may be impaired.
An impairment loss is recognised wherever the carrying value of an
asset exceeds its recoverable amount. The recoverable amount is the
higher of the assets net selling price and value in use which means
the present value of future cash fows expected to arise from the
continuing use of the asset and its eventual disposal.
N. TREATMENT OF CONTINGENT LIABILITIES:
a. A provision is recognised, if as a result of past event, the
Company has a present legal obligation that can be measured reliably,
and it is probable that an outfow of economic benefts will be required
to settle the obligation. Provisions are determined by the best
estimate of the outfow of economic benefts required to settle the
obligation at the reporting date. Where no reliable estimate can be
made, a disclosure is made as contingent liability.
b. A disclosure for a Contingent Liability is made when there is a
possible obligation or a present obligation that may, but probably will
not, require outfow of resources. Where there is a possible obligation
or present obligation where likelihood of outfow of resources is
remote, no provision or disclosure is made.
c. Contingent Assets are neither recognized nor disclosed.
Sep 30, 2009
A. BASIS OF ACCOUNTING
a. Accounting Convention:
The financial statements are prepared under historical cost convention
on an accrual basis 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.
b. Use of Estimates:
The preparation of the financial statements in conformity with the
Generally Accepted Accounting Principles requires Management to make
estimates and assumptions to be made that effects the reported amounts
of revenues and expenses during the reporting period, the reported
amounts of assets and liabilities and the disclosure relating to the
contingent liabilities on the date of the financial statements.
Examples of such estimates include useful lives of Fixed Assets,
provision for doubtful debts / advances, deferred tax, export
incentives, provision for retirement benefits, etc. Actual results
could differ from those estimates.
B. FIXED ASSETS:
a. Land (Freehold): At cost except Land at Deonar, Mumbai, which is
reflected at revalued amount;
b. Buildings: At cost less depreciation and grants related to specific
assets except buildings at Deonar, Mumbai, which are reflected at
revalued amount less depreciation;
c. Other Fixed Assets: At cost less depreciation. Cost for the
aforesaid purpose comprises of its purchase price, including import
duties and other non-refundable taxes and levies and any directly
attributable cost of bringing the asset to its working condition for
its intended use; trade discount and rebate, if any, are deducted in
arriving at the purchase price;
C. DEPRECIATION: a. Depreciation on Fixed Assets is provided on the
straight-line method, at the rates prescribed under Schedule XIV to the
Companies Act, 1956.
b. Assets costing below Rs.5,000 have been depreciated fully in the
year of acquisition.
c. The amount of depreciation on the Revalued Fixed Assets over its
Original Cost is withdrawn from Revaluation Reserve Account(to the
extent the Reserve is available) and credited to the Profit and Loss
Account.
D. INVESTMENTS:
Long term investments are stated at cost. A provision for diminution,
if any, is made to recognise a decline, other than temporary, in the
value of Investments.
E. INVENTORIES:
a. Inventories are valued at Cost or Net Realisable Value whichever is
less.
b. Cost of Raw Materials and Packing Materials are valued at cost
computed on FIFO basis. Cost includes all costs of purchase, Excise
Duties and Taxes and all other costs incurred in bringing the same to
its present condition and location . (net of Cenvat / Sales tax set
off, if any).
c. Cost of Finished Goods consists of direct cost and an appropriate
share of related factory overheads. Excise duty is provided on closing
stock of finished goods, wherever applicable.
F. TREATMENT OF CONTINGENT LIABILITIES:
a. A provision is recognised, if as a result of past event, the
Company has a present legal obligation that can be measured reliably,
and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are determined by the
best estimate of the outflow of economic benefits required to settle
the obligation at the reporting date. Where no reliable estimate can be
made, a disclosure is made as contingent liability.
b. A disclosure for a Contingent Liability is made when there is a
possible obligation or a present obligation that may, but probably will
not, require outflow of resources. Where there is a possible obligation
or present obligation where likelihood of outflow of resources is
remote, no provision or disclosure is made.
c. Contingent Assets are neither recognized nor disclosed.
G. REVENUE RECOGNITION:
a. Sales:
i. Sale of goods in respect of export sales are recognised as and when
the shipment of goods takes place.
ii. Sale of goods in respect of export sales from overseas warehouses
are recognized as and when the release order for goods is sent to the
warehouse.
iii. Sale of goods in respect of domestic sales are recognised on
despatch of goods to the customer net of VAT and excise duties.
iv. Sales are net of returns.
b. Export Incentives are accounted for on export of goods, if the
entitlement can be estimated with reasonable accuracy and conditions
precedent to claims are fulfilled (Refer Note 8 to Accounts of Schedule
"15).
c. Excise Duty Refund, Octroi Duty Refund and Sales Tax Set off, if
any, is taken on accrual basis. Grants are recognised as accrued on the
basis of sanction letter received from the concerned authorities.
d. Dividend income is recognised when the right to receive payment is
established.
e. Interest income is recognised on a time proportionate basis taking
into account the amount outstanding and the rate applicable.
H.FOREIGN CURRENCY TRANSACTION:
a. Transactions in foreign currency are recorded at exchange rates
prevailing on the respective dates of the relevant transactions.
b. 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
Profit and Loss Account.
c. Non-monetary items denominated in foreign currency and measured
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.
d. In case of forward contracts:
- the premium or discount is recognised as income or expense over the
period of the contract;
- the exchange differences are recognised in the Profit and Loss
account in the reporting period in which the exchange rates change;
- the exchange differences on settlement/restatement are recognised in
the Profit and Loss account in the period in which the forward
contracts are settled/restated.
I.GRANTS:
a. Grants related to specific fixed assets is shown as deduction from
the gross value of the assets
b. Revenue grants are deducted from the related expense.
J. EMPLOYEE BENEFITS:
Short term employee benefits are recognised as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
Long term benefits:
Defined Contribution Plan:
Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post
employment benefits in respect of provident and family pension fund, in
which both employees and the Company make monthly contributions at a
specified percentage of the employees eligible salary (currently 12%
of employees eligible salary). The contributions are made to the
Central Provident Fund under the State Pension Scheme. Provident Fund
and Family Pension Fund are classified as Defined Contribution Plans as
the Company has no further obligations beyond making the contribution.
The Companys contributions to Defined Contribution Plan are charged to
profit and loss account as incurred.
Defined Benefit Plan:
1. Gratuity
The Company has an obligation towards gratuity, a defined benefit
retirement plan covering eligible employees. The plan provides a lump
sum payment to vested employees at retirement, death while in
employment or on termination of employment of an amount equivalent to
15 days salary payable for each completed year of service. Vesting
occurs upon completion of five years of service. The Company makes
contribution to the Group Gratuity Scheme with SBI Life Insurance
Company Limited based on an independent actuarial valuation made at the
year-end. Actuarial gains and losses are recognised in the profit and
loss account.
2. Compensated absences
The Company provides for the encashment of leave or leave with pay
subject to certain rules. The employees are entitled to accumulate
leave subject to certain limits for future encashment/ availment. The
liability is recognised based on number of days of unutilized leave at
each balance sheet date on the basis of an independent actuarial
valuation. Actuarial gains and losses are recognised in the profit and
loss account.
3. Superannuation fund
The superannuation fund benefits are administrated by a trust formed
for this purpose through the group scheme of Life Insurance Corporation
of India.
K. BORROWING COSTS:
Borrowing costs, attributable to the acquisition/construction of
qualifying assets are capitalised as part of the cost of such assets
upto the commencement of commercial operations. Other borrowing costs
are charged as an expense in the period in which the same are incurred.
A qualifying asset is one that necessarily takes a substantial period
of time to get ready for intended use.
L. LEASES:
Assets taken on leases where significant portion of the risk and
rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the Profit and Loss
Account on accrual basis.
M. TAXATION:
a. Provision for current tax is made on the estimated taxable income
of the period at the rate applicable to the relevant assessment year.
b. In accordance with the Accounting Standard 22 - "Accounting for
taxes on Income", the deferred tax for the timing differences is
measured using the tax rates and tax laws that have been enacted or
substantially enacted by the Balance Sheet date.
Deferred tax assets are recognised only if there is a reasonable or
virtual certainty, as may be applicable, that sufficient future taxable
income will be available, against which they can be realised. The
carrying amount of deferred tax assets is reviewed at each Balance
Sheet date and reduced to the extent that it is no longer probable that
sufficient taxable income will be available to allow all or part of the
deferred tax asset to be utilised
c. Provision for Fringe Benefit Tax is made in accordance with the
provisions of the Income-Tax Act, 1961.
N. RESEARCH AND DEVELOPMENT:
Revenue Expenditure on Research is charged against Profit and Loss
Account of the year in which it is incurred.
Capital Expenditure on Development is shown as an addition to Fixed
Assets.
O. IMPAIRMENT OF ASSETS:
The Management periodically assesses using, external and internal
sources, whether there is an indication that an asset may be impaired.
An impairment loss is recognised wherever the carrying value of an
asset exceeds its recoverable amount. The recoverable amount is the
higher of the assets net selling price and value in use which means
the present value of future cash flows expected to arise from the
continuing use of the asset and its eventual disposal.
Sep 30, 2003
A. BASIS OF ACCOUNTING
The financial statement are prepared under historical cost convention
on an accrual basis except for medical re-imbursements and leave travel
allowance, and are in accordance with the requirements of the Companies
Act, 1956 and mandatory Accounting Standards.
B. FIXED ASSETS:
a) Land (Freehold) :At Cost except at Deonar, Mumbai, which is shown at
revalued amount.
b) Building : At cost less depreciation except buildings at Deonar,
Mumbai, which are shown at revalued amount less depreciation.
c) Other Fixed Assets : At Cost less depreciation. Cost for the
aforesaid purpose comprises of its purchase price and any attributable
costs of bringing the asset to its working condition for its intended
use, net of duties recoverable, if any.
C. DEPRECIATION:
a) In respect of items of Fixed Assets acquired/purchased up to 31st
January, 1988 on straight line basis in terms of section 205(2)(b)of
the Companies Act, 1956 prior to the amendment enacted vide the
Companies (Amendment) Act, 1988. Accordingly, in respect of all the
assets acquired prior to 31st January, 1988 the depreciation is
provided for the year as per equivalent straight line rates based on
the depreciation rates prescribed under the Income Tax Rule Prevalent
at the relevant time.
b) In respect of Fixed Assets acquired/purchased on or after 1st
February, 1988 but before 16th December 1993 on straight line basis as
per the then prevailing rates prescribed under schedule XIV of the
Companies Act, 1956.
c) In respect of Fixed Assets acquired/purchased on or after 16th
December 1993 on straight line method at the rates and on the basis
specified under Schedule XIV to the Companys Act, 1956 as revised by
Notification No.G.S.R. 756E dated 16th December 1993 and further
revised by notification No.101E of the Department of Company Affairs,
and for Assets costing below Rs.5000/- purchased on or after 16th
December, 1993 the entire cost has been written off fully in the year
of acquisition.
d) Patent & Trade marks are written off over a period of 14 years.
e) The excess depreciation provided on the revalued assets as reduced
by that on the original cost of the assets is transferred from
Revaluation Reserve (to the extent the Reserve is available) and
credited to Profit and Loss Account.
D. INVESTMENTS:
Long term investments are stated at cost. Provision is made for
permanent diminution in the value if any, of such Investments.
E. INVENTORIES:
a. Raw Materials and Packing Materials are valued at a cost or net
realisable value whichever is less, on FIFO basis .Cost for this
purpose includes basic cost (net of Cenvat / Sales tax set off if any)
and all direct expenses.
b. Finished Goods are valued at cost or net realisable value whichever
is less . Cost consists of direct cost other related factory overheads.
Excise duty is provided on closing stock of finished goods, wherever
applicable, meant for local sales.
c. General Stores, Laboratory Chemicals etc. are written off in the
year of purchase.
F. TREATMENT OF CONTINGENT LIABILITIES :
Contingent Liabilities are disclosed separately in Notes to Accounts
and /or provided for depending upon the Management perception as to
whether the said Liability is likely to materialise or not.
G.SALES:
Manufactured Goods:
a) Sale of goods in respect of export sales are recognised as and when
the shipment of goods takes place and includes exchange differences
arising on sales transactions.
b) Sale of goods in respect of export sales from overseas warehouse are
recognized as and when the release order for goods is sent to the
warehouse.
c) Sale of goods in respect of domestic sales are recognised on
despatch of goods to the customer. Sales are net of return.
H. FOREIGN CURRENCY TRANSACTION:
Foreign Currency Transactions are accounted at average monthly Exchange
Rate. The overall Gain/(Loss) on settlement/realisation is
credited/charged to the Profit & Loss Account.
I. REVENUE RECOGNITION:
Duty drawback, Excise Duty Refund, Octroi Duty Refund & Sales Tax Set
off, is taken on accrual basis.
J. PRIOR PERIOD ITEMS:
Income and Expenditure pertaining to prior period, wherever material,
are disclosed separately.
K. RETIREMENT BENEFITS:
i. Companys contribution to recognised provident fund and family
pension fund is charged to Profit & Loss Account on accrual basis.
ii. Provision for gratuity and leave encashment, are based on actuarial
valuations as on the Balance Sheet date.
iii. The superannuation fund benefits are administrated by a trust
formed for this purpose through the group scheme of Life Insurance
Corporation of India.
L. RESEARCH & DEVELOPMENT :
Revenue Expenditure on Research & Development is charged against Profit
& Loss Account of the year in which it is incurred. Capital
Expenditure on Research & Development is shown as an addition to Fixed
Assets.
M. DEFERRED REVENUE EXPENDITURE:
In respect of items of expenditure considered deferred, the Company
charges such expenditure over its estimated useful life as the benefit
is expected to accrue evenly.
N. TAXATION:
Income tax expense is accrued in accordance with Accounting Standard 22
- Accounting for Taxes on Income, issued by the Institute of Chartered
Accountants of India, which includes current and deferred taxes.
Deferred Income Taxes reflect the impact of current year timing
differences between taxable income & accounting income for the year and
reversal of timing differences of earlier years.
Deferred tax assets and liabilities are measured using the tax rate and
tax laws that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax assets are recognized for all deductible timings
differences, carry forward of unused tax assets and unused tax losses
subject to consideration of prudence.
The carrying amount of deferred tax assets is reviewed at each balance
sheet date on the same consideration.
O. LEASES :
Assets taken on leases were significant portion of the risk and rewards
of ownership are retained by the lessor are classified as operating
leases. Lease rentals are charged to the Profit and Loss Account on
accrual basis.
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Bank Nifty Surges: RBI’s 25 bps Rate Cut Triggers Strong Upside in Major Banking Stocks -
Closing Bell: Sensex Ends 158 pts Higher, Nifty Climbs Above 26,000; Hero MotoCorp, HAL Up 2% Each -
Stocks To Buy Today, Dec 4: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday
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